Gift Allocation Fund

Restricted gifts are designated by donors for specific programs, departments, or initiatives.

Beginning June 1, 2026, five percent of every restricted gift to Luther College will be directed to an operational administrative fund (called the Gift Allocation). This modest allocation ensures we have the resources, systems, and staff needed to implement restricted gifts effectively.

Restricted gifts—those designated by donors for specific programs, departments, or initiatives—are essential to advancing Luther’s strategic goals. However, the true cost of managing these gifts is often underestimated. The allocation supports the necessary behind-the-scenes work—such as gift processing, reporting, stewardship, financial management, and oversight—that allows Luther to administer generous restricted gifts with excellence and accuracy, without placing additional strain on the college’s operating budget.

The Gift Allocation strengthens Luther’s operational and business model, which makes all of this possible. In short, it helps us:

• Steward gifts responsibly.
• Sustain programs long-term.
• Strengthen long-term fundraising capacity.

• 95% of your gift will go directly to the fund or program you designate.
• 5% will support the essential systems, services, and staff needed to implement this gift through the Gift Allocation Fund.

Example: A $1,000 gift to the Torgerson Center for Nordic Studies will allocate $950 to the center and $50 to the Gift Allocation Fund.

If you want to ensure a specific round-dollar amount goes to your designated program, you can increase your gift slightly. For example, to ensure $1,000 supports your chosen program, divide $1,000 by .95. The total gift would be $1,052.63.

• 100% of every gift supports Luther College.
• This policy does not change how your gift is treated for tax purposes.
• This policy does not change your donor recognition level.
• Gifts to the Luther Fund, the Norse Athletic Association, and gifts toward Luther-owned life insurance policy premiums are not affected by this policy.

Endowment levels—the principal at which a fund is fully endowed—have not changed.

If you would like to ensure that a round-dollar amount go to a particular program or fund, you can divide the dollar amount by .95 to come up with the total contribution needed to accomplish this goal.

For example, if you want to establish a Vision Scholarship (which is fully funded when the principal reaches $80,000), the required contribution will be $84,211. Luther Advancement encourages an $85,000 gift to establish this scholarship.

Going forward, planned gift conversations will also include information about Luther’s Gift Allocation. The Gift Allocation will be explained to donors who document an estate gift after June 1, 2026, though board-designated planned gifts are exempt from the Gift Allocation.

For previously documented estate gifts, donors will be given the choice whether to opt in when their gift matures through one-on-one conversations. If a donor of a previously documented planned gift has not opted in, the allocation will not be applied.

For irrevocable planned gifts, such as Charitable Gift Annuities or CRUTs, the five percent gift allocation will be recognized at the time of maturity for irrevocable planned gifts established after June 1, 2026.

This policy ensures your gift has the maximum impact. By supporting Luther’s administration of its restricted gifts, you are also:

• Covering the essential costs that bring your gift to life.
• Helping Luther sustain your area of interest for years to come.
• Strengthening the college’s ability to invest strategically and respond quickly to new opportunities.

Exceptions are limited to:

• Payments made on documented pledges and matured planned gifts established before June 1, 2026.
• Gifts from private foundations where the governing policies prohibit such an allocation.
• Donations towards Luther-owned life insurance policy premiums.
• Gifts to the Luther Fund, the Norse Athletic Association, and board-designated planned gifts are not affected by this policy.

All other exceptions will require review and approval by both the vice president for advancement and the vice president for finance and administration, and would be granted in the rarest of circumstances. Presidential approval is required for any exceptions over $1 million.

Note: Gifts from donor-advised funds are not exempt.

Yes. This approach has been in practice for years by many universities and public colleges across the country, and is becoming increasingly common among small, private colleges as well. Gift assessments from our peers range from 4% to 14% annually.

If you have questions about how the Gift Allocation works or how it affects your giving, please contact Allie Scott at 563-387-1100 or another member of our team.