A couple who CARES How the Middletons utilized the CARES Act to obtain a $5 million federal tax deduction with their gift to UND.

How did you learn about the tax benefits the CARES Act made possible this year?

Tom: I have always followed the financial markets and tax law changes, but the 2020 changes came as a surprise to myself and my close friends. I was working with my financial and tax advisor on how to effectively manage the distribution changes regarding 401(k)/IRAs that took effect January 1, 2020. During this process, the CARES Act was enacted in March of 2020.

You really had to be digging for the few lines that mention 401(k)/IRA distributions – and I was, at the time.

The CARES Act allows cash contributions to a 501(c)(3) public charity such as the UND Alumni Association and Foundation (UNDAAF) to be tax deductible for federal income taxes up to 100% of one’s Adjusted Gross Income (AGI). Previously, cash only contributions up to 60% of person’s AGI qualified as tax deductible. This would allow us to give a significant gift to a charity without federal tax consequences.

Describe the process of working with your tax advisor and the UND Alumni Association & Foundation.

Tom: Our tax advisor was surprised by this discovery because he had never done this before. Konnie and I were committed to making a decision in 2020. We felt that, with the major changes to the tax laws in January and with the CARES Act in March, this was the perfect time to move forward with our donation to UND.

We first connected with (NCoBPA Director of Development) Jay Erickson in June, which led to a campus visit in September. We then met with President Andy Armacost and (first lady) Kathy, Dean Amy Henley, and (UNDAAF CEO) Deanna Carlson Zink. We wanted to find out if the timing was right for UND and if this gift would adequately support the needs of the college. We expressed our vision within the School of Entrepreneurship & Management. After that conversation, we decided that UND was where we wanted to make our donation.

We also connected with UNDAAF’s CFO Nancy Pederson, who confirmed that the CARES Act tax changes would apply to our planned donation. The guidance of Nancy and her team was valuable.

Why did you decide to make UND the recipient of your gift, particularly the School of Entrepreneurship & Management?

We were considering several other philanthropic opportunities, but we kept circling back to our very positive experiences at UND. As we got closer to finalizing our decision, the naming opportunity for the School of Entrepreneurship & Management within the Nistler College of Business & Public Administration (NCoBPA) was a great fit.

Tom: I graduated from UND’s Business School in the early ’70s. The North Dakota spirit has always been one of entrepreneurship, and providing financial support for existing and future students at the school will expand opportunities and employment within the state of North Dakota.

Konnie: I chose to major in Elementary Education to try to make a difference and give students opportunities to succeed. As Dean Henley says, our donation will not just be changing hundreds of lives within UND, we’ll be changing thousands.

Why did you choose to give a gift this large at this point in your life?

Tom: Konnie and I both grew up in a very modest environment, but it has always been important for us to give back. As I look back on my professors and instructors, I thought I received an excellent foundation for an education that prepared me for my future career.

Where many people prefer to wait until the end of their life to give a substantial donation, Konnie and I are excited to see the fruits and labors of the initiative and watch the program grow and expand within the new NCoBPA.

What advice do you have for others who may want to take advantage of the CARES Act in a similar way?

There are discussions in Washington, D.C. that the current administration may recommend changes to the existing tax laws in 2021. Should a tax increase occur, withdrawals from one’s 401(k)/IRA may be taxed at higher levels. The good news is that the CARES Act and its tax advantages have been extended through the 2021 calendar year. Considering those tax advantages, a cash donation to the University this year can provide a maximum value for both you and the charity you benefit.

We strongly recommend that all those considering a similar contribution consult with their financial and tax advisors.

— Jenn Lukens