Money given to the tax-deductible gift fund generally comes from alumni and passes to the designated student groups. The FAS tax will start at 5 percent this year and increase to 15 in three years.
FAS currently taxes donations to the gift fund at a rate under 2 percent, according to UC Student Affairs Committee Chair Ryan A. Petersen ’08, a sponsor of last night’s bill.
The UC bill cited Harvard China Care as an example of a group that would be adversely affected by the FAS tax. If the organization received a donation of $15,000 through the gift fund, the 15 percent tax would take away $2250. This money represents two weeks’ worth of basic living necessities for the 35 Chinese orphans the group supports, according to UC member Matthew L. Sundquist ’09, who was a sponsor of the bill.
Along with negatively affecting charity groups, Petersen said, the tax impacts newer students groups, which are less likely to have endowments, disproportionately.
“You’re looking at student groups that have to draw on these gift funds for costs that are necessary for the costs of their administration,” said Charles J. Hamilton ’07, president of Harvard Black Men’s Forum, which uses money donated through the gift fund.
“It really sends the implicit message that the administration is not supportive of student groups that positively enrich the community,” he added.
Petersen said that 24 of Harvard’s older student groups have their own endowments managed by the Harvard Management Corporation and are thus not affected by the tax.
“This exacerbates inequality among groups that arise from the historic inequality [at] Harvard,” Petersen said.
If the tax is not repealed, the Women in Business group will have to look for other ways to receive tax-deductible gifts, said group president Tracy L. Britt ’07.
“Student organizations can get their own non-profit status, but it’s a lot of paperwork,” Britt said. “As a result, it will put more responsibility on a student organization that has high student turnover each year.”
UC members debated contributing the UC’s funds to make up the money taken by the tax—which they estimated would amount to about $20,000 dollars per year—but decided doing so would have a negative long-term impact.
“It will set a precedent that [FAS] can raise taxes as much as they want, and the entire student body will pay for it when this is groups, individuals and their causes that suffer most,” Petersen said.
—Staff writer Margot E. Edelman can be reached at firstname.lastname@example.org.