Scores of Harvard donors have availed themselves of a new option to invest their trusts, totaling over $200 million, with the University’s acclaimed endowment.

The novel arrangement, approved by the Internal Revenue Service (IRS) last September, has already prompted 70 percent of eligible trust holders to make the switch from standard Harvard trusts to investments in higher education’s largest endowment.

Typically invested in relatively benign stocks and bonds, Harvard charitable trusts pay donors a set percentage or amount each year with the total trust going to Harvard upon the donor’s death. By investing in the University endowment, which has posted annual returns well ahead of standard trusts, donors and fundraisers are hoping to maximize benefit for both parties.

“I think the endowment actually offers a higher rate of return for the same amount of risk,” said Jack Meyer, president of Harvard Management Company (HMC), which invests the endowment.

Harvard fundraisers, facing an upcoming University capital campaign, are likely to push the new endowment option as a potential added benefit for donors.

“It may encourage some people to give a little more than they were planning to give, or perhaps give sooner,” said Anne D. McClintock, executive director of University Planned Giving Office.

A full-page advertisement touting the endowment option in the Harvard alumni magazine last month promised, “Greater potential returns for you, your family, and Harvard.”

THE ASTERISK

But while Harvard fund managers insisted the endowment posed no greater risk than ordinary charitable trusts, the endowment’s famously high returns over the past decade could still fade.

“Looking ahead into the future, I think it is logical to say the endowment will do better than an index fund, but it’s not certain,” said David W. Scudder ’57, vice president of trusts for HMC.

And the Planned Giving Office is well-versed in the art of the footnote. As one document notes, “*Past performance is not any indication of future returns.”

The new endowment option is a first in the field of charitable planned giving, and the IRS ruling still applies only to Harvard.

But Scudder said a number of fund managers at other universities had contacted him to express interest in initiating similar programs.

“I think, absolutely, you’ll see other universities looking at this as an opportunity to increase their endowments,” said Andrew C. Schulz, deputy general counsel for the Council on Foundations.

MAKING THE SALE