How to get education funds earmarked?
December 26, 2007 7:31 AM   Subscribe

Can a defunct trust fund donate tax-free to a university student's dissertation?

I have a question regarding tax-free donations made to a state university.

My friend's parents were previously running a private trust fund. The trust is now defunct (since 2002) and there is about $4000 left in the trust account. The money has to be donated to a tax-free entity. My friend is a graduate student at a state university embarking on her dissertation and would like that money to be donated to the university and used to purchase her dissertation equipment and compensate her participants.

Since her university does not provide counsel on tax issues, I was wondering if this type of donation is allowed. Could the funds be earmarked for her dissertation? (She obviously has no desire to break any tax laws so any help is greatly appreciated).
posted by cashman to Education (4 answers total) 1 user marked this as a favorite
 
They should approach one of the fund raisers in the university's Advancement office. The fund raiser would be able to tell them if the contribution could be accepted. If it is accepted and the university has a 501(C) rating, which it most likely does, then it would be a charitable contribution. The challenge here is that they want to restrict the funds to a particular dissertation. Normally, restricted contributions are for a particular program; not a particular student. When I worked in a college Advancement office, we'd direct people wanting to make a "gift" towards a particular student's bill to the Business Office. The university may do so as well. However, start with the Advancement office and see where that leads you. The institution may have policies in place about these kind of restricted donations.

If it can not be handled as a restricted donation, investigate it being a grant. If you go this route, you'll also want to talk with the university's grant officer. Your friend may have to apply to the trust for the funds in order for them to be disbursed.

One thing to be aware of is that relationship between the recipient and the trust administrators may need to be taken into account. Again, the university's fund raisers should be able to answer any questions you may have about such a transaction.
posted by onhazier at 7:49 AM on December 26, 2007


Or your friend could set up a non-profit. Some of the money would then need to be spent on associated issues such as the tax filing..
posted by Pants! at 8:53 AM on December 26, 2007


Setting up a non-profit for something as specific as a dissertation seems rather excessive and difficult. If the university is unwilling to cooperate, perhaps you could seek out another, already existing non-profit that does work in the relevant area of study and see if the trust could make a donation in exchange for the organization sponsoring the student's work.
posted by zachlipton at 11:25 AM on December 26, 2007


It sounds like none of the money will be going to her directly, (just equipment and payment to the subjects) which is good.

I agree that she should contact the university about treating it as a donation (development or advancement office or an associated foundation) or as a grant (sponsored research office at my old school). She should be prepared for the university to take part of the money to cover overhead and indirect costs so not all of it will flow to her research. She might also explore routing the money through the research account of her faculty advisor. If she gets along with her advisor, it might make things simpler if it is going to a larger, preexisting account.
posted by metahawk at 4:00 PM on December 26, 2007


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