This article originally appeared in the winter 2009 Harker Quarterly.
In a culture of philanthropy, constituents support an organization’s mission and recognize the need for charitable contributions to help achieve that mission. In recent years we have seen Harker’s culture of philanthropy take root and flourish within our school community.
This past fall we have been the fortunate recipients of three types of charitable gifts that are new to the school.
1. Endowed Gifts
The John Near Excellence in History Education Endowment Fund
Harker received its first endowment in memory of a 31-year veteran of Harker’s teaching staff, John Near, who passed away in late September. Near’s parents, James and Patricia Near, are funding the $300,000 endowment by taking advantage of the IRA Charitable Rollover Extension, which they learned about in the November 2008 issue of the Harker News. This rollover extension allows them to contribute funds from their IRA without having to pay the tax on the appreciation. The proceeds will be used to “help develop the history department, both through the acquisition of resources and providing growth opportunities for both faculty and students,” as John Near articulated in August of this year as he and his parents planned this gift.
To create an endowed fund at Harker, a donor makes a gift or series of gifts, which make up a principal amount. That principal is permanently restricted and will only be used to generate interest income. A pre-set amount of the annual interest is used each year to support the purpose for which the endowed fund was established or the general fund, depending on the donor’s wishes. Endowed funds can continue to grow over time if the interest earned on the principal exceeds the set amount used for the annual payout, and the excess is added the principal. The pre-set interest on endowed funds will support the purpose for which they are created year after year in perpetuity.
2. Privately Held Stock Gifts
Harker parents Selvaraj Venugopal and Sumathi Selvaraj (Raghav, Gr. 9; Anu, Gr. 2), Raj and Shailaja Velagapudi (Anish, Gr. 6; Anmol, Gr. 1) and Michel and Sudha Susai (Kevin, Gr. 9; Jessica, Gr. 4) are transferring shares of privately-held stock in their companies to the school.
Given Harker’s location in the Silicon Valley, it is not surprising that a large number of our constituents are entrepreneurs. Making a gift of privately-held stock is a way for some of our parents who have funds tied up in their start-up companies to share their entrepreneurial successes with the school.
3. Private Equity Fund Gifts
Current Harker parents Srini and Durga Madala (Samantha, Gr. 7; Ajay, Gr. 1) became Visionary Benefactors during Phase 3 of the school’s capital campaign two years ago, and they are leading the way again by introducing a new type of charitable gift. The Madalas are contributing an Endowment Management Account, the funds of which are invested primarily in private equity.
Returns from private equity investments usually pay out over several years. With the gift structured to ensure that the school has no liability for capital calls, and assuming the fund continues to grow, the school will eventually receive not only the current value of the fund, but any growth the fund achieves as well.
Those wishing to contribute to the John Near endowment fund or to discuss these or other gift types should contact Joe Rosenthal, executive director of advancement, at firstname.lastname@example.org.