Extended CARES Act provision creates unique giving opportunity

Peter Cella (FIN ‘79) is one of a number of Gies College of Business alumni electing to use an extended provision from the wide-ranging Coronavirus Aid, Relief and Economic Security (CARES) Act to take a charitable deduction in the amount of their cash gifts up to 100% of their adjusted gross income (AGI) in 2021. The provision was designed to encourage giving to qualified charitable institutions during the pandemic, and it expires at the end of the year.

“I think of myself as a stakeholder in the future of Gies College of Business, and the CARES Act gives people a big reason to act now. It creates an opportunity to make a larger, faster impact at Gies that will have no negative tax ramifications,” said Cella, who formerly was president and CEO of Chevron Phillips Chemical Co. and now is a non-executive board member for several companies.

The University of Illinois Foundation (UIF) fits within the CARES Act guidelines, and a cash gift can be directed to UIF for the benefit of Gies, according to Jason Shuba, a UIF Director of Gift Planning. He also notes a unique opportunity to make the most of the cash-gift election provision via retirement assets:

“If your financial advisor thinks it’s beneficial for you to elect the 100% AGI cash-gift deduction, you can liquidate unneeded retirement account assets this calendar year. You can then donate the liquidated amount to UIF for the benefit of Gies, making a bigger impact at the College than you otherwise thought possible and receiving a unique tax benefit in return,” said Shuba, who added donors must be older than 59½ and itemize their tax deductions.

Thinking about this opportunity in action, let’s assume Gies alumnus Illini Ike is 63 years old, will make $200,000 in adjusted gross income this year, is interested in creating a new $250,000 endowed-scholarship fund at Gies, and has $500,000 in retirement account assets inessential to his wider retirement plan. Ike can withdraw $250,000 from his retirement account and donate that money to UIF for the benefit of his new Gies scholarship fund. Ike’s withdrawn retirement assets count as income and raise his 2021 AGI to $450,000, but, since he elects the 100% cash-gift deduction and donates the withdrawn $250,000, he’s able to deduct the entire donation against his AGI, leaving him back with his original $200,000 of taxable income.

Cella chose to pursue this strategy to donate to the new building fund. With plans to be located between the Business Instructional Facility and Huff Hall, the new building will be a shared south campus resource that will expand the Gies footprint on campus and improve its online capabilities.

“This building is really going to up the ante for the College’s studios and the iMBA program that’s becoming increasingly global,” said Cella, whose wife Karolyn (LAS ‘80) and daughters Monica (ACES ’11) and Andrea (ENG ’15) are also University of Illinois graduates. Andrea is a graduate of engineering’s joint technology management program with Gies.

“Whether contributing to a building fund or creating a scholarship for experiential learning,” added Cella, “giving to Gies is an important way for help students and our future alumni have an impact on the world.”

The University of Illinois Foundation does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.