Gift Acceptance and Valuation Policy
GIFT ACCEPTANCE AND VALUATION POLICY
Attached is a copy of the proposed Loyola University of Chicago ("the University) Gift Acceptance and Valuation Policy.
The purpose of this document is to give the University a standardized procedural approach to fundraising and the valuation of gifts. All members of the University community are expected to know and follow the policies, procedures and guidelines contained in this document. Therefore, all members of the University community should become familiar with its contents.
Three key points should be emphasized:
- All members of the University community are expected to clear any and all formal and/or informal gift solicitations with the President of the University or the Vice President for Advancement of the University, or their designee, prior to making any such contact with current or prospective donors (this includes individuals, corporations, foundations and government bodies).
- If, on behalf of the University, any member of the University community receives any gift to the University (including but not limited to cash, checks, securities, property, or other items) it is essential that the University Development Department be notified immediately. It is also essential that all letters, certificates, or other documents relating to such gifts, including the envelope in which it arrived with post-marks intact, be saved and forwarded to the University Development Department. This is to ensure that all gifts are credited to the appropriate University account, and to further ensure that the University complies with all legally mandated gift acknowledgement procedures.
- If you have any questions or are in doubt about a particular point, please contact the University Development Department.
Thank you for your cooperation.
TABLE OF CONTENTS
- Categories of Giving Commitments
- Major Policy Concerns
- Board Acceptance of Gifts and Grants
- Consistent with Mission
- Prior Approval
- General Procedure
- Review of Legal Arrangements
- Donor Legal Representation
- Finder Fees or Commissions
- Professional Fees
- Unacceptable Gifts
- Gift Acknowledgement and Stewardship
- Gift Credit
- Gift Recognition
- Conflict of Interest
- Conformity to Federal and State Laws
- Gift Valuations
- Required Reporting of Gifts to the IRS
- Gift Acceptance Guidelines
- Outright Gifts
- Estate Gifts
- Deferred Gifts
- The University as Trustee and Investment of Charitable Trust Assets
- Charitable Gift Annuities, Pooled Income Funds and other Deferred Giving Arrangements
- Gift Valuation Guidelines
- Establishing Date of Gift
- Establishing Value of Gift
- Gifts in Kind
This Gift Acceptance and Valuation Policy is to give guidance and counsel to those individuals within Loyola University of Chicago ("University") community, including the Stritch School of Medicine, concerned with planning, promotion, solicitation, receipt, acceptance, application, and disposition of charitable gifts. All gifts are to be accepted in accordance with the policy statements set forth herein.
To prevent misunderstandings and conflicts, University gift guidelines must be carefully drawn, adequately publicized and impartially applied to the fullest extent possible. However, some degree of flexibility must be maintained since some gift situations will be unforeseen, and proper decisions can be made only after careful consideration of all related factors. These policies may, therefore, require that the merits of a particular gift be considered by the appropriate officers and/or involved persons of the University along with the Board of Trustees of the University ("Board of Trustees") and the University's Office of the General Counsel ("Office of the General Counsel") if necessary.
It is intended that this Gift Acceptance and Valuation Policy shall apply prospectively from the date of adoption by the Board of Trustees. Gifts accepted prior to this date are not subject to the polices set forth herein. Any gift acceptance or valuation policies adopted prior to that date are deemed superseded by the policies set forth herein.
The Board of Trustees, through its Advancement Committee ("Advancement Committee") along with the President of the University ("President") and the Vice President for Advancement of the University ("Vice President for Advancement") are responsible for the girt policies of the University.
All gifts offered to the University will be seriously considered by the University.
All gifts accepted by the University will utilize charitable giving procedures that conform to federal and state laws and regulations.
This Gift Acceptance and Valuation Policy shall be reviewed by the Advancement Committee on an annual basis or as circumstances warrant, and they shall recommend any revisions to the policy to the Board of Trustees for approval.
II. CATEGORIES OF GIVING COMMITMENTS
The overall fundraising program at the University consists of three basic categories:
- Annual gift support is either unrestricted or restricted to a specified program for current operations.
- Support for special projects provides expendable funds for donor specified projects over and above current operations.
- Restricted for capital purposes are subject to specific restrictions as to the application and use of the gift (principal and its income). e.g. endowment. It is recommended that all gifts received for restricted or endowment purposes will be accepted only on the condition that should the purpose for which the funds are provided cease to exist, the University shall allocate the funds to purposes as near as possible to the original intent of the donor, as determined by the President of the University.
For purposes of this "Gift Acceptance and Valuation Policy", a "donor" shall be defined as any individual, partnership, corporation, foundation or other legal entity that makes a charitable gift to the University, regardless of amount or type of gift.
* Please also see Gifts_Vs_Grants10-14-08_.pdf
III. MAJOR POLICY CONCERNS
- Board Acceptance of Gifts and Grants*: The Board of Trustees shall, through the Chairman of the Board of the University, the President, or anyone to whom the President may delegate in writing, accept philanthropy to the University. Philanthropy is defined as an act of goodwill to mankind. However, any philanthropy which requires the expenditure of University funds in any amount which exceeds $500,000 in excess of the gift shall require approval by the Board of Trustees of Trustees.
- Consistent with Mission: The President shall determine that all gifts and grants to the University are in accord with the stated mission and goals of the University.
- Prior Approval: The President shall determine that all philanthropic solicitations are coordinated through either the pre or the Vice President for Advancement, or their designees.
- General Procedures: With increasing competition for gift dollars in higher education, it is essential that the University make every contact with prospects and donors meaningful and appropriate. The University must be sensitive to the interests and capabilities of its donors and donor prospects and must not burden them with excessive or inappropriate solicitations.
To help ensure effectiveness with the University fundraising efforts, the following guidelines will be followed.
- The Development Department of the Advancement Division ("Development Department"), under the direction of the Vice President for Advancement, and with the consent and guidance of the Advancement Committee and the President, is charged with the responsibility for soliciting all gifts on behalf of the University.
- Funds will be sought only for general support or for projects and capital purposes that are fully documented and approved by the Advancement Committee and the President.
- The University, through its Board of Trustees and President, shall establish priorities for special projects or programs for which funding is sought. All special projects will be presented for review to determine the best possible sources of funding as determined by the Development Department.
- To avoid any donor embarrassment caused by multiple appeals, the solicitation of all gifts must be approved by the Vice President for Advancement. Solicitations of gifts may be initiated by a department outside of the Development Department only with the prior written approval of the Vice President for Advancement.
- Any University employee who receives a gift on behalf of the University must so notify the Development Department. Due to the need to provide donors with a written acknowledgement of their gift in a timely manner, any University employee who receives a gift must notify the Development Department on the date of receipt, or if such notice is impractical, by the first business day following receipt of the gift. Unless otherwise directed by the Development Department, any such gift must be immediately forwarded to the Development Department for proper processing. It is also essential that all letters, certificates, or other documents relating to such gifts, including the envelope in which it arrived with post-marks intact, be saved and forwarded to the University Development Department.
- Files, records and mailing lists regarding all donors and donor prospects are maintained and controlled by the Development Department. Maximum use will be made of information and contacts that members of the Board of Trustees, various volunteer groups, the faculty or the administration have with potential donors. Written reports of interviews and solicitations will be maintained in the donor prospect file and/or computer. All donor information should be considered confidential and will be maintained and utilized for fundraising purposes only, including donor acknowledgment and donor recognition. If a question arises as to whether specific donor information should be disclosed to a source outside of the University (information which is not generally available to the public at large), the prior written consent of the donor should be obtained, unless the information is otherwise required to be disclosed by law.
- Mailing lists will be made available after the Vice President for Advancement or his/her designee has determined that the use of such lists conform to the fundraising policies and procedures of the University. Mailing lists will not be available to outside organizations.
- Ethics: The President shall determine that all philanthropic promotions and solicitations are ethical.
- Review of Legal Arrangements: The Office of the General Counsel, shall, as required, review legal documents, contracts, and all donor agreements on behalf of the University, or retain outside counsel for such review.
- Donor Legal Representation: The Vice President for Advancement shall determine that all donors, prior to making a "capital asset gift" (defined as any gift other than that which would be regarded as made from donor's cash flow), was counseled to secure independent tax and legal counsel. All legally-binding documents, whenever possible, shall be prepared by counsel retained by the donor, to avoid any potential conflict of interest or undue influence.
- Finder's Fees or Commissions:
- The University will pay no fees to any person in consideration for directing a gift to the University.
- The University will pay no finder's fee of any type to any party in connection with the completion of a gift to the University without the written approval of the President of the University.
- Professional Fees: All fees will be paid by the donor unless payment by the University is authorized by the President of the University, or his designee. If authorized, the following guidelines shall be followed:
- The payment of professional fees should be limited to situations where the University will benefit significantly from the gift, and the donor contends that it is proper for the University to bear all or part of the attending fees for completion of the gift.
- Such fees will be paid only with prior written approval of the President and prior notification to the donor involved, of the amount and the recipient(s) of such fees.
- Fees should be reasonable and directly related to the completion of a gift.
- Fees shall be limited to:
- appraisal fees by persons who are competent and qualified to appraise the property involved and who have no conflict of interest, provided that the appraiser's fee is not based upon a percentage of the appraised value of the property;
- legal fees for the preparations of documents; and
- accounting fees related to the transanction.
- In the case of financial planners, such persons must attest in writing that they are compensated only for services rendered, and not for the sale of products to clients.
- In the case of accounting and other professional fees, the University shall attempt to determine the reasonbleness of these fees prior to payment. An hourly breakdown of time should be requested.
- In cases where the persons receiving fees were initially employed by the donor and the donor requests that the University pay the fees involved, the University will notify the donor that its payment of such fees may result in taxable income to the donor in the amount of the fees paid.
- Unacceptable Gifts: The University reserve the right to refuse any gift that is not consistent with its mission. In addition to and without limiting the generality of the foregoing, gifts will not be accepted by the University:
- That violate any federal, state or local law, stature or ordinance;
- That provide for scholarships, fellowships, professorships or lecture series with restrictive clauses that could cause embarrassment to the University, or that reserve to the donor or his/her representative the right to designate the recipient;
- That as a condition thereof, require any action on the part of the University which is unacceptable to the Board of Trustees;
- That commit the University to name a faculty, program, or endowment fund that is revocable in any way;
- That require/stipulate to the University and its Board of Trustees the future employment of any specified person;
- That contain unreasonable conditions (i.e. a lien or other encumbrance) on gifts of partial interest and property;
- That are financially unsound, fail to provide a positive net present financial value, or which, in the University's sole judgment, could reasonably expose the University to unacceptable liability (including gifts of real estate which may expose the University to environmental liability.)
- Gift Acknowledgment and Stewardship: The University will be responsible for good stewardship toward its donors.
- All gifts will be acknowledged within a reasonable period of time (with "reasonable" defined as ten business days from receipt of the gift.)
- All gift acknowledgement letters/receipts will conform with state and federal law and regulations, and will be coordinated through the Office of Development Services of the Development Department. The University shall provide a written receipt to all donors acknowledging their gifts. Gifts of $75.00 or more in which the donor did receive goods or services in consideration of the gift (the "quid pro quo" gift in which dinner, tickets, etc. is provided for the gift) shall receive an itemized statement regarding the value of the consideration received by the donor.
- Gifts to the University shall be reported in a manner consistent with the standards recommended by the joint Council for Advancement and Support of Education (CASE) and the National Association of College and University Business Officers (NACUBO) committees report on "Gift Reporting Standards and Management Reports for Educational Institutions." The University shall also comply with the "statements of Financial Accounting Standards" relating to not-for-profit organizations as established by the Financial Accounting Standards Board (FASB).
- An annual report may be prepared in which the appreciation and the gratitude of the University will be expressed to its many categories of donors.
- The University will provide the donors of endowed scholarships with appropriate information about the recipients of scholarship assistance, in addition to an annual accounting reflecting the principal and expendable balance for the prior fiscal year.
- For acknowledgment and recognition purposes, gifts to the University will be considered public in nature except those gifts specifically designated by the donor as "anonymous".
- Gift Credit: Individuals, business firms, foundations and other organization will be given credit for their specific philanthropy.
- President's Society (University): Individuals who make gifts of $1,000 or more unrestricted in a single fiscal year (i.e. July 1st to June 30th) qualify for membership in The President's Society. Membership levels within the President's Society are as follows:
Raymond C. Baumhard, S.J. Associates: ($10,000 or more);
James F. Maguire, S.J. Associates: ($5,000-$9,999);
James T. Hussey, S.J. Associates: ($2,500-$4,999);
Arnold Damen, S.J. Associates: ($1,000-$2,499)
- Dean's Circle (School of Law), Leadership Society (Stritch School of Medicine) and Spirit of Mundelein (Gannon Center for Women and Leadership): Individuals who make gifts of $1,000 or more restricted to the above-named school or program in a single fiscal year qualify for membership.
- Society of the Shield of Loyola: Individuals who advise the University that they have made the University a beneficiary of an estate or deferred gift will qualify for membership in The Society of the Shield of Loyola.
- Corporate and Foundation Gifts and Grants*: Credit will be given for gifts and grants given to the University from businesses, corporations, organizations and foundations.
Externally-funded grants and contracts that support research, training, and/or public service projects conducted by Loyola faculty, staff, and administrators are legal agreements that may only be signed on behalf of the university by an authorized official. For lakeside campuses, proposals for such external-funded grants and contracts must be routed through the Office of Research Services and Corporate and Foundation Relations (as outlined in the Coordination - Lakeside flowchart). These offices work collaboratively.
- Matching Gifts:
- Recognition and gift credit will be given to those business firms, organizations and foundations that make matching gifts.
- Matching gifts will not be counted toward an individual's membership in The President's Society, Dean's Circle, Leadership Society or Spirit of Mundelein.
- The University shall, whenever possible, assist donors in compliance with an employer's matching gift procedures.
- Gifts in Kind: Gifts-in-Kind (any gift of property whose monetary value is not readily definable, e.g. equipment) credit will be given only in cases where the actual value of the gift can be established pursuant to the valuation procedures set forth in Section V herein. In the absence of this valuation, the donor's acknowledgement will carry a stated gift value of zero ($0).
- Memorial Gifts: Gifts given in memory of another individual will be credited to the donor making the memorial gift for acknowledgement purposes, in addition to registering his/her gift on the University's records as a memorial for the individual being memorialized
- Gifts Made Pursuant to Raffles or Auctions: The University may utilize a charity auction or raffle as a means of raising funds. The University shall comply with all federal and state laws and regulations regarding the value of items contributed for auction or raffle purposes, as well as all such laws and regulations applying to purchasers of auction items or raffle tickets.
- Gift Recognition: Donors shall receive appropriate recognition for their gifts, except for gifts which have been specifically designated by the donor as "anonymous". This recognition may include, but is not limited to, listing of gifts in the Annual Report and other University publications, media publicity, special events, "donor walls" and other signs listing donor gifts, and "naming opportunities" for specific programs and buildings. Decisions regarding appropriate recognition for gifts shall be made by the President or the Vice President for Advancement. Donors will only receive recognition for actual gift assets given. No recognition will be provided for gift assets which appreciate in value after the date of gift. Donors whose gifts are made over a term of years or are deferred in nature shall be recognized for the face value of their gift.
"Naming opportunities" for University facilities: The University shall seek, whenever possible, to receive private donations which provide one hundred percent (100%) of the funding needed for construction of new University buildings and other structures, as well as endowment funds providing for the ongoing maintenance of the facility. The University will name a facility in honor of an individual donor (or donors) should the donor(s) make an irrevocable gift equal to a minimum of forty percent (40%) of the construction cost of the facility. The University reserves the right to seek multiple donors for "naming opportunities" within a single facility. A written gift agreement or other legally binding document will be executed by the donor prior to the donor's name being affixed to any building or structure. Any "naming opportunity" gift, which the donor requests to fund over a period of years during the lifetime of the donor, shall be secured by an agreement and an estate note executed by the donor.
- Conflict of Interest: University personnel shall be circumspect in all dealings with donors so as to avoid even the appearance of impropriety or self-dealing. Pursuant to University policy, a conflict of interest may exist when a University employee desires to perform services for another organization or is employed in a way that may materially interfere with the performance of University obligations. A conflict of interest may also arise when a present or potential financial advantage or other interest impairs, or reasonably appears to impair, an employee's independent judgment in the discharge of his/her responsibilities to the University. In each case this will be a question of fact.
The President will examine all potential conflicts of interest including, but not limited to, the following:
- Prohibition against personal benefit: Those individuals who normally engage in the solicitation of gifts or grants on behalf of the University shall not personally benefit by way of commission, contract fees, salary, or other benefits from any donor in the performance of their duties on behalf of the University. The definition of individuals includes each of the three categories of employees at the University (faculty, administrators and support staff) or their family members. Individuals are further defined to include associations, partnerships, corporations or other enterprises in which a member of the faculty, administrator or support staff holds a principal (five percent or greater) ownership interest.
- Purchase, sale, exchange or leasing from a donor: The relationship nurtured between University personnel and an individual donor is sacrosanct. Consequently, purchase, sale, exchange or leasing property (except for routine transactions in the ordinary course of commercial business) from an individual donor by a member of the faculty, administration or support staff of the University which could be construed as part of the gift cultivation or solicitation process will be subject to review by the President.
- Borrowing from a donor: Faculty, administrators or support staff of the University are prohibited from borrowing funds or entering into any form of credit extension with a donor, except for routine transcactions in the ordinary course of commercial business.
- Faculty, administrators or support staff of the University also includes associations, partnerships, corporations or other enterprises in which a member of the faculty, administration or support staff holds a principal (five percent or greater) ownership interest.
- Conformity to Federal and State Laws: The President will determine that fundraising events and affairs comply with local, state and federal laws.
- Gift Valuations: The University shall follow accepted guidelines for the valuation of gifts to the University. The proper method of valuing non-cash items will be made pursuant to section V ("Gift Valuation Guidelines") of the Gift Acceptance and Valuation Policies herein.
- Required Reporting of Gifts to the Internal Revenue Service: Should the University sell, exchange, or otherwise dispose of any gift (other than checks, cash or publicly traded stocks or bonds), within two (2) years after the date of the gift, the University will furnish the Internal Revenue Service (the "IRS") and the donor with a completed Treasury Form 8282.
IV. GIFT ACCEPTANCE GUIDELINES
Gifts can be generally categorized as either outright, estate or deferred.
- Outright Gifts:
- Cash and Checks:
- Cash, checks (including electronic funds transfers and payroll deductions) and credit card charges shall be accepted regardless of amount.
- Checks for all gifts to the University (including the Stritch School of Medicine) shall be made payable to "Loyola University of Chicago." Checks made payable to an employee, agent or volunteer for the credit of the University will not be accepted as a gift to the University.
- Publicly Traded Securities:
- Securities which are traded on the New York and American Stock Exchange, as well as other major U.S. Exchanges and NASDAQ shall be accepted by the University. All gifts of securities will be processed through the Development Department and the Assistant Treasurer's Office of the University (the "Assistant Treasurer's Office").
- Such securities may be sold immediately by the University according to instructions given by the Assistant Treasurer or his/her designee. The sale of all gifts of securities which exceed $25,000 shall require written approval of the Assistant Treasurer.
No employee or volunteer working on behalf of the University may commit to a donor that a particular security will be held by the University, sold through a specific broker or traded on instruction of the donor without the approval of the Assistant Treasurer or his/her designee.
- The electronic funds transfer (EFT) of any security into an account controlled by the University may only be accomplished pursuant to instructions issued by the Assistant Treasurer or his/her designee.
- Closely Held Securities:
- Closely held or non-publicly traded securities may be accepted only after approval of the President or the Vice President-Finance and Treasurer of the University (the "Vice President-Finance and Treasurer").
- Such securities may be subsequently sold only with the approval of the President or the Vice President-Finance and Treasurer.
- Restricted Securities: Gifts of restricted securities (also known as unregistered securities, investment-letter stock, control stock or private placement stock) may only be accepted with written approval of the President or the Vice President-Finance and Treasurer.
- Real Estate:
- No gift of real estate located within the United States (residential or commercial) shall be accepted without prior approval by the President or the Vice President for Facilities of the University (the "Vice President for Facilities"). No real estate located outside of the United States will be accepted unless the potential value of the property merits the additional costs associated with such a gift.
- No gift of real estate shall be accepted without a current "qualified appraisal" by a "qualified appraiser" as required by the regulations issued under the Internal Revenue Code and which is acceptable to the University.
- The University will not accept any real estate without:
- a title search and title policy;
- marketability check;
- an on-site evaluation by the Facilities Department or its designee;
- an environmental impact study of the property to ascertain if it is subject to environmental restrictions, sanctions, toxic wastes or otherwise encumbered in such a manner as to cause present or future economic liabilities for the University; and
- conveyance by properly executed deed, or other conveyance acceptable to the University as determined by the Vice President for Facilities.
- No gift or real estate will be accepted in which the University takes title subject to a mortgage. The subsequent sale of such mortgaged property could subject the University to unrelated business tax liability.
- No gift of real estate, including bargain sales, will be accepted which subjects the University to liability in an amount in excess of $500,000 of the value of the gift without prior approval of the Board of Trustees.
- Any gift of real estate which may subject the University to liability for environmental clean-up in an amount in excess of $500,000 of the value of the gift may only be accepted by the Board of Trustees.
- Tangible Personal Property:
- Tangible personal property whose value exceeds $1,000 will only be accepted upon approval by the President or the Vice President-Finance and Treasurer.
- Book collections will be accepted upon additional approval of the Director of the Library of the University. The books may or may not be held, at the discretion of the Director, in the University's collection.
- No personal property shall be accepted requiring ownership in perpetuity without express written approval of the President or the Vice President-Finance and Treasurer.
- No perishable property or property which will require special facilities, cost (including insurance) or security to be properly safeguarded will be accepted without prior approval of the President or the Vice President-Finance and Treasurer.
- Other Personal Property: Other property of any description, and including but no limited to: mortgages, notes, copyrights, royalties, easements, whether real or personal, may be accepted only upon approval of the President or the Vice President-Finance and Treasurer.
- Estate Gifts:
Estate gifts consist of bequests to the University through a will or trust arrangement. The University shall accept estate gifts subject to the following:
- The University reserves the right to decline gifts from the estate of deceased donors which are not in keeping with the terms of this policy. No part of any gift, or benefit from any gift, shall be accepted until a final determination has been made as to the acceptance of the gift.
- Gifts of property from the estate of deceased donors, which are not acceptable, shall be rejected only by agreement of the President or the Vice President-Finance and Treasurer or other duly authorized officers. The Office of the General Counsel shall expeditiously communicate the decision of the University to the legal representatives of the estate.
- The President shall have the discretion to designate for capital, endowment, or other purposes any unrestricted estate gift in excess of $25,000.
- The Office of the General Counsel shall be responsible to retain counsel to appear on the University's behalf in all probate proceedings in which the University's interests either (1) consists of a gift in excess of $50,000 or (2) consists of the residue of an estate.
- Deferred Gifts:
The term "deferred gifts" (also known as "planned gifts" or "split-interest gifts") generally applies to gifts in which the donor makes a current conveyance or commitment, but the University's legal ownership or use of the gift is subject to a specific event (i.e. death of an individual) or term of years. The University shall comply with all federal and state laws and regulations relating to these giving arrangements.
University may accept (including but not limited to) the following planned and deferred gifts:
- Charitable Remainder Annuity Trusts and Unitrusts;
- Charitable Lead Trusts;
- Charitable Gift Annuities;
- Gifts of Pension Fund and Individual Retirement Account assets;
- Bargain Sales;
- Retained Life Estates;
- Pooled Income Funds;
- Life Insurance.
- The University as Trustee and Investment of Charitable Trust Assets
- Though it is strongly recommended that donors utilize a corporate trustee or self-trustee any charitable trust which names the University as beneficiary, the University may serve as trustee for charitable trust arrangements, subject to the following:
- The University shall comply with all state and federal laws and regulations concerning trusts and trustees;
- The University shall not serve as trustee for any charitable trust which is funded with less than $100,000, shall not serve as trustee for any trust which contains net-income or net income with make-up provisions, or any trust in which the University is less than a 100% beneficiary;
- In general the University will not serve as trustee for any charitable trust in which an income beneficiary is under 60 years of age or which names more than two income beneficiaries, without prior approval of the President or the Vice President-Finance and Treasurer.
- Investment of charitable trust assets will conform with all state and federal laws and regulations, and those trust assets which may be commingled with endowment assets will be invested pursuant to the University investment policy, as it exists from time to time.
- The University shall not serve as investment manager for any assets held in trust unless it also serves as trustee for those assets.
- The University, through the Vice President-Finance and Treasurer, shall annually set the maximum percentage rate for which a charitable trust will pay a donor (the "pay-out rate"). Prior written approval of the President or the Vice President-Finance and Treasurer is required for the University to pay a rate which exceeds that maximum rate.
- The trust instrument must contain a provision which expressly provides that the University, as trustee, is permitted, for investment purposes, to commingle the trust assets with other such assets and/or the University's assets including the endowment.
- The donor(s) execute a written acknowledgment that it is the express desire of the donor(s) that the University serve in the capacity of trustee, that the University has disclosed to them the potential for conflict of interest in the University serving as trustee, and that the donor(s) waive any claim for conflict of interest which may arise from the University serving as trustee.
- Charitable Gift Annuities, Pooled Income Funds and other Deferred Giving Arrangements
- The University, through the Vice President-Finance and Treasurer will enact and periodically review, rates for all charitable gift annuities. The University shall comply with all out-of-state insurance and securities statutes relating to gift annuities before insurance of a gift annuity to a non-Illinois resident.
- The University will maintain one or more pooled income funds.
- Minimum initial contributions and additional contributions for deferred gifts are as follows:
- Charitable Gift Annuities: Minimum contribution of $10,000;
- Pooled Income Fund: Minimum initial contribution of $5,000 with $1,000 minimum additional contributions.
- Life Insurance:
- New or existing policies may be given outright or the University may be named the owner and beneficiary of an existing policy.
- No insurance products may be endorsed for use in funding gifts to the University without the approval of the President.
- Retained Life Estate gifts may be accepted only with the approval of the President or the Vice President-Finance and Treasurer.
- Giving arrangements in which the University is required to enter into a partnership relationship (i.e. family limited partnership) with the donor or a legal entity created by the donor may be accepted only with the approval of the President or the Vice President-Finance and Treasurer.
V. GIFT VALUATION GUIDELINES
- Establishing the Date of Gift:
The date of any contribution may be simply defined as that date on which the donor irrevocably relinquishes control of the property to the University. Determining that date may be difficult. Determining the date of a gift may be impossible in the absence of relevant physical evidence; it is critically important to save all envelopes (with postmarks intact) and other evidence to document gift dates, without exception.
- Date of Gift: Overview:
- Physical Delivery: If property is actually delivered to the University by the donor, in person, the date of delivery always is defined as the date of the gift. However, this may not be a date that is readily identifiable. Memory may not be accurate as to the date the donor delivered the item on campus. Therefore, it is imperative al gifts received by University employees are given to the Development Department on the date of receipt or on the next business following receipt.
- U.S. Postal Service: For gifts of cash or securities the postmark date on the envelope used to mail that completed gift via the U.S. Postal Service defines the date of contribution. For gifts that are made at the end of the calendar year, the postmark on the envelope is controlling over the date on the donor's check.
- Other Delivery Services: Property or cash/checks may be delivered by some means other than the U.S. Postal Service, including domestic services such as U.P.S., or Federal Express, or foreign postal services. For all of these services, the gift date is that date on which the cash or property arrives at the University and is not the shipping/mailing date.
- Credit cards: Credit card gifts are deemed complete on the day the donor's account is debited, as reported by the credit card company.
- Personal Property: Gifts of tangible personal property, no matter how delivered, are deemed complete when they arrive at the University.
- Real Estate: A gift of real estate is effected at the time a properly executed deed to the property is delivered by the donor to the University or the date the deed is recorded in to the Office of the Recorder of Deeds (or similar office) in the country in which the property is located, whichever is first.
- Procedure for Gift of Securities:
Unlike most other gifts, securities gifts may be completed in any of several ways that will directly impact the time involved to effect transfer of ownership. Therefore, it is imperative that personnel from the Development Department be directly involved in all gifts of securities to the University. Once received by the University, the conveyance of securities to the brokers or other agents of the University shall be undertaken only with the direct involvement of the Assistant Treasurer.
- Certificate Delivery: If the donor has the certificate(s) in his/her possession, ownership transfers to the University when:
- the donor hand delivers the properly endorsed certificate(s)/Stock Power to the University;
- the envelope(s) containing the properly executed certificate(s)/Stock Power are postmarked. NOTE: donors are advised not to send endorsed stock certificates to the University, even by registered mail. Certificates (unsigned) and signed Stock Power forms should be sent in separate envelopes.
- The date of gift for gifts delivered other than by hand or by the U.S. Postal is the date on which the completed gift arrives at the University. Stock certificates sent without an endorsement are not completed gifts. If the certificate (unsigned), and a properly executed stock power form are sent separately, the date on which the last of these documents is sent defines the completion of the gift.
- New Certificate(s) Registered to the University: If the donor has the certificate(s) in his/her possession or safe deposit box, or in an account with a bank or brokerage office, or held by an agent, and the certificate(s) are registered in the donor's name and the donor has the option to deliver the currently registered certificates to the University, it is usually in his/her interest to do so. This will ensure that the donor's gift is completed on a date certain, especially at the end of a calendar year. By comparison, stock that must be reissued in the name of the University, such as stock held in dividend reinvestment accounts, may take several weeks to accomplish through the corporation transfer agent. The date of gift is the date in which the stock changes ownership on the books of the corporation.
- Stock held in Brokerage Accounts: When the donor wishes to give securities held in a brokerage account (securities held in "street name") to the University, the donor should instruct the broker to transfer the specific share into an account owned and controlled by the University. It is strongly encouraged that such transfer be made directly to the broker retained by the University, as opposed to the University opening an account with the donor's broker. No account in the University's name shall be opened without the prior approval of the Assistant Treasurer. The date of gift is the date on which the security is transferred into an account controlled by the University.
An exception to this general rule applies when the donor's brokerage account is held in an institution which utilizes an in-house "gift account" to facilitate client gifts to charity. If such an account is utilized to transfer donor securities to the University, the date of gift is the date in which the security is transferred from the donor account into the "gift account" if: the institution provides the University with a statement which 1) provides the date on which the securities were transferred from the donor account into the "gift account", and 2) that pursuant to the policy of that institution, all
- Gifts in Kind:
All gifts of real estate, tangible personal property (including works of art, jewelry, books, etc.) and other personal property, require an appraisal to determine the value. Although the IRS currently requires an appraisal for gifts of $5,000 or more, the University should seek an appraisal for all gifts in kind.
- All property requiring valuation for tax purposes will be made by a "qualified appraisal" as required by regulations issued under the Internal Revenue Code.
- Without a qualified appraisal, the donor's acknowledgment will carry a stated value of zero ($0).
Service performed for the University and then "donated" to the University may not be claimed by the donor as a charitable deduction for the value of his/her service rendered. However, the provider may be assigned gift credit for the purpose of recognition.
An endowment is perpetual. It is a special reserve of money and/or assets given with some form of stipulation or restriction on the use of the earnings generated by the endowed fund. The stipulations may be as general as "for the use of the University", to varying degrees of specific criteria to be closely observed in the use of the generated funds.
All agreements relating to endowed funds must provide a balance between the specific terms as to how the University will administer the endowed fund, and flexibility as to future conditions which may impact the donor's intent for the funds.
All new endowments will be invested in instruments conducive to appreciation of capital guided by the University's investment policy guidelines. Endowment funds are traditionally invested for long-term growth, but must also provide sufficient income for immediate needs such as scholarships. It is anticipated that a portion of this gross income will be reinvested into the endowment fund principal, to provide a hedge against inflation. Thus, the Board of Trustees will determine the percentage of endowment fund principal which may be allocated for immediate use ("expendable income"). Unless otherwise provided by an endowment agreement, all income earned in excess of this amount will be reinvested into the endowment fund principal.
No endowment will be separately invested without the approval of the President or the Vice President-Finance and Treasurer.
- Types of Endowment
In the past, endowments had commonly been defined as either:
- Pure Endowment (perpetual fund, principal never invaded);
- Quasi-Endowment (perpetual fund, principal may be invaded, though usually only per Board of Trustees approval), and;
- Term Endowment (restrictions on use of principal lapse after a donor-designated period of time or event).
However, in order for the accounting practices of not-for-profit organizations to more accurately mirror those of the for-profit sector, the "Statements of Financial Accounting Standards No. 116 and No. 117" were established by the Financial Accounting Standards Board of Trustees (FASB), and became the required practice for external financial statements of universities and other not-for-profits. During 1996, the University adopted these standards. Commonly-referred to as "FASB 116" and "FASB 117", these new standards require the University to re-define many aspects of its accounting and gift reporting procedures, including endowment.
When referring to endowment funds under these new standards, the previous definitions should be abandoned, and the following definitions are to be used:
- "Permanently Restricted" net assets resulting from contributions and other inflows of assets whose use by the organization is limited by donor-imposed stipulations that neither expire by passage of time nor can be fulfilled or otherwise removed by actions of the organization.
- "Temporarily Restricted" net assets resulting from contributions and other inflows of assets whose use by the organization is limited by donor imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of the organization.
- "Unrestricted" net assets that are neither permanently restricted or temporarily restricted by donor-imposed stipulations.
The understanding and proper use of these terms is critical not only for accounting purposes, but also for fund-raising purposes. As endowment gifts are received, the donor agreement creating the endowment must accurately reflect the nature of the endowed fund. Each endowment fund must be supported by documentation which clearly describes the nature of the endowment.
- Endowment Restrictions:
No restrictions on how gifts may be used by the University will be honored without prior approval of the President in the case of current gifts, or subsequent approval in the case of bequest gifts or other gifts which are effective at death. In the case of current gifts, it is recommended that all gifts received will only be accepted on the condition that should the purpose for which the funds are provided cease to exist, the University shall allocated the funds to purposes as near as possible to the original intent of the donor(s), as determined by the President.
- Amounts required to establish endowed funds:
The University shall establish minimum amounts needed to establish various types of endowments (e.g. Chairs, Professorships, Lectureships, and Scholarships). These minimum funding amounts may vary from department to department. These minimum amounts are to be reviewed on an annual basis by the President and the Vice President-Finance and Treasurer and are established by applying the University's anticipated investment return of endowment assets as well as the University-determined percentage of an endowment fund principal which may be utilized annually as "expendable income" for endowment projects.
As indicated in the Introduction, the policies set forth in this document are intended to assist, guide and establish conduct for those persons associated with the University who are involved in the receipt of money or property of any kind intended as gifts to the University.
This policy shall be amended upon recommendation by the Advancement Committee of the Board of Trustees of Loyola University of Chicago and approval of the Board of Trustees.