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Spring 2008

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News and Information from Harvard University Planned Giving

Amid the turbulence and uncer- tainty in the financial markets, I want to share with readers some thoughts about what we at Harvard Management Com-pany (HMC) expect in the year ahead and the general strategies we are using to best position the University’s trust assets.

The markets performed well for the first half of 2007, capping an exceptional run during the previ-ous five years. The endowment enjoyed outstanding results over

that timeframe, including a 23 percent return in the fiscal year ending June 30, 2007. For donors who have charitable trusts invested in the endowment option, this has meant that their trust market values have grown significantly, as have their quar-terly income payments.

In previous communications, we have noted that these high returns would be unlikely to persist, and that future returns will be muted. The volatility of the markets over

ALSO IN tHIS ISSUe

Window of Opportunity for Lead Trusts

Charitable Remainder Trust Performance

How to Make a Bequest to Harvard

Family, Finance, and Philanthropy Dinners

New Staff Announcements

A View to the Future Luncheon

HMC’s Outlook on the Financial MarketsBy Jennifer Pline, Managing Director, Harvard Management Company

GiftStrategies

Jennifer Pline

John F. Shelley and Patricia Burgess

Endowment Charitable Remainder Trust to Honor Donor’s Parents

John F. Shelley AB ’65, LLB ’68 remembers opening volumes in Widener Library as an undergraduate and noting the bookplates carrying the names of alumni.

“I recall seeing those bookplates—some over a hundred years old and thinking that it was a charming way to memorialize someone.” In 1987, Shelley established a book fund at Harvard, and as a result, his family’s name has been appearing inside books in the Harvard College Library ever since.

As a trust and estates lawyer, Shelley felt inclined to make a planned gift to sup-plement that book fund. Last year, he established a charitable remainder unitrust (CRUT) that is invested with the Harvard endowment. The trust offers him quarterly income for his and his wife’s lifetimes, and ultimately the corpus will support the John D. and Catherine H. Shelley Book Fund, honoring his parents.

“I’m always telling my clients to go ahead and do a life income gift. In the end, it may provide more money for charity, and it will give you a current tax benefit in addition to the income,” says Shelley. “It’s a different experience when you’re doing it, and it’s your money,” he says. “But I worked with Harvard to make a sensible

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SPRing 2008 SESSiOnS

nEw YORk CiTY

Tuesday, March 25, 2008

Harvard Club of New York 35 West 44th Street New York, NY

Speakers

Charles Collier Senior Philanthropic Adviser Harvard University

Anne McClintock Executive Director Harvard University Planned Giving

Jennifer Pline Managing Director Harvard Management Company

Hosts

Edward B. Dunn AB ‘58, MBA ‘62 and Giovannella Dunn

Richard W. Kislik AB ‘48, MBA ‘49 and Audrey Gerber Kislik AB ‘49

James S. Marcus AB ‘51, MBA ‘53 and Ellen F. Marcus

TOROnTO

wednesday, April 16, 2008

Fairmont Royal York 100 Front Street West Toronto, ON, Canada

Speakers

Charles Collier Senior Philanthropic Adviser Harvard University

Alasdair Halliday Senior Associate Director Harvard University Planned Giving

Jennifer Pline Managing Director Harvard Management Company

Host

Roger Martin AB ’79, MBA ’81 Dean of the Joseph L. Rotman School of Management at the University of Toronto

Dinner and discussion on

Family, Finance, and Philanthropy

Join us to learn about family wealth and governance, the management

of Harvard’s endowment, and charitable planning techniques that can

benefit you and your family and help you meet your philanthropic goals.

If you are interested in having a program in your area, please let us know.

We welcome the opportunity to host these discussions. Please call Jane

Verrill at (617) 495-9421 for more information.

1. Walton H. rawls AB ’55, Maria Wilson and Brenda rawls 2. Sydney Costigan Cotton and roger J.C. Meyer MpH ’59 3. Connie Hungate and Daniel Hungate LLB ’64 4. Host John A. Wallace LLB ’63 and Wana L. Duhart MDV ’96

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the last few months has provided us with a powerful reminder that mar-kets can and do go down. However, given the long time horizon for planned gifts and a carefully diversi-fied portfolio, we are confident that the long-term gains for the endow-ment and trust assets will be solid.

Looking ahead to the remainder of 2008, we expect the economy to experience slow growth, with the possibility that we will enter a reces-sion during the second quarter. The impact of the difficulties in the credit markets combined with a down-turn in the housing market and tight credit conditions will likely continue well into 2008, and we will probably see consumer spending decrease as labor markets weaken. We anticipate a reduction of inflationary pressures despite high commodity prices, espe-cially for oil and food, which are driven by demand from China and India. A weaker dollar should fuel healthy growth in exports.

The Fed’s recent actions to lower interest rates significantly had a tem-porarily positive impact, yet it will take more than Fed action to improve the current tone of the markets. However, if the world’s central banks also cut their rates aggressively, that may fuel stronger global demand and economic growth.

Bearing these factors in mind, we have implemented a well-diversified asset allocation across various asset classes that we believe will deliver superior returns over the long term. We are opting for ample global expo-sure as well as a higher fixed income component. In an environment of slowing economic growth and rising inflation, we find it effective to turn to real assets such as Treasury Inflation Protected Securities (TIPS). We also look to optimize access to commodi-ties and other hard assets.

HMC is fortunate in having endow-ment managers with expertise in and access to a wide variety of asset classes that can be difficult for individual investors to tap into. Sectors such as timber, hedge funds, private equity, and infrastructure investments are

attractive not only for their return potential but also for their beneficial diversifying effect on the portfolio.

As we navigate the choppy waters in the financial markets, HMC’s interim CEO, Robert S. Kaplan, is at the helm, effectively leading our organi-zation. A faculty member at Harvard Business School and former vice chair at Goldman Sachs, Rob is well equipped to head up HMC at this transitional time.

By focusing on the fundamentals of investing and planning for long-term success, we are optimistic about uncovering opportunities and delivering results that will ultimately advance Harvard’s mission. Your charitable gifts remain in skilled hands and are sure to make a differ-ence to the work of the University for generations to come.

HMC’s Outlook (Continued from page 1 )

“ We are opting for ample global exposure as well as a higher fixed income component.”

J E N N i F E R P L i N E

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window of Opportunity for Lead Trusts Savvy Planning for Charity and Family

With interest rates low, now is a good time to consider a charitable lead

annuity trust (CLAT) as part of your planning for your family and charita-

ble organizations you care about. The CLAT enables you to fund annual

gifts to charity over a set term of years, after which the trust assets

revert to your children with minimal, or no, gift and estate tax owed.

Below are projected results of a 6.5 percent CLAT funded with $1 million,

paying $65,000 per year for 20 years to Harvard, as compared with a

bequest. An 8 percent average annual investment return on the assets

in both scenarios is assumed.

6.5% CLAT BEquEST

Starting Principal $1.0 million $1.0 million

Taxes $50,000 $2.7 million

Future Gift to Children $1.6 million $1.5 million

Gift to Harvard $1.3 million $0.0

Harvard Endowment Charitable Remainder Trust Can Pay You income for Life

The chart below shows how a charitable remainder trust invested in

the Harvard endowment 10 years ago would have performed. The other

two lines show the 10-year S&P 500 performance and the performance

of the Trust Universe Comparison Service (TUCS). TUCS is the most

widely accepted benchmark for the performance of institutional assets,

tracking funds with the assets greater than $1 billion.

For more information on how a Harvard charitable remainder trust

can benefit you and your family, contact University Planned Giving at

(800) 446-1277 or pgo@harvard.edu.

University Planned Giving Notes

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“ I give ( dollars/ percent or all of the residue of my estate) to the President and Fellows of Harvard College, a Massachusetts educational, charitable corporation, for the benefit of (School/Affiliate).”

if you would like assistance in making a

more specific bequest, please contact

University Planned Giving professionals at

(800) 446-1277 or pgo@harvard.edu.

We will be happy to help you draft language

so that your gift is used as you intend. if you

have already made a bequest provision for

Harvard, we thank you for your thoughtful and

generous support! Please let us know about it

to ensure a smooth transfer process for the

gift from your estate to Harvard in the future.

How to Make a Bequest to Harvard universityLeaving a bequest to the University is easy—simply include the following language in your estate plan:

nEw STAFF AnnOunCEMEnTS

We are delighted to announce the newest members of our staff!

Doug nannene AB ’05 Gift Processing Coordinator

Doug is no stranger to planned giving, as he comes to us from the Faculty of Arts and Sciences planned giving team. Doug is a grad-uate of Harvard College and currently serves as a non-resident freshman adviser for the College.

in his new role, Doug assists donors with the transfer of their gifts to Harvard and prepares gift documentation.

Jenny Moniz Staff Assistant

Jenny is a graduate of Brown University, where she concentrated in sociology with a focus on social economics. Along with various other responsibilities, Jenny assists in planning our dinner discussions on Family, Finance, and Philanthropy.

uPg PROMOTiOnS

We are also delighted to announce several promotions within the department!

Al Halliday AB ’82 has been promoted to Senior Associate Director

kara Morin has been promoted to Deputy Director

Ericka webb EdM ’01, has been promoted to Associate Director

Jane Verrill has been promoted to Development Coordinator

Doug nannene Al Halliday

Jenny Moniz Kara Morin

Ericka Webb

Jane Verrill

A View to the Future, A Celebratory LuncheonNovember 7, 2007

A University Planned Giving luncheon at the Harvard Club of New York City brought together alumni and friends who have

provided for Harvard through their estate plans, life income gifts, or other planned gifts. The morning session included

a welcome from host Michael A. Cooper AB ’5,7 LLB ’60; remarks by James F. Rothenberg AB ’68, MBA ’70, University

Treasurer and Member of The Harvard Corporation, and Chairman, Harvard Management Company (HMC) Board of Directors;

and an update from Mohamed El-Erian, former President and Chief Executive Officer of HMC, and Jennifer Pline, Managing

Director of HMC. The luncheon program began with a welcome from Tamara Elliott Rogers AB ’74, Vice President for Alumni

Affairs and Development. Host Richard L. Menschel MBA ’59 introduced our speakers: Brock C. Reeve MBA ’88, Executive

Director of the Harvard Stem Cell institute, and Amy Wagers, Assistant Professor of Pathology at Harvard Medical School,

who led a thought-provoking talk about stem cell research.

1. Host Michael A. Cooper AB’57, LLB’60 2. Kenneth Foran MpA’71, Denis C. Yang and Kathleen Mao Yang AB’56 3. Edward B. Dunn AB’58, MBA’62 and Host paul M. Weissman AB’52 4. Andrea H. Lambrinides MpA’74 5. Host David E. Moore AB’45, Joel post AB’89 and george post AB’45 6. Speaker Amy Wagers, Assistant professor of pathology at Harvard Medical School

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Trust to Honor Donor’s Parents (Continued from page 1 )

projection of the long-term economics on the transactions. And although nobody can guarantee results, I got over my financial anxieties when I saw what our income stream may be and what Harvard may ultimately receive. It was also clear that establishing the trust was an effective means of diversifying an investment portfolio in a tax-efficient way. I thought of this as an investment for my future and my wife’s future—and, at the end of the day, a significant gift to Harvard as well.”

An Iowa native who lives in Cleveland with his wife, Patricia Burgess, Shelley initially thought of establishing and investing the CRUT on his own. “Then I wondered, who is likely to produce the best investment results over the next thirty years, John Shelley or Harvard University?” In addition to the strong track record of the endowment, the tax reporting and accounting that Harvard Management Company furnishes at no fee provided further incentive to make this gift.

Most important, however, was Shelley’s commitment to giving to Harvard. “A great deal of my success and my enjoy-ment of life is attributable to my experience at Harvard, particularly as an undergraduate,” he says. “I long felt that I should recognize that with a meaningful gift back to the College.”

When Shelley initiated his book fund, he decided to enable the library to determine how to use the gift. They had a need for Scandinavian resources and have directed most of Shelley’s funds toward purchasing books from that region. Coinciden-tally, Shelley has some Nordic ancestry, so he was pleased.

Making the decision to establish a planned gift, in the end, turned out to be easy. “My wife and I have both wanted to make significant charitable gifts as part of our estate plan-ning,” says Shelley. Burgess has been supportive of the gift, honoring her husband’s ties to Harvard, love of books, and penchant for bookplates. Yet, as the library increases its online holdings, Shelley wonders if bookplates will be a thing of the past. Regardless, his gift will benefit generations of future students at Harvard by offering the academic resources they need.

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U.S. POSTAGE

PAiD

Nashua, NhPermit No. 375

University Planned GivingHarvard University124 Mount Auburn StreetCambridge, Massachusetts 02138-5795

How to Reach Harvard’s Planned giving Professionals

University Planned Giving (617) 495-4647 Anne McClintock

Harvard University (800) 446-1277

124 Mount Auburn Street (617) 495-8130 (fax)

Cambridge, MA 02138-5795

Email: pgo@harvard.edu

internet: http://post.harvard.edu/pgo

Business School (617) 495-6027 Edward Buckbee

Harvard College, GSAS (617) 495-4352 Peter Kimball

Medical School (617) 384-8449 Mary Moran Perry

(800) 922-1782

Law School (617) 496-9265 Charles Gordy

Senior Philanthropic Adviser (617) 495-5218 Charles Collier

university Planned giving professionals

can help you develop gift plans for

any part of the university, including the

following Schools and Affiliates:

School of Dental Medicine

Graduate School of Design

Divinity School

Graduate School of Education

School of Engineering and Applied Sciences

Extension School

Kennedy School of Government

School of Public Health

Radcliffe institute for Advanced Study

Arnold Arboretum

University Art Museums

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American Repertory Theatre

Other Harvard Affiliates