Donor Stories
Robert F. Donegan
In 2002, Bob Donegan, IM 1947, funded a charitable gift annuity with the Georgia Tech Foundation to provide future support for Georgia Tech and an income stream for himself during his retirement. But this Founders' Council member was just getting starting with his gift plan for Tech.
Nearly twenty-six years ago, Bob and his brother, Stan, purchased a piece of property in Forest Park, Georgia to use in conjunction with their wholesale fencing company. Later, when the company moved, the Donegan brothers leased the real estate to another business for several years.
"We knew there would come a time when we wanted to sell this property, and the capital gains tax had always been a concern," says Bob. "The property appraised for much more than we paid for it. We had also taken depreciation on it as a commercial enterprise, so our cost basis was even lower than the purchase price. We were facing a significant capital gains problem."
At the same time, the brothers were looking for a way to provide an income stream for Bob Donegan's daughter. A charitable remainder unitrust funded with the real estate has allowed the Donegans, both of whom are now retired, to divest themselves of the property without having to pay capital gains tax. And now that the property has sold, the trust will pay income to Bob's daughter for the rest of her life.
The gift vehicle that the Donegans used is a hybrid of two different types of charitable remainder trusts. While the trust is holding non-income-producing real estate, it is a "net-income" charitable trust, meaning it pays out either a fixed percentage of the value of the trust assets or the net income the assets produce, whichever is less. After the real estate sells, the trust converts to a "straight" trust and pays a fixed percentage of the value of the trust assets. The trustee can then invest in a balanced portfolio of equities and fixed income instruments, with an eye toward growth and income. This arrangement is called a "flip" trust.
When the trust terminates, the proceeds will go to the Georgia Tech Foundation for the Robert F. and Patricia G. Donegan Endowment Fund to provide unrestricted support for the Institute. The remainder of Bob's gift annuity will also be directed to this endowment fund. These unrestricted funds will enhance the Institute's ability to respond to its future most pressing needs and to take advantage of new opportunities.
Not only have his gifts to Tech brought Bob Donegan financial benefits, but also they have given him personal satisfaction in the form of helping future generations of Tech students get a world-class education. "I love Georgia Tech and I'm happy to be able to contribute to the Institute," he says. "Tech gave me a great career start. I will always be grateful for that."
