John Tao (E 1970, 1974) knows good advice when he hears it. And more importantly, he takes it to heart.
Tao, who graduated with bachelor’s and doctoral degrees in chemical engineering from Carnegie Mellon University’s College of Engineering, came to CMU based on advice from his father — and influence from his older sisters, who lived in Pittsburgh.
It proved to be a great decision for him, and Tao flourished at CMU. After his graduation, he stayed connected to the university, including serving as an alumnus interviewer for CMU admission efforts and as a recruiter for undergraduates and doctoral candidates for his company, Air Products & Chemicals Inc. He also made single gifts to Carnegie Mellon nearly every year. Then, a member of CMU’s Office of Gift Planning mentioned the tax benefits and philanthropic impact of a gift annuity.
“I feel my success in my career had a good foundation in my education at Carnegie Mellon,” Tao says. “I think of that when it comes to my philanthropy, I think of Carnegie Mellon first.”
Tao, who retired from Air Products after nearly 34 years as corporate director of technology partnerships, made his first six-figure gift 12 years ago to the College of Engineering after that conversation. His gift established a scholarship endowment in the college — and led to his second significant gift through a charitable remainder trust (CRUT). A gift that provides him with income for life (which he invests back into the trust), Tao’s CRUT will eventually benefit CMU as well as his other favorite charitable organizations.
Tao’s latest gift to CMU was also the result of good advice, this time from his accountant. It turned out that a donor-advised fund (DAF) was the perfect fit for Tao’s financial planning and philanthropic goals. It provides tax benefits for him and his family and offers a great deal of convenience in making gifts and disbursing funds. It was also quick and easy to set up.
“I like to give to CMU, my church and professional organizations. You can do whatever you want with a DAF,” Tao says. “I just go online, and one click and it’s done!”
Tao keeps himself active with consulting as part of his own company, O-Innovation Advisors LLC, the Larta Institute, his family and a new love of pickleball. He’s looking forward to the 50th reunion of the Class of 1970 in 2020, and is already starting to organize his classmates from the Department of Chemical Engineering to give a class gift in honor of the occasion.
Giving That Fits Your Finances and Schedule
A donor-advised fund (DAF) is a giving vehicle that allows you to create a charitable fund and then recommend grants from the fund on your timetable to charitable organizations, like Carnegie Mellon. Many public charities sponsor DAFs, and you can contribute to it with an irrevocable gift of personal assets, including cash, stock and real estate.
If you already have a DAF, make sure you address what happens to your DAF after your death. The sponsor will keep the remainder of your DAF unless you specifically name another charitable organization, such as CMU. Just request beneficiary designation forms, fill them out and return them to your DAF sponsor.
Establishing a DAF can be a tax-efficient way to express your philanthropy, reducing your liability while increasing your impact.
Grow Your Charitable Dollars Tax-Free
Your donor-advised fund can be invested, meaning that, with market growth, your DAF balance increases. While you can take an immediate tax deduction for gifts to your DAF, you will not be taxed on any growth, since the assets belong to the DAF’s charitable sponsor.
Reduce Your Tax Burden in a Windfall Year
If you’re facing an increased tax burden due to an inheritance, business sale or strong market returns, you can take an immediate tax deduction with a DAF contribution. Since you can recommend grants over time, you can pre-fund future giving from a single high-income event.
Eliminate or Reduce Capital Gains
Donations of appreciated property are not subject to capital gains tax. You also receive an immediate tax deduction of up to 30 percent of adjusted gross income (AGI) for gifts of appreciated securities, mutual funds, real estate and other assets, and can enjoy a five-year carry-forward deduction on gifts that exceed AGI limits.