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Sigma Delta Chi Foundation
Chapter Scholarship Fund

How many times have your chapter’s fundraising efforts been hampered because donors couldn’t claim a tax deduction for their gifts?

Even though the Society of Professional Journalists is generally exempt from paying Federal income tax as a 501(c)(6) business league, gifts to SPJ and local chapters are not considered charitable contributions and, thus, are not deductible. Only 501(c)(3) charitable organizations — like the Sigma Delta Chi Foundation — can offer donors a tax deduction.

Recognizing this as an opportunity to add real value to the SPJ experience, the Sigma Delta Chi Foundation board of directors is announcing a unique program to allow chapters to create their own special “account” within the SDX Foundation.

Called Chapter Scholarship Funds (CSF), the special funds are designed to allow chapters to solicit tax deductible gifts for scholarships without any of the headaches associated with maintaining a 501(c)(3) foundation.

The set-up process is simple. Chapter leaders execute a letter of agreement with the SDX Foundation and the fund will be established with the receipt of the first gift. All gifts must be made payable to the Sigma Delta Chi Foundation with the CSF name in the memo section of the check. The chapter is responsible for all the fundraising; the SDX Foundation acknowledges all gifts, handles the accounting and provides periodic updates to chapters on their CSF.

Functioning much like a donor-advised fund within a community foundation, the idea behind the CSF is to create a fund that will be sustained in perpetuity. In order to accomplish this, only a portion of the fund — typically five percent — will be made available for scholarships. So you would need to have $10,000 in the CSF to make a $500 scholarship. We can help you create a scholarship application if you don’t have one already. You review the applications and make your recommendation to the SDX Foundation. Once approved, we cut and send the check directly to the recipient’s college or university.

What’s the catch? Five percent of each CSF gift goes to the SDX Foundation for unrestricted use. So for every $100 donated to the SDX Foundation for the Timbuktu Pro Chapter Scholarship Fund, $95 goes into the CSF and $5 goes to the SDX general fund. Exceptions can be made for extraordinary circumstances such as a chapter that already has a fund sitting in a savings account somewhere and wants to transfer it to the Foundation.

In addition, 10 percent of the annual earnings on the CSF are designated for unrestricted use. That’s 10 percent of the total earnings, not the first 10 percent! For example, if your chapter’s CSF has dividends, interest and realized gains of $100 in any given year, $90 goes back into the CSF with the remaining $10 going to the SDX general fund.

You may be saying to yourself, “It seems like the Foundation is taking a pretty big cut for itself.” But consider this: it would cost a chapter several thousand dollars to set up its own 501(c)(3) charitable organization, not to mention the time and expense associated with maintaining it. The Internal Revenue Code spells out very strict rules by which charitable organizations must abide. Failing to follow these rules could be disastrous for not only the chapter, but also for the donors who may have already claimed a deduction. By using the SDX Foundation, all the hard work is already done. The Foundation subjects itself to a rigorous independent audit each year and consults with tax counsel frequently. All your chapter needs to do is go out and raise the money.

Questions about the Chapter Scholarship Funds? Call 317/927-8000 ext 216 or send an e-mail.