The official minutes of the University of South Carolina Board of Trustees are maintained by the Secretary of the Board. Certified copies of minutes may be requested by contacting the Board of Trustees’ Office. Electronic or other copies of original minutes are not official Board of Trustees' documents.

The Ad Hoc Committee on Advancement of the University of South Carolina Board of Trustees met on Thursday, May 25, 2000, at 10:00 a.m. in Room 107-C of the Osborne Administration Building.

Members present were: Mr. Mack I. Whittle, Jr., Chairman; Mr. Herbert C. Adams; Mr. Toney J. Lister; Mr. Miles Loadholt; Mr. Robert N. McLellan; Mr. J. DuPre Miller; and Mr. William C. Hubbard, Board Chairman. Mrs. Helen C. Harvey and Mr. M. Wayne Staton were absent.

Others present were: President John M. Palms; Secretary Thomas L. Stepp; Executive Vice President for Academic Affairs and Provost Jerome D. Odom; Vice President for Development Charles D. Phlegar; Vice President for Business and Finance John L. Finan; Vice President for Student and Alumni Services Dennis A. Pruitt; Vice President for Human Resources Jane M. Jameson; Vice Provost and Executive Dean for Regional Campuses and Continuing Education Chris P. Plyler; Senior Director for Planned Giving Harriette D. Wunder; Director for Regional Campaigns Charles L. Applebee, III; Director of Development for the Law School Deborah A. Wells; Senior Director of Development J. Cantey Heath, Jr.; Director of Internal Audit Alton McCoy; Director of Public Affairs Russell McKinney; and Media Relations representative Jason Snyder.

Chairman Whittle called the meeting to order and asked everyone present to introduce themselves. Mr. Snyder noted that there were no media present. Chairman Whittle stated that the agenda had been posted and the press had been notified as required by the Freedom of Information Act; the agenda and supporting materials had been mailed to the Committee; and a quorum was present to conduct business.

Chairman Whittle directed attention to the agenda and called on Mr. Phlegar.

1. Bicentennial Campaign Total July 1, 1995 - April 30, 2000 : Mr. Phlegar informed the Committee that the total amount which had been raised in the Bicentennial Campaign as of April 30, 2000, was $283 million.

2. Bicentennial Campaign Fiscal Year Total July 1, 1999 - April 30, 2000 : Mr. Phlegar said that the total amount raised in the first ten months of the 1999/2000 fiscal year was $54 million. This amount exceeded the goal for the current fiscal year of $50 million. The Development Office wanted to raise a total of $300 million by June 30, 2000, to obtain the Bicentennial Campaign goal a full one year ahead of schedule.

   Mr. McLellan questioned the amount raised by the Gamecock Club. When Mr. Phlegar replied that the amount was $6.4 million, Mr. McLellan asked if that total had been raised during the campaign or if it had been transferred. Mr. Phlegar explained that it was the total amount of cash contributions raised by the Gamecock Club during the current year; the Gamecock Club averaged $8 million per year in cash contributions.

3. Law School Update : Mr. Phlegar introduced Ms. Wells and asked her to provide an update on fundraising efforts for the new Law School Building.

   Ms. Wells distributed a document and referred to the time-line in it. When she began working at the Law School in November 1998, she talked with people to determine if such a fundraising project were possible and to identify volunteer leadership. The first Executive Committee meeting for Law School fundraising was held April 1, 1999, and volunteers were currently soliciting gifts of $10,000 and above.

   The building goal of $30 million was to be funded with $15 million from public funds and $15 million from private funds; the current status of both the public and private funds was distributed to the Committee.

   From the public funding side, the first $5 million was received through the 1999 state bond issue and the second $5 million was an item in the 2000 legislative budget as it existed this day (although funding sources differed in the House and Senate versions). There would be a proposal for an additional $5 million to be included in the 2001 legislative budget.

   From the private funding side, there were 52 signed gifts and pledges in hand which totaled $7.65 million. There were another nine verbal commitments in excess of $6 million. Ms. Wells was confident that the $6 million would be realized, but a portion of it might be reserved for the endowment instead of the building. There were currently 70 outstanding solicitations totaling in excess of $22 million, and 54 proposals in excess of $5 million would be presented in the next three months.

   Ms. Wells added that she had been in higher education fundraising for 15 years, and she had more pride in this project than any other in which she had been involved. She commended the volunteers and especially noted the efforts of Chief Justice Jean Toal who had been a great proponent of the campaign.

   There was discussion of the potential for the legislature to remove the $5 million from the current budget process. The House of Representatives had the $5 million in state appropriations, and the Senate had the $5 million in a Bond Bill. Chairman Hubbard asked how the Trustees could help, and Dr. Palms replied that they should contact the members of the Conference Committee and encourage support for inclusion of the $5 million in the budget.

4. Regional Campaigns : Mr. Phlegar introduced Mr. Applebee and asked him to present the efforts of the Development Office with respect to the Regional Campaigns. Mr. Applebee stated that 27 regional events had been conducted during the previous 18 months. Twelve of the events were held in South Carolina and 15 were held out of the state, from California to New York to Florida.

   Committees had been formulated in all of the regions from a total of 480 volunteers. Approximately 2,500 people had attended these events. It would not have been possible without Dr. and Mrs. Palms, and Mr. Applebee acknowledged their efforts and hard work.

   The next event would be held on June 7 in Washington, D.C. There would be four more events held: 1) Chicago and 2) Nashville in October and 3) Raleigh-Durham and 4) Winston-Salem/Greensboro in November. Events to be held in Columbia and in Lexington county would be planned for spring 2001.

   Mr. Applebee stated that several things had been accomplished. The regional campaigns had been successful in marketing and letting people know the exciting and important things happening at the University, and a great many new prospects had been uncovered. This had been a great beginning, and the University needed continually to cultivate the prospects.

   Approximately 60 percent of the 480 committee members had made a gift to the University. The Development Office would focus on the remaining 40 percent and on the individuals suggested as prospects by the committee members. Major potential donors, capable of at least a $100,000 gift, were identified and would be examined closely.

5. Fall Campaign Committee Meeting - Saturday, September 9, 2000 : Mr. Phlegar stated that there would be one additional meeting of the campaign leadership on Saturday afternoon, September 9, 2000. During the meeting, the current status of the campaign would be reviewed and the 12 month plan would be presented. The campaign leadership would be asked to help with certain key gifts that had not yet closed.

6. July 2000 - June 2001 : Mr. Phlegar explained that the Bicentennial Campaign would officially end on June 30, 2001.

   1. Focus : Mr. Phlegar said that he and Dr. Palms would meet within 30 days to review 50 key prospects who have the ability to give at least $1 million each to the University. Ten of those 50 prospects had the ability to give $5 million each to the University. A specific strategy would be developed to detail the way in which each of those ten would be solicited.

   2. Bicentennial Celebration : The celebration of the University of South Carolina's Bicentennial would be very important to the success of the Campaign. Everyone would be given an opportunity to make a contribution to the University 's Bicentennial Campaign either through telemarketing, direct mail, or the Internet.

   Mr. Phlegar projected that the Campaign would reach the goal of $300 million by June 2000, one year ahead of schedule.

7. Report on Bequests and Charitable Reminder Trusts : Mr. Phlegar recognized Ms. Wunder. She distributed a document that outlined three types of opportunities for planned giving . Ms. Wunder said that there was much discussion of saving taxes, charitable deductions, etc., but it was her experience that those advantages did not make people give money. People donated because they loved the institution and its people.

   The first type of planned giving that she addressed was the "charitable gift annuity." It was an option when someone donated directly to the Educational Foundation and the Foundation committed to pay an annuity to the donor and/or donor's spouse for the remainder of the donor and/or spouse's life. The Foundation was used in order to make direct payments to the respective donors.

   The rate of the annuity was determined by the Committee on Gift Annuities. That group set rates based on actions of other charities. Rates were set for every age and differed depending on whether or not a spouse was included. The rates were changed, usually in spring. The Foundation chose to use the Committee rates, but it was not required to do so.

   In addition to the payments of the annuity during the donor's lifetime, the donor also received a charitable deduction of 30 to 35 percent of the value of the gift. This type of gift annuity was originally established for small gifts of $10,000 to establish a small endowment when the donor could not forfeit the income.

   The second type of planned giving was the "charitable remainder trust." It was similar to the annuity in that it was an option when someone donated directly to a trust and the trust paid income to the donor and/or donor's spouse for the remainder of the donor and/or spouse's life. The trust could either be within the Foundation or not, but there must be a payment of at least five percent. The present value was ten percent of the fair market value.

   Such a trust was ideal with appreciated assets. The trust could take the assets and diversify without having to recognize capital gains. The donor and/or donor spouse would receive an income stream for life without having to pay taxes on capital gains, and t he University would ultimately receive the assets. The University also requested of the individuals to donate a portion of the income for an additional tax deduction.

   The third type of planned giving was the "lead annuity trust." It was the exact opposite of the remainder trust. It was an option when someone donated directly to a trust, and the trust paid income to the University for a period of time. The assets either returned to the donor or to the donor's children or grandchildren.

   By the year 2007, every couple would be able to leave an estate of approximately $2 million without taxes. For people with very high net worth, estate taxes would be in the range of 55 percent. The percentage of the deduction was based on the number of years the income was paid. For example, to claim 100 percent deduction, the income would need to be paid to a charity for 18 to 20 years, which would yield an approximate nine percent payment amount. Afterward, the assets of the trust would be transferred to the children or grandchildren, absolutely tax free.

   Ms. Wunder also mentioned retirement plan assets as gifts. There was a bill pending in Congress that would allow a person to name a charity as the beneficiary of his/her retirement plan. There would be no charitable deduction, but there would also be no taxes. Currently, retirement benefits were not only subject to estate taxes if part of a taxable estate but also subject to income taxes. In South Carolina, it was possible to have 75 to 80 percent of retirement benefits lost to estate taxes and income taxes.

   Mr. Phlegar added that although there was a great need for cash donations, it was not in the best interest of some people with high net worth to give cash. Often, they donated through such planned giving vehicles, and their contributions would benefit the University many years later.

   In response to a question from Chairman Whittle, Mr. Phlegar replied that there were many needs at the University and the Development Office was only a portion of the solution. The University needed to articulate to a larger group of people the message of why the goal to achieve membership in the American Association of Universities (AAU) was so important.

8. Other Matters : Joint Resolution by Research Universities : Mr. Hubbard noted that there had been informal discussion among trustees of South Carolina's major research universities to determine a way to work together to make sure the institutions were funded in an appropriate fashion to meet their goals. The trustees were working on proposed language for a draft resolution that could be considered by MUSC, Clemson, and USC to make a strong statement about cooperation and the need for South Carolina to support major research universities.

   Mr. Hubbard anticipated that within the next two or three months, there would be the opportunity to make a joint statement of cooperation in a way that would have a major impact among policy makers in the state to support the institutions. He would keep the Board apprized of the progress.

When there were no other matters to come before the Committee, Chairman Whittle declared the meeting adjourned at 10:48 a.m.

Respectfully submitted,
Thomas L. Stepp
Secretary