Will rich bequeath to charities if estate tax ends?
Oct 05, 2017 at 2:50 PM
The University of Maryland, College Park announced Wednesday it has received a $219 million donation from the A. James & Alice B. Clark Foundation, the largest gift in the state flagship university’s history. (Talia Richman / Baltimore Sun)
University of Maryland, College Park's announcement that the A. James & Alice B. Clark Foundation has donated $219 million, the largest gift in the university's history, is cause for joy and appreciation for their generosity ("University of Maryland receives $219 million gift, largest in college's history," Oct. 4). But it's also a reminder that we're likely to see many fewer such transformative gifts if Congress repeals the federal estate tax as President Donald Trump strongly desires.
People set up private charitable foundations like the Clark Foundation for a variety of reasons; the estate tax is one powerful incentive. Removing that incentive will cause a substantial decline in very large gifts. That's what happened in 2010 when the estate tax was temporarily not in force. Bequests from estates declined that year by 37 percent from the previous year ($11.9 billion to $7.49 billion). In 2011, when the estate tax was restored, those gifts rose 92 percent (to $14.36 billion).
Much is at stake for Maryland's universities and colleges, which received some $1.48 billion in contributions of $1 million or greater from 2005 to 2017, according to the Chronicle of Philanthropy. For all the vital institutions that are increasingly reliant on major gifts as governmental budgets are squeezed, this would be the worst time to remove such an important incentive for high-level giving.
Aaron Dorfman, Washington, D.C.
The writer is president and CEO of the National Committee for Responsive Philanthropy.