Corporation Weighs Fundraising Plan

Will Vote on Monday

The Harvard Corporation will decide Monday whether the University should create a new option for its fundraising program, a Harvard development officer said yesterday.

The proposed Harvard Growth Fund (HGF) could reach potential donors who ordinarily "couldn't afford to part with a great deal of capital," John J. Brown, director of deferred giving, said yesterday.

Donors would give a minimum of $5000 to the HGF, he said. The Harvard Management Company (HMC) would invest the money and donors or their beneficiaries would receive approximately 2.5 to 3 per cent interest on their gift annually.

Although donors could probably find an investment yielding a more profitable rate of interest, these gifts are "intended primarily to do something for Harvard," Brown said.

Donors must pay taxes on the interest they receive although in most cases part of the gift itself is deductible, he said.

The new fund, which Brown said was "merely being considered" by the Corporation, would supplement two existing Pooled Income Funds (PIF), part of Harvard's planned giving programs.

Harvard raised over $4 million through the PIF since its inception two years ago, Betty Poulin, Brown's assistant, said yesterday. "It's been very successful," she added.

The donors earn approximately 8 per cent interest on the "high interest" pooled fund and approximately 5 per cent on the "balanced" fund, both under HMC management. The investments for the balanced fund are more oriented towards appreciation, she said.

The two other "income producing" options are Charitable Remainder Funds (CRF). Established with donations over $50,000, these funds are not pooled but are invested individually, either by the HMC or by a trustee the donor selects, Brown said.

The returns on a "unit" CRF is determined annually according to the investment's fair-market value, Brown said, while the interest on an "annuity" CRF is permanently established when the fund is started. In the second case, Harvard absorbs any profit or loss.

All investments are made "separately from the rest of the University's endowment," Brown said. Endowment investments "are planned in terms of 300 years" while gift investments are geared "more towards the benefactor's life span," he added.

The donations to all of these funds are "irrevocable." The donor cannot collect interest for a few years and then withdraw the money. After the last beneficiary dies, the principle belongs exclusively to Harvard, Brown said.

"It's a tremendous resource," he said. Because the country's recent economic difficulties made people less willing or less able to make outright gifts, "we expect to see larger and larger dollars given this way" in the future, he said.

The PIF and CRF programs together raised $6 million in the last two years, including a single donation of $1 million, Brown said.

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