HODAG TRUST FUND

After discussing this for a few years, some of the alums finally got around to investigating getting an official charitable fund set up for the team. There are a couple of advantages to doing it this way. One, the alums can now contribute to a charitable organization and get a tax deduction for all donations. Two, the fund is professionally managed so no one has to worry about handling the finances and taxes. Three, since it's tax deductible, the alums should be able to donate a little more, which will help out the team.

However, there is still one issue on which I could use some input. There are basically two ways to have the fund set up. One, everything that is donated within the year is distributed that same year, much like we do now. Two, we spend a couple years building up the principal, and then only the interest is distributed to the team each year.

For option two, you can assume that 4.5 - 5% interest will be distributed to the team every year after we reach the initial level of $10,000. The UW Foundation estimates that they will get a return of approximately 10% every year. Of that, 1% goes to their maintenance costs. The remaining 4% is reinvested in the fund to battle inflation. So after we meet the initial amount, the fund becomes essentially self-sustaining. Of course, the principal has to grow to a rather large amount before it really becomes a benefit to the team. And if we never get the principal up to a large amount, we can convert it to the full annual distribution at any point.

I created the poll below to get a sense of what people think will be the best option. The poll is open for the next week.