Converting Stock Gains Into Scholarships Creates Win-Win Situation for Students
Sara Knuf Mellinger knows all about conversions. The 1983 management information systems graduate spent much of her career in network and software system conversions with Verizon, beginning with its predecessor company GTE. Leveraging information and processes for maximum efficiency has been her life. So it's not surprising that when it came to investing and charitable giving, she and her husband, Jim, also an MIS graduate, wanted their money to do the same.
Sara and Jim took stock that they had purchased-and that had grown considerable gains-and created scholarships through the UW-Eau Claire Foundation. They wanted to create opportunities for students, but they also knew it was to their advantage to convert their gains into cash awards.
"Stock gifts just made sense for us," says Sara, adding that she and Jim took full advantage of their company's matching funds program to maximize the gifts. "We wouldn't have to claim the capital gains and UW-Eau Claire would get the benefit of those earnings."
The Mellingers established the Philip and Marilyn Knuf Scholarship in honor of Sara's parents, who were longtime teachers at Frederic High School in northern Wisconsin. Two awards of $1,000 are given to Frederic seniors each year and include needs-based criteria.
"We are big believers in education and the need for young people to broaden their perspectives," Sara says. "In many areas like northern Wisconsin there is simply not a lot of opportunity to travel and experience different cultures. There is not a lot of exposure to diversity in people or customs."
For this reason, and because they wanted to support the College of Business, the Mellingers also established the Jim and Sara Mellinger IS Study Abroad Scholarship.
"We feel really good about being able to broaden students' outlook on the world and the opportunities out there for them," Sara says.
One particular letter of thanks from a scholarship recipient has made an impression on her. The student wrote that the award allowed her to take just one part-time job instead of two jobs outside of her studies in order to pay for tuition.
"That we could help her take a full load and keep up her GPA makes it worthwhile."
The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results. Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.
A charitable bequest is one or two sentences in your will or living trust that leave to University of Wisconsin-Eau Claire Foundation a specific item, an amount of money, a gift contingent upon certain events or a percentage of your estate.
an individual or organization designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust or retirement plan
able to be changed or cancelled
A revocable living trust is set up during your lifetime and can be revoked at any time before death. They allow assets held in the trust to pass directly to beneficiaries without probate court proceedings and can also reduce federal estate taxes.
cannot be changed or cancelled
tax on gifts generally paid by the person making the gift rather than the recipient
the original value of an asset, such as stock, before its appreciation or depreciation
the growth in value of an asset like stock or real estate since the original purchase
the price a willing buyer and willing seller can agree on
The person receiving the gift annuity payments.
the part of an estate left after debts, taxes and specific bequests have been paid
a written and properly witnessed legal change to a will
the person named in a will to manage the estate, collect the property, pay any debt, and distribute property according to the will
A donor advised fund is an account that you set up but which is managed by a nonprofit organization. You contribute to the account, which grows tax-free. You can recommend how much (and how often) you want to distribute money from that fund to University of Wisconsin-Eau Claire Foundation or other charities. You cannot direct the gifts.
An endowed gift can create a new endowment or add to an existing endowment. The principal of the endowment is invested and a portion of the principal’s earnings are used each year to support our mission.
Tax on the growth in value of an asset—such as real estate or stock—since its original purchase.
Securities, real estate or any other property having a fair market value greater than its original purchase price.
Real estate can be a personal residence, vacation home, timeshare property, farm, commercial property or undeveloped land.
A charitable remainder trust provides you or other named individuals income each year for life or a period not exceeding 20 years from assets you give to the trust you create.
You give assets to a trust that pays our organization set payments for a number of years, which you choose. The longer the length of time, the better the gift tax savings to you. When the term is up, the remaining trust assets go to you, your family or other beneficiaries you select. This is an excellent way to transfer property to family members at a minimal cost.
You fund this type of trust with cash or appreciated assets—and receive an immediate federal income tax charitable deduction. You can also make additional gifts; each one also qualifies for a tax deduction. The trust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. When the trust terminates, the remaining principal goes to University of Wisconsin-Eau Claire Foundation as a lump sum.
You fund this trust with cash or appreciated assets—and receive an immediate federal income tax charitable deduction. Each year the trust pays you or another named individual the same dollar amount you choose at the start. When the trust terminates, the remaining principal goes to University of Wisconsin-Eau Claire Foundation as a lump sum.
A beneficiary designation clearly identifies how specific assets will be distributed after your death.
A charitable gift annuity involves a simple contract between you and University of Wisconsin-Eau Claire Foundation where you agree to make a gift to University of Wisconsin-Eau Claire Foundation and we, in return, agree to pay you (and someone else, if you choose) a fixed amount each year for the rest of your life.