Donations left in wills bolster fundraising

Charlie Berardesco’s 30-year legal career was born at the GW Law School. And when he dies, a $3 million chunk of his multimillion-dollar estate will go back into the school to fund scholarships and programs.

The 54-year-old alumnus is part of a growing pool of donors earmarking GW in their wills – initiating an awkward waiting game for gifts that will pad the University’s endowment when they die.

“It’s an old lawyers’ joke about giving money estates. When the estate matures, then the money flows,” said Berardesco, whose gift was announced at a law school banquet this month. “That’s what would happen when I pass away.”

The amount of money the University pulled in from these gifts, called estate or planned gifts, grew by 56 percent last fiscal year, amassing $23.5 million from 81 donations that will be tucked away for years or even decades.

These gifts often make up some of GW’s heaviest money loads. Out of the 19 gifts valued over $1 million last year, eight were planned estate gifts.

Media Credit: Nick Rice | Graphics Assistant

The University’s planned giving program – where donors can request in their wills that money for scholarships, academics or research go to GW – isn’t new. GW has pushed the option since the 1980s, but it rapidly gained popularity in the past year, accounting for one-fifth of last year’s entire fundraising haul.

It has the potential to have its greatest impact over the next two decades as the baby boomer population fades away, creating a “huge opportunity for gift planning,” Vice President for Development and Alumni Relations Mike Morsberger said.

“Planned gifts are often among the largest that the university receives,” Morsberger said in an email. “Planned giving, where the gift won’t come to fruition during their lifetime, takes away the constraints of current (and projected) living expenses.”

In all, GW is sitting on $156.4 million worth of 574 planned gifts – but the amount could be more, Morsberger said, since only about 20 percent of planned donors notify the University.

Berardesco’s case is unique. The D.C.-based lawyer does not have children, and the Defense of Marriage Act prevents him from getting a tax break if he were to leave all of his money behind for his husband – so he’s splitting the difference between GW and his undergraduate alma mater Duke University.

“It’s not very complicated. I want to pay as few taxes as possible, and I want my schools to be taken care of,” he said, crediting the law school’s grants and scholarships for helping him stay to earn his degree.

About $1 million will fund student scholarships, and $2 million will be up to the law school to spend, because, “I don’t know by the time I die what the appropriate way for the money to be spent [is],” Berardesco, general counsel for the North American Electric Reliability Corporation, said.

The cause made sense for Berardesco, too, he said. He said he was drawn to give by GW Law School Dean Paul Schiff Berman’s vision to boost financial aid and increase personalized learning tracks.

“I’m one of the bizarre guys who loved going to law school,” he said. “I’m not a big believer of naming buildings. I have a terrible last name, so why would you want to name a building after me? It’s much more that the school uses its money as it needed.”

For the University, it’s a bit more complicated.

GW, and the law school specifically, is seeking planned gifts to build up a substantial cash base – though it would materialize years or decades down the line. For instance, the University won’t see any of Berardesco’s $3 million gift until he dies, although he gives annually on top of his pledged donation.

The University also is relying on these donors to not change their minds, and it calculates gift money on the assumption that their estates won’t shrink.

But Executive Vice President and Treasurer Lou Katz said in August that it’s worth the wait. The University typically fixes the payout to fund the University’s operations at about 5 percent of the endowment each year.

He said that predictability eases any worries about the University’s year-to-year financial state, allowing him to focus on the big-picture impact that planned gifts will have.

The University’s endowment sat at about $1.3 billion last fiscal year, on par with the year before. GW’s total wealth has grown five-fold over the last two decades, as the University increasingly prioritizes fundraising and cost-cutting strategies while planning ambitious capital projects like the $275 million Science and Engineering Hall, $16 million Gelman Library renovations and $75 million School of Public Health and Health Services building.

The promise of funds coming in allows GW to expand its ability to pay for new faculty positions and internal research dollars, he said.

“This actually gives a way of leveraging the revenue you have – you just don’t know the timing of it, but that doesn’t bother me at all,” Katz said. “If you do enough of those kinds of gifts, or if you do enough planned giving, it really does help catapult the institution.”

The law school, for instance, is relying on the momentum of planned estate gifts to eventually double its endowment from $130 million to $260 million, in line with the University’s goal to increase financial aid and rely less on tuition to operate.

Rich Collins, associate vice president for law development, said he’s pinning his hopes on “the great transfer of wealth” that will take place when wealthy baby boomers not only leave money to their children, but also to their schools. A Boston College report estimated that $41 trillion will be passed on from one generation to the next between 1998 and 2052.

Collins said the law school has been promoting planned estate giving for the last three or four years, but it has made more headway in the past year through word of mouth.

“The annual gifts are terrific, but the estate plans really go further to build, and that’s why places like Harvard are so well-endowed – centuries of gifts from people like Charlie,” Collins said.

The University has pumped up its fundraising efforts overall in recent years, bringing in a record $120 million last year to a traditionally tuition-dependent school.

GW will need to stockpile funds even more over the next 10 years, especially with a strategic plan calling for academic and research initiatives that relies on between $300 million and $400 million in fundraising.

Universities nationwide have been picking up on the power of planned estate gifts after the 2008 economic crisis caused many top donors to hold onto their pocketbooks, Rae Goldsmith, vice president of advancement resources for the Council for Advancement and Support of Education, said.

She said universities typically promote the option through sensitive one-on-one conversations and in direct mail.

“Fundraisers found it to be an effective approach, especially with a donor who wants to make a significant gift but wants to make sure they’re secure financially in their lifetime,” she said.

Liza Dee contributed to this report.

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