Scholarship Endowment

The Sigma Chi Building Foundation is a Montana non-profit corporation dedicated to preserving two institutions near and dear to our hearts. First, the Sigma Chi Building Foundation is dedicated to preserving the Beta Delta Chapter house at 1110 Gerald in Missoula, Montana. Second, the Foundation is dedicated to preserving the Beta Delta Chapter of the Sigma Chi Fraternity on the campus of the University of Montana. 

Our goal is to raise $1,000,000 as a scholarship endowment for worthy Sigma Chis and pledges at the University of Montana. The Sigma Chi Building Foundation received 501(c)(3) status from the Internal Revenue Service on July 28, 1999 by letter ruling. Therefore, Sigma Chis and others who donate to the Sigma Chi Building Foundation are allowed a charitable donation deduction on their tax returns. A copy of this ruling will be available upon request. 

Estate and income tax benefits are available to donors in the form of charitable contribution deductions. Also, Montana taxpayers may receive an endowment tax credit if the donation qualifies as a “planned gift”. Examples follow later in the letter as to both tax deductions and credits. 

We understand the importance of tax planning for both estate and income taxes. Sigma Chis and other taxpayers for decades have wrestled with the issues of what to do with the fruits of their efforts and success. Therefore, we have a vehicle in place to allow our alumni to plan for taxes and benefit the traditions of Sigma Chi at the University of Montana.  

Donations to the Sigma Chi Building Foundation may take many forms including cash, stocks and other appreciated property. We can accept contributions from corporations as well as individuals. Donors may also wish to take advantage of charitable trusts such as remainder or lead trusts. If you are interested in trusts which can be very beneficial, please contact your legal counsel and tax advisor. We suggest you contact your tax advisor on any significant donations of any kind. 

The Sigma Chi Building Foundation is using the University of Montana Foundation to administer and invest the funds raised to date. The UM Foundation and its Board of Directors are responsible for and direct the investments with investment advisors. The Sigma Chi Foundation funds are pooled with the other invested funds of the UM Foundation and are accounted for as agency funds. The UM Foundation is audited annually by an independent accounting firm. 

We believe that the use of a scholarship endowment is a positive means to help the functions of the Beta Delta Chapter of Sigma Chi Fraternity. The benefits include rush, recruitment and programs for Sigma Chi. Benefits to Sigma Chi Alumni are a manner to reward i.e. pay back to Sigma Chi and the Beta Delta Chapter and to assist in savings taxes at the same time. Prudent investing and management should allow the endowment to be around for many generations into the future and provide a long term benefit to Sigma Chi and The University of Montana.

Examples of donations and tax benefits follow:

  1. Cash Donations.  Taxpayers make direct cash donations to the fund. The tax benefits of the donation can be estimated by multiplying the amount of donation times their effective tax rates including both Federal and state. If a Sigma Chi donated $10,000 to the Scholarship endowment fund and if their combined Federal and state tax rate is 35%, then the out of pocket cost of the donation is $6,500. The Sigma Chi taxpayer will have obtained a tax savings of $3,500.
     
  2. Non-cash Donations.  Taxpayers have appreciated stock in IBM Corporation and wish to avoid paying capital gains taxes on the sale of the stock. The Sigma Chi taxpayer could donate the shares of IBM to the Sigma Chi Building Foundation and receive a charitable donation deduction equal to the market value of the stock on the date of the gift. Two tax benefits are received by donating appreciated “publicly traded” stock. First, the capital gains tax inherent in the stock is avoided. Second, the donation deduction is the fair market value of the stock at the time of transfer. Therefore, if you own IBM and your tax basis is $1 per share and if the market price were $100, then donating 100 shares of that IBM stock would result in a $10,000 donation deduction. Again, the tax savings would be $3,500 using a tax rate of 35%. The out of pocket cost is actually a gain and not a cost since the tax cost was $1 per share. You receive a $34 per share economic benefit.  Non-cash donations can include real estate. Special rules apply to donations of real estate but the tax benefits are beneficial.
     
  3. Planned Gift Donations.  These types of donations generally involve the use of a written document such as a will or a trust. The scope of this letter does not allow the use of examples for planned gifts due to length and complexity. If you are a Montana taxpayer, your donation may qualify for a special tax credit. The endowment credit is presently equal to 40% of the present value of the gift from an individual and 20% from entities other than an individual.   The following list gives examples as to what qualifies for the Montana endowment credit as a “planned gift”

Charitable remainder unitrust
Charitable remainder annuity
Pooled income fund trust
Charitable lead trust
Charitable lead annuity
Charitable gift annuity
Deferred charitable gift annuity
Charitable life estate agreement
Paid-up life insurance policies
Qualified outright charitable contributions by corporations, partnerships, trusts, estates and limited liability companies

Please contact us if you have any questions about donating to the Sigma Chi Building Foundation. Email info@betadelta-sigmachi.org. We are here to help.

Walter J. Kero, CPA
Beta Delta ‘73