|Policy Title||Gift Acceptance Policy|
|Policy Category||Financial Policies|
|Original Policy Approval Date||June 25, 2020|
|Responsible Office||University Advancement|
|Related Policies||Naming Opportunities Policy, Distinguishing Gifts from Sponsored Awards Policy|
|Policies Superseded||Policy on Acceptance and Management of Gifts|
|Frequency of Review||3 Years|
|Date of Next Review||June 25, 2023|
|Date of Revision|
This Gift Acceptance Policy (“Policy”) applies to all University faculty and staff when accepting charitable Gifts or Grants on behalf of the University. See Section IV below for the definitions of capitalized terms contained in this Policy.
II. Policy Statement
The University has established this Policy to ensure fidelity to Donor intent, manage expectations about how a Gift will be used, ensure that all Gifts meet University needs, and safeguard the University’s reputation. The purpose of this Policy is to articulate and outline the University’s methods for analyzing and accepting charitable Gifts for the University’s benefit. It is also intended to answer the following questions for gift officers and other University officers who deal with Donors and Gift-related issues.
- What types of Gifts can the University accept?
- What documentation is required to transfer each type of asset to the University or to document the terms of Restricted Gifts?
- What are the minimum gift levels required to establish endowed funds or to establish certain types of scholarships or professorships?
- How do we determine the value of each Gift for the purpose of recording it in the University’s gift records?
- How will the Gift be recorded in the University’s financial statements?
- What credit will each Gift receive toward an annual campaign or any future comprehensive campaign?
This document does not anticipate all possible gift situations. Soliciting officers should discuss any potential Gift not described in this document with appropriate University officers, including the Vice President for Development and Alumni Engagement or their designee.
This Policy shall be interpreted in light of the following overriding principle:
A gift will be accepted by the University only if there is a reasonable expectation that accepting the Gift will be of a charitable nature that will ultimately benefit the University. Factors that may be considered in making that determination include the capacity of the University to utilize the Gift; any restrictions placed on the Gift by the Donor; and any costs or obligations that the University may incur by accepting the Gift.
Further, all Gifts, whether or not addressed in this Policy, should adhere to the following principles of gift acceptance:
- Support of Mission: All Gifts should champion the University’s mission of academic excellence.
- University Reputation: The University cannot accept Gifts which may damage or compromise the University’s reputation or core values.
- Academic Integrity: No Gift may in any way interfere or impinge upon the University’s capacity to fully control the management, operation, and direction of its affairs, including admissions procedures, academic programs, and financial aid, nor may any Gift vitiate the University’s academic integrity and commitment to academic freedom.
- Burden: No Gift may impose unreasonable financial or administrative burden on the University, its staff, employees, or students, or any of its other resources.
- Donor Intent: All Donors should be motivated by a philanthropic desire to support the University and further its mission, promote its well-being, and enhance its reputation.
- Gift Application: The University must retain sole authority over the application of proceeds in accordance with a Donor’s stated philanthropic intent and objectives.
Gifts will not be accepted that involve unlawful discrimination based on race, religion, sex, age, national origin, color, disability, or any other basis prohibited by federal, state, and/or local laws and regulations, or University policy. Nor can the University accept Gifts which may result in a violation of any other applicable laws or regulations or which violate the charter or mission of the University.
The University will adhere to federal law, including the Internal Revenue Code and its regulations, and Pennsylvania law relating to charitable organizations and not-for-profit corporations. Further, the University will set standards that are consistent with guidelines established by industry organizations such as the Financial Accounting Standards Board (“FASB”), the Council for the Advancement and Support of Education (“CASE”), National Association of Charitable Gift Planners (“CGP”), and the Association of Fundraising Professionals (“AFP”) and its related Donor Bill of Rights.
This Policy is not intended to create contract rights and, as a living document, is subject to change at any time in accordance with the University’s Policy on University Policy Development.
The University and its staff and representatives shall endeavor to assist Donors in accomplishing their philanthropic objectives through providing charitable support for the University, in accordance with the following principles:
- Confidentiality. Information concerning all transactions between a Donor and the University shall be held by the University in strict confidence and may be publicly disclosed only with the permission of the Donor or when required by law.
- Anonymity. The University shall respect the wishes of donors who choose to support the University anonymously, except where such anonymity violates law. Donor identity may be kept confidential by agreement and with the consent of the Vice President for Development and Alumni Engagement. The University will take all reasonable steps to safeguard the identity of those Donors.
- Blackbaud Raiser’s Edge. Raiser’s Edge is the current official repository for all philanthropic gifts and charitable grants to the University. It keeps detailed historical records of Gifts and charitable grants to the University as well as biographical data on Donors and prospective Donors. Raiser’s Edge is also the essential tool for planning and managing fundraising and alumni engagement activities. It is best practice for financial data to be transferred from Raiser’s Edge to Microsoft Dynamics GP’s accounting software platform daily.
- Disclaimer. The University does not provide personal legal, financial, tax compliance, or other professional advice to Donors. While gift officers may provide Donors with gift illustrations, including calculations, and draft documents prepared for Donor review and consideration or which are approved by the University’s Office of General Counsel, Donors must be advised in writing, in gift proposals made to Donors, to seek the assistance of their own legal counsel or other professional advisors in matters relating to the legal, tax, and estate planning consequences of a proposed Gift to the University.
A. GENERAL STANDARDS
The University encourages Gifts of all types from Donors willing to support its mission. However, the University must take care to avoid assuming potential liabilities or obligations of any kind that may outweigh the value of a Gift received by the University.
Gifts can come from individuals, corporations, partnerships, foundations (private, community or corporate), private liability companies, Donor Advised Funds, public charities, estates, and trusts.
A Gift may be made either outright (i.e. the Donor retains no use of, or ownership in, the assets donated) or in trust, in which case the Donor contributes to the University either a “future interest” in a trust’s principal value or the right to a trust’s income for a certain term.
The Donor may designate a Gift for unrestricted use by the University or a particular school, department, or unit. A Donor may also make a Restricted Gift by designating a specific purpose for the Gift. Any restriction must adhere to the University’s gift acceptance policies. Or, the Donor may limit the expenditure of a Gift by adding the gift to an existing (or establishing a new) endowed fund.
The purpose and use of a Gift as specified by the Donor must be appropriate to the functions and character of the University, as determined by its policies and procedures, and in accordance with all applicable laws and policies.
Gifts should be in amounts appropriate to the specified uses and consistent with the University’s published program and planning priorities. Gifts should not be directed to purposes that are so narrowly restricted that effective use or administration, either immediate or in the future, will be problematic.
Gifts requiring a commitment by the University to spend its own funds, either upon receipt or in the future, in addition to any amounts donated or pledged, must first be presented by the Vice President for Development and Alumni Engagement for approval by the President and/or Provost (and depending on size and scope of gift, the Board of Trustees) before consideration by the University.
Certain philanthropic “grants” (see below) consist of payments by a foundation or corporation in response to a proposal requesting funding for a school or specified project over a set period of time. Although the University’s Office of Sponsored Research and Programs approves and monitors these charitable grants, the University will count them in development and campaign totals, recording them in Raiser’s Edge. The following transfers do not constitute philanthropic gifts and will not be recorded in Raiser’s Edge:
- Any charitable grant that involves contractual obligations to perform services or deliver products to the grantor;
- Gifts or charitable grants from federal, state, and city governments, and those from foreign governments;
- A transfer for the benefit of a specific individual;
- Investment income on previous Gifts to the University;
- Interest income earned on endowed funds;
- Transfer payments from departmental funds, medical practice plans, or other University funds;
- Contract revenues; • Independent qualified appraisal fees paid by Donors in relation to their Gifts;
- Payment for goods and services (the only exception involves payments that are part Gift and part non-Gift);
- Donations to an organization that has its own 501(c)(3) designation (in certain cases, the University maintains Gifts or endowed funds for designated affiliates, but these are not considered Gifts to the University); and
- The right to use an individual’s property.
The Division of University Advancement (UA) and the Office of Sponsored Research and Programs are responsible for requesting funds – whether they are reflected as Gifts, charitable grants, or awards (contracts) – to the University. Determining whether the funds are philanthropic — and therefore, how to count and treat those funds — can often be challenging. To make this determination, both offices must be in communication to understand a number of determinant factors: intent, purpose, risk, intellectual property (“IP”), deliverables, reporting, return of funds, control of funds, accounting, and publicity. Both UA and the Office of Sponsored Research and Programs may submit funding proposals to corporations and foundations, but some will be classified as philanthropic and some will not.
|University Advancement-Donations, Gifts, and Charitable Grants-||Sponsored Research & Programs-Sponsored Awards-|
|Intent||Gift is motivated by charitable intent and does not include a commercially valuable return to the funder (quid pro quo). The language used – gift, charitable grant, contract, or award – does not necessarily reflect intent.||Award may be either a grant which benefits the public or a contract, which benefits the Sponsor. In both situations, (quid pro quo), the benefit is provided in exchange for the funds.|
|Purpose||Gift supports a restricted or unrestricted purpose – including unrestricted support for research – or activities such as endowment, scholarship, student support (i.e. fellowship), construction, and general support of outreach and service programs.||Award supports research or non-research projects with defined deliverables or set of activities that are completed within a specified period of performance.|
Award conditions are governed by a legal agreement executed by the Sponsor and University’s authorized legal representative.
|Documentation||A gift agreement codifies an irrevocable charitable gift of $10,000 or greater which must outline an amount, intent, purpose, and fulfillment schedule. All endowed gifts must be signed by the President and Vice President.||Award conditions for the defined project are governed by a legal agreement executed by the Sponsor and University’s authorized legal representatives.|
|Risk||Project does not include research risk items.||Sponsored awards may include research risk items (e.g., human subjects, export controls, radioactive materials, recombinant DNA, etc.)|
|Intellectual Property||Donor relinquishes intellectual property and data rights to the University.||Governed by federal regulations, Sponsor and University policies, where University usually owns IP created during the project. Sponsor may negotiate licensing rights, patent rights, etc.|
|Deliverables||Project promises few, if any, deliverables other than stewardship reports.||Award requires specific deliverables (e.g., technical reports, evaluations, training, etc.)|
|Reporting||Gifts require strategic stewardship and communication as a courtesy to the donor (e.g., progress reports, reports of expended funds, financial or summary reports, and/or fund balances.)||Award requires post-award financial reports, certifications or assurances of adherence to policy requirements (e.g. IRB/IACUC approvals, public access requirements, documentation of personal compensation, etc.)|
|Return of Funds||Gift is irrevocable and return of expended funds is usually not a requirement or is negotiable.||Award may be revocable or the Sponsor may reduce funds awarded. Unexpended funds are either de-obligated or returned to the Sponsor. Expended funds may be disallowed if Sponsor policies are not followed.|
|Control of Funds||Donor does not control expenditures. Control is prohibited.||Sponsor requires grantee to follow the authorized budget; changes in budget categories may require prior Sponsor approval.|
|Accounting||Gifts for the same purpose may be combined into one fund. In such cases, financial reporting is handled by the department or program.||Awards may not be comingled in the University’s financial system; each must be separately budgeted and accounted for.|
|Publicity||Donor may request the right to review and approve press releases or publicity announcements.||Sponsor may request the right to preview and approve press releases or review presentation or manuscripts prior to delivery or publication, respectively.|
The question of whether an award is charitable and therefore countable as a Gift is not determined by which office manages the funds. Both offices can accept charitable contributions, which the IRS defines as voluntary donations to a tax-exempt organization for charitable, scientific, literary, or educational purposes. The Office of Sponsored Research and Programs also handles non-charitable transactions, which are exchanges having potential commercial benefit or profit back to the funder that do no support charitable purposes.
1. General Standards for Gift Acceptance
The legal name of the University is Arcadia University. It is a nonprofit corporation formed by an act of the Commonwealth of Pennsylvania.
Arcadia is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code, classified as a public charity and eligible for charitable tax deductions under 26 U.S.C. Section 170(b)(1)(A)(ii) as an education organization. The University’s Employer Identification Number (EIN) is 23-1352620. This number includes all of the University’s colleges, schools, departments, centers and institutes.
The University can accept Gifts under its full legal name or the variation “Arcadia.” Donors should be instructed to make checks payable in this manner. Any further direction or restriction should be entered on the memo line of the check and/or described in Donor correspondence (e.g. a gift agreement).
Whenever a Gift creates the potential for exposing the University to liability, the University should consult with the University’s Office of General Counsel and consider accepting such Gift through a single-member limited liability company owned by the University in accordance with Internal Revenue Notice 2012-52, which allows contributions made to a domestic single-member limited liability company wholly owned and controlled by a charitable organization, like the University, to be treated as a charitable contribution directly to the charitable organization. Specifically, the University shall consider accepting all Gifts that are not cash or marketable securities through a single-member limited liability company, including, but not limited to, interests in partnerships, interests in the limited liability company, and real property interests. Additionally, the Department of Finance and Administrative Services must evaluate the possibility that unrelated business tax income (“UBTI”) will be attributed to the University as a result of ownership of an interest in a partnership or limited liability company.
Additionally, when the University receives a gift of any type of property, it is the University’s policy to either immediately put the property in use or sell it. Donors that seek a charitable deduction for property contributed to the University shall be responsible for completing IRS Form 8283 (Noncash Charitable Contributions) and submitting said form to Advancement Operations in UA for completion. This form should then be returned to the Donor so that they may process it with the IRS. However, if the University sells, exchanges, or disposes of donated property within three (3) years of receipt, the University shall file a Form 8282 (Donee Information Return) with the IRS and provide a copy to the Donor.
2. Reporting and Valuation Standards
- Reporting. For campaign and other reporting purposes, the University shall use the CASE Reporting Standards & Managements Guidelines for Educational Fundraising (www.case.org).
- Valuation of Planned Gifts. To evaluate the University’s planned giving program and to compare the relative value of various planned gift approaches, the University shall consider the National Association of Charitable Gift Planners (“CGP”) in forming its policies.
3. Ethical Standards
The University is committed to the highest ethical standards. University Advancement staff at all levels of the organization shall adhere to all University policies related to ethics and conflicts of interest, and shall familiarize themselves with and aspire to meet the standards set forth in the Model Standards of Practice for the Charitable Gift Planner adopted by the American Council on Gift Annuities (“ACGA”) and the National Association of Charitable Gift Planners (“CGP”); the Code of Ethical Principles adopted by the Association of Fundraising Professionals (“AFP”); and the Ethical Standards and Principles for Fundraisers, Zero Tolerance Pledge, and the Statement of Ethics adopted by the Council for Advancement and Support of Education (“CASE”), as well as the Higher Education Conflict of Interest Guidelines adopted by the American Council on Education (“ACE”).
4. Responsible Offices
Implementation of this Policy is delegated to the Vice President for Development and Alumni Engagement in UA, who shall be responsible for oversight of the acceptance of all Gifts by the University. Revisions to this Policy will be made in accordance with the University’s Policy on University Policy Development.
5. Approval Exceptions
Acceptance of Gifts by the University in a manner that is in any way inconsistent with this Policy must be approved in writing by the Vice President for Development and Alumni Engagement, who shall report such exceptions to the President of the University before the gift is accepted.
6. Period Review
- General. The Vice President for Development and Alumni Engagement shall periodically (but no less frequently than every three years) review this Policy to ensure that it continues to accurately describe the policies of the University with respect to acceptance of charitable gifts, and shall propose to the Policy Advisory Committee for adoption those revisions that are deemed necessary or appropriate in order for this Policy to accurately reflect the policies of the University.
- Specified Review This Policy shall be reviewed by the Board of Trustees each time the Board determines that the University will embark on a capital, comprehensive, or other significant fundraising initiative. This Policy shall also be reviewed upon the enactment or promulgation of legislation or regulatory rules affecting fundraising and gift acceptance by the University, to assure continued compliance by the University with relevant legislation and rules.
7. The Gift Review Committee
The Gift Review Committee (composed of the President’s Cabinet, key faculty, and other stakeholders) reviews potential Gifts that would fall outside of standard procedures and practices or that would significantly impact the University. Following are examples of Gifts/actions that may be brought, at the discretion of the Vice President for Development and Alumni Engagement, to the Gift Review Committee and which may require the Committee’s approval:
- Gifts of $5 million or more;
- Gifts that would be fulfilled over a period greater than five (5) years (generally determined at the discretion of the Vice President for Development and Alumni Engagement);
- Gifts that would be fulfilled with assets other than cash or readily marketable securities (generally determined at the discretion of the Vice President for Development and Alumni Engagement upon recommendation and advice of the Office of General Counsel and other University experts when appropriate);
- Gifts that use the University’s name;
- Gifts that would draw significant public attention or that may have reputational implications for the University;
- Gifts that may have real or apparent conflicts of interest for the Donor or University officers;
- Gifts from corporate vendors of $500,000 or more (excluding faculty research grants);
- Return of significant contributions from Donors due to circumstances that have made the use of the Gift impractical or impossible based on the intentions of the Donor or needs of the University;
- Naming Opportunities, as defined by the University’s Naming Opportunities Policy, for current or former heads of state, current or former public officials, other government entities, or corporations;
- Gifts of real estate below the ordinary thresholds;
- Realized bequests specifying naming for purposes that require minimum funding levels (such as professorships, centers, or institutes);
- Gifts requiring institutional financial commitment or deviation from the University’s standard endowment management practices;
- Gifts for which the purpose is unusual (e.g., where there are financial or academic questions);
- Gifts from international entities not already known to or affiliated with the University; and/or
- Gifts of $500,000 or more from any international sources, including alumni and parents.
Appropriate clearances, approvals, and signoffs are expected to be in place before negotiations proceed or a Gift is accepted.
B. GENERAL GUIDELINES AND OVERSIGHT
- Supervision and Coordination
Acceptance and documentation of Gifts must be under the supervision of the Vice President for Development and Alumni Engagement, in order to maximize the value of those Gifts to the University, while minimizing costs and risks to the University associated with those Gifts.
- Adherence to Policies
Each member of the University Advancement team shall be given a copy of this Policy. The procedures set forth in this Policy shall be judiciously applied by the University Advancement team. Any questions regarding interpretation of this Policy should be directed to the Vice President for Development and Alumni Engagement.
- Donor Expenses
- General. As a general rule, and except as provided elsewhere in this Policy for specific assets (including real estate), expenses associated with a Donor’s Gift should be borne by the Donor. Typical expenses include appraisal fees to substantiate the value of the Donor’s Gift for tax purposes and the Donor’s legal fees.
- Payment by University. The University may agree to pay some or all of the expenses associated with the Gift following a determination by the Vice President for Development and Alumni Engagement that doing so is necessary to facilitate the Gift.
- Written Agreements
- General. All gift arrangements of twenty-five thousand dollars ($25,000) or more shall be memorialized in a written document, or gift agreement, describing the restrictions, if any, imposed on the Gift by the Donor and other obligations that may be undertaken by the University with respect to the Gift. The University’s Office of General Counsel maintains form documents that can be used in documenting gift arrangements. Before a Donor signs a gift agreement, it must be reviewed and approved by the Vice President for Development and Alumni Engagement or their designee and the Office of General Counsel prior to being sent to the Donor for review and signature. The Office of General Counsel will approve gift agreements that conform to its form documents as a matter of course, but will need to meaningfully review any changes to those form documents.
- Legal Counsel. Gift agreements exceeding $1 million and those involving donations of real estate shall be reviewed by the Vice President of Development and Alumni Engagement and the University’s General Counsel and approved for acceptance by the Vice President for Development and Alumni Engagement, General Counsel, and the President of the University.
- Variance Power/Alternative Use. Unless otherwise approved in advance by the Vice President for Development and Alumni Engagement, the University will reserve the right, in the gift agreement, to broaden or alter the restrictions as to the use of the Gift funds in a way that is consistent with Donor intent, should it be determined in the future that the original restricted purpose of the Gift no longer meets the needs or serves the mission of the University. Unless strongly objectionable to the Donor, all gift agreements will have an alternative use/contingency clause as part of the agreement. The clause shall read as follows:
“The University is entitled to protect the Fund from obsolescence and impracticability. Should any intervening event(s) or restriction(s) or condition(s) on the distribution of funds from the Fund cause this Agreement to become, in effect, obsolete, impracticable, or incapable of fulfillment in the judgment of the President of the University, then any restriction or condition on the distribution of funds may be modified in a manner such that the Fund may be applied to support such other purpose or purposes as are determined by the University to be consistent with Donor’s original intent. The University may exercise this variance power without prior approval, including that of any court or other agency.”
- Donor Control
IRS regulations and University policy prohibit Donor control over the administration of Gifts. A Donor may not retain any explicit or implicit control over the use of a Gift after acceptance by the University. For example, when a Donor establishes a new scholarship or supplements an existing scholarship, the Donor may not have authority or influence in the selection of their own named scholarship recipient(s). Donors can be involved in the implementation of a Gift, however, they cannot have majority control over the use of funds. While the convening of Donor oversight, selection, or advisory committees should be discouraged in accepting a Gift, there are rare circumstances when such committees may be required as a condition of the Gift. When such committees are established, the University, and not the Donor, should appoint the majority of its members. Additionally, if a Donor serves on such an advisory or selection committee related to their Gift, the Donor must have less than 50% of any voting process. This should be clearly communicated to Donors as part of the fundraising process and in connection with the documentation of any Gift. While the University will accept a Gift that supports research in a particular subject matter or discipline, the University should not accept a Gift directed toward or supporting a particular individual, particular result, or point of view. Engaging Donors by keeping them informed or seeking their advice is often helpful to the activities they support, but never to the extent that the Donor directs appointments, research, or other activities.
- Due Diligence
The University has established these comprehensive Gift acceptance polices to ensure the fidelity to Donor intent, manage expectations about how a Gift will be used, ensure that all Gifts meet the University needs, and safeguard the University’s reputation.
Because of their disproportionate importance to the success of the University’s fundraising efforts and potential impact on the operation and finances to the University, its Trustees and the President require that all potential proposals of Gifts of $5 million or more be presented for review (in writing, outlining the purpose, potential budgetary impact, and naming opportunity implications of the Gift) to the Vice President for Development and Alumni Engagement prior to presentation to prospective Donors.
For all Gifts, firsthand knowledge of potential donors along with, when necessary, documentation of their background provides the basis for understanding whether acceptance of a Gift is appropriate, and sets the stage for a thorough, fact-based analysis and evaluation.
In thinking about the acceptance of a Gift, the University should consider the following:
- The historic and current reputation of the prospective Donor;
- The current and future needs of the University; and
- Perceived, Potential, or Real Conflicts of Interest
If a soliciting officer has any concerns, they are expected to alert their supervisor before proceeding with a Gift conversation in order to allow for an appropriate review of the facts and circumstances. In certain situations, this review may prompt extraordinary due diligence measures. In such instances, it is expected that all of the procedures for appropriate research and documentation will be followed. In addition, any or all of the following actions may be undertaken to ascertain the appropriateness of accepting a Gift:
- Inquiries of our trusted volunteers, alumni, and friends;
- Review of a given situation by the Office of General Counsel;
- Formal or informal review of a proposed Gift by the Gift Review Committee; and/or
- Review by the Executive Committee of the Board of Trustees.
C. FORMS OF GIVING
- Outright Gifts
Outright Gifts are an irrevocable transfer of assets which are placed at the immediate disposal of the University and in which the Donor retains no interest, nor makes a commitment to pledge payments. Outrights Gifts may be restricted or unrestricted in purpose.
- In Trust
Arcadia can accept Gifts in which the University accepts title to a remainder interest in trust of property in return for an obligation to pay income to the Donor and/or other beneficiaries for their lives or a certain term, and the University’s ability to use the gift is deferred until the income beneficiaries die or the trust otherwise terminates. These gifts may be in the form of (a) charitable remainder unitrusts, (b) Charitable Remainder Trusts, (c) charitable gift annuities, or (d) contributions to a pooled income fund.
- By Bequest
The University can accept Gifts transferred pursuant to decedents’ wills, revocable living trusts, life insurance policies not owned by the University, retirement funds, or other estate planning documents. Deans or directors whose programs, schools, or colleges receive unrestricted bequests in excess of $100,000 should discuss such Gifts with the Vice President for Development and Alumni Engagement and the Provost to determine whether these Gifts should be treated as for current use or as Quasi-Endowed Funds.
Arcadia will accept a Donor’s commitment to make Gifts payable over a period of time. Such a promise is often called a Pledge or a commitment.
- General. Pledges are commitments to give a specific dollar amount according to a fixed time schedule. The maximum fulfillment period for a pledge is five (5) years, unless specifically approved by the Vice President for Development and Alumni Engagement and the Vice President of Finance and Administrative Services.
- Binding Commitment. The University Advancement team will encourage Donors wishing to fulfill their Gifts in annual installments to document their commitment to the University in a written gift agreement that will create a binding legal obligation on the Donor, as well as a claim against the Donor’s estate if any part of the commitment remains unpaid at their death.
- Conditional Pledges. Conditional pledges are those that will be fulfilled only if certain conditions specified by the Donor are met. Challenge pledges are one example: the Donor agrees to make a Gift of a certain amount if, within a set time frame, the University succeeds in raising an agreed-upon sum of money from other Donors, usually for the same purpose as the original pledge. Because they impose an obligation on the University, all conditional pledges are subject to review by the President and the Vice President for Development and Alumni Engagement, and depending on the size and scope of the challenge, the Vice President of Administration and Finance, and the General Counsel. Conditional pledges will be counted as commitments, but will be tracked separately.
- Modifications to Pledges. Written documentation is required for most modifications to pledges. Acceptable written documentation to amend a pledge or a pledge payment schedule is limited to a new gift agreement or amendment signed by both the University and the Donor.
- Open Pledges. Donor obligations with one or more outstanding installments due will be reviewed periodically by the University. University Advancement will send reminders to Donors with open pledges. Past due pledges which are deemed uncollectable may be written off in accordance with CASE guidelines and without written documentation to or from the Donor.
- Legal Authority to Make Pledges. Donors who make binding commitments to the University must have the legal authority to commit funds. Any Gift received from a Donor-advised fund, a family foundation, or corporate Matching Gift program must be legally credited to these entities. Donor recognition credit (also known as soft credit) will also be assigned to originating requesters to these organizations. Since originating requesters have no legal authority over these types of organizations, gift agreements which expressly direct payments to come from these organizations will not be accepted.
- Pledge Underpayment/Overpayment. Pledge payments using marketable securities are considered fulfilled if the valuation of securities falls within 5% of the total pledged amount. Pledge payments received over the amount of a given pledge total amount will be applied to the original pledge. If a multi-purpose pledge, the overage will be proportionally distributed to all pledge designations.
- Verbal Pledges. University Advancement will not record verbal pledges of $25,000 or more and will not record a verbal pledge of less than $25,000 without verifiable documentation, which may take the form of pledge cards or registers, recorded conversations, or written confirmation from the Donor or soliciting officer, including via email.
- Pledge Contacts. Pledge contacts are those who are expected to monitor the collectability of active pledge balances. Annually, pledge contacts will be provided with a list of pledges with payments overdue by more than one year. Pledge contacts are expected to confirm the pledges, adjust schedules as needed (executing the required proper documentation with Donors), or requests that balances be written off (with explanation for the record). Pledge contacts are required to respond to the overdue pledge review and report actions taken for pledges with payments overdue for more than one year.
- Writing Off Pledges. Pledge balances are ordinarily written off for commitments that have expired (the stated payment period in the agreement has lapsed) and for which no payments have been received for three years or more. Such pledges may be kept active at the request of the pledge contact. Write-offs must be approved by the Vice President for Development and Alumni Engagement of pledges of $25,000 or more. All write-offs should be communicated to the University’s Controller’s Office.
- Non-Endowed Funds
Non-endowed funds are funds which are used for expendable, or current use purposes, and will be expended upon receipt, typically in the same fiscal year in which the Gift is received.
- Endowed Funds
There are two types of endowed funds: traditional or permanent endowed funds (i.e. principal/corpus cannot be spent) and a Quasi-Endowed Fund (i.e., has language which permits principal to be spent assuming certain criteria are satisfied). The following provisions apply to both types:
- General. A Donor may contribute to an existing endowed fund or establish a new named endowed fund, subject to the University’s Endowment, investment, and spending policies, for general purposes of the University or for restricted purposes as approved in accordance with this Policy.
- Termination. A Quasi-Endowed Fund may be terminated if the Board of Trustees, upon recommendation of the President, in consultation with the Vice President for Development and Alumni Engagement, and the Vice President of Administration and Finance, determines that the market value of the assets remaining within the fund is uneconomically low in relation to the cost of administering the fund; provided that gift agreements creating Quasi-Endowed Funds must provide the University with such authority to terminate the fund. In such case, all remaining assets within the Quasi-Endowed Fund shall be transferred to the general endowment of the University to be administered pursuant to general endowment’s terms.
- Minimum Contribution. Minimum commitment levels for the most named endowed funds are as follows:
- Professorships – An endowed academic professorship (also known as a chair) may be established with a minimum gift of $2 million;
- Junior Professorships/Visiting Professorships – A junior chair or visiting chair may be established with a gift of at least $1 million;
- Fellowships – An endowed fellowship (for graduate students) may be established with a minimum gift of $375,000;
- Scholarships – An endowed scholarship (for undergraduate students) may be established with a gift of not less than $50,000;
- Lectureships – An endowed fund for a lectureship may be established with a gift of at least $500,000;
- Programs – Programs, which include academic and non-academic programs, centers, institutes, departments, schools, and colleges, can be endowed at values determined through a market analysis of comparable entities at other universities at the time of the gift and based on an assessment of the Gift’s ability to either propel growth or provide budget relief. These Gifts, which are typically significant, must be first approved by the President and then the Board of Trustees; and
- Others – Gifts to establish other restricted endowed funds are considered provided they support traditional academic activities or functions and are established with a Gift of not less than $25,000.
If the Donor designates a deferred Gift to establish an endowed or restricted fund, the gift agreement will include a proposed name for said fund and a provision that the Gift must reach the minimum amount required to establish such a fund at the time the Gift is realized.
- Administration of Endowed Funds
The assets contained within each endowed fund shall be commingled for investment and administration purposes with the general endowment of the University, provided that each fund shall be separately accounted for, properly diversified, and invested in accordance with the goals and objectives of the fund. All policies applied to those endowed funds, including the formula for spending from endowed funds, shall apply to all endowed funds
- Donor Flexibility
Donors are encouraged to recognize that over the many years following the establishment of an endowed fund, the needs, policies, and circumstances of the University can change in unforeseen ways. The University desires the flexibility to make use of funds in the best interest of the institution and in accordance with Donor intent, interests, and specifications. Therefore, as a best practice measure, Donors are advised to describe the specific purposes of their Gifts as broadly as possible and to avoid detailed limitations and restrictions.If the Vice President for Development and Alumni Engagement, or their designee, determines that a Gift will place unreasonable constraints and/or conditions upon the resources and finances of the University, the Donor will be contacted to request that any unacceptable restrictions be altered or eliminated. If these restrictions cannot be altered or eliminated, the University may refuse to accept the Gift. The Vice President for Development and Alumni Engagement will determine the best person to contact the Donor.
D. TYPES OF PROPERTY GIFTS
- Cash and Cash Equivalents
Cash and cash equivalents are often the easiest way to make a Gift and are the form of Gift most frequently made by Donors. The University will accept Gifts of U.S. or foreign currency, checks drawn on U.S. or foreign banks, and credit card payments (via VISA, MasterCard, Discover, and American Express), as well as Gifts delivered via Electronic Funds Transfer (“EFT”) or wire transfer. Cash Gifts may be delivered in person, by mail, EFT, wire, or via the Internet through the University’s online-giving site. University faculty and staff may also make contributions via payroll deduction.
- Matching Gifts
Many corporations have programs to promote civic engagement by matching the charitable gifts their employees donate to qualified charitable organizations. Donors employed by or, if appropriate, retired from such corporations are encouraged to take full advantage of corporate Matching Gift programs. When the Matching Gift is received by the University, the Donor’s employer will receive legal (tax) credit for its gift, and the employee will receive Donor recognition (soft) credit, which will be counted toward qualification for inclusion in honor rolls and for events and giving societies. The general policy of the University is to direct Matching Gifts to align with the same area(s) or program(s) as the original Gift unless the Donor’s employer stipulates otherwise. Matching Gifts cannot be used to fulfill personal pledges, as the employee does not have legal control over these corporate funds.
- Third-Party Gifts/Assignment of Income
The University will accept third-party Gifts or assignment of income. These can include Gifts from private foundations, Donor-advised funds at community foundation, or private companies at the advice or direction of third parties. Additionally, a Donor may assign to the University any income to which the Donor is entitled or authorized to receive from a third party, such as payment for service on a corporate board, honoraria, consulting payments, etc. Because the Donor does not control these funds, a Donor’s representation or promise of income to be assigned will not be reported as a pledge. The Gift will be recorded only when it is received by the University. If a third party makes payment directly to the University and the Donor will not declare that payment as part of their income reported to the IRS, then legal credit will be given to the payor and recognition credit (soft) will be given to the Donor. If the Donor declares that payment as part of their reportable income and provides a written statement to that effect to the University, legal credit for the Gift will be given to the Donor.
- Marketable Securities
The University will accept Gifts of securities, including stocks, bonds and mutual funds. In accordance with federal tax regulations, they will be valued at the mean of the high and low quoted selling prices on the date of Gift, i.e. the date when the Donor relinquishes dominion and control in favor of the University, regardless of the actual date that the University sells the security. When dominion or control has been relinquished by a Donor depends upon the method of delivery of the securities. For example, stock transferred electronically is valued as of the date the securities are received into an account owned by the University. Stock mailed to the University is valued as of the latest postmark date of either the envelope containing the stock certificate(s) or the envelope containing any required valid stock power(s). Stock directed by the Donor to be registered in the name of the University will be valued as of the date the stock is so registered. Stock that is personally delivered to the University in negotiable form is valued on the date received by the University. Soliciting officers and other appropriated University Advancement officials are responsible for notifying the Director of Advancement Operations (or equivalent title) of anticipated gifts of stocks and/or bonds. Because stock is often transferred by a broker directly to a University account, which can make it difficult to identify Donors, it is important that the University receive advance knowledge of the name of the Donor, the nature and number of shares to be transferred, and the Donor’s intent regarding gift designation. In general, the University’s policy is to dispose of all Gifts of securities as expeditiously as possible. Donors are advised to consult their financial advisors for specific information regarding the tax consequences of any Gift of securities.
- Closely Held Stock
All Gifts of non-traded stocks and bonds are subject to review by the Vice President for Development and Alumni Engagement and the University’s General Counsel. This review is required because (a) these stocks are not traded on stock exchanges and are difficult to value, (b) they may be subject to shareholder or other agreements that may limit the ability to convert them into cash, and (c) there may be federal regulations and laws to which the University must adhere. The University may decline a Gift of such securities if it deems them difficult to value or not easily marketable.
Cryptocurrency, broadly defined, is digital money which takes the form of virtual tokens or coins. Still fairly new, the field of cryptocurrencies is always expanding; at this writing, Bitcoin is the most widely known, and leads the pack in terms of market capitalization, user base and popularity. Again at this writing, the short list of leading cryptocurrencies includes Bitcoin, Ripple (which was used to make a $25 million gift to San Francisco State University, the largest gift of its kind to date), Litecoin, Ethereum, DASH, ZCash, Monero, NEO, Cardano, and EOS. Similar to the more traditional securities markets, there is a spot market that values cryptocurrency daily. Charitable gift value would be determined by the date the cryptocurrency is irrevocably transferred to the University. Market volatility would determine whether an immediate sale is practical. Depending on the size of the Gift, it may be more prudent to slowly sell equal lots of tokens in exchange for U.S. currency, weekly over an extended period not to exceed six (6) months. Any market maker/taker fees should be taken into consideration and borne by the Donor.
- Interests in Partnerships and Limited Liability Companies
Interests in partnerships and limited liability companies may only be accepted with the prior written approval of the President, Vice President for Development and Alumni Engagement, and the General Counsel. The principal factor to be considered shall be a determination that the University will not incur liability as a result of holding this asset. The University’s Office of General Counsel will review the governing documents of the partnership or limited liability company to determine if capital call provisions might require the University to contribute funds to the partnership or limited liability company. Additionally, the University shall seek indemnification from the Donor from any third-party claims, potential tax liabilities, and potential capital contribution requirements. Assuming there are no such capital call provisions, the University’s Office of General Counsel must determine whether the entity is either a limited liability company or a limited partnership and, if the latter, that the interest the University will receive is a limited partner interest. The University will not accept general partner interests.
- Tangible and Intangible Personal Property
The University may consider Gifts of tangible and intangible Personal Property at its discretion, which are subject to approval by the Board of Trustees, in consultation with the President and the Vice Presidents for Development and Alumni Engagement and Finance and Administrative Services. All Gifts of this type are also subject to review by the Office of General Counsel. Examples of tangible Personal Property include, but are not limited to, works of art, manuscripts, vehicles, boats, computer hardware, developed software, equipment, and livestock. Examples of intangible Personal Property include, but are not limited to, software under development, patents, copyrights, royalties, goodwill, trade names and trademarks, partnership interests, and intellectual property. The University may decline to accept Gifts donated on the condition or expectation that the items will be permanently exhibited or if the University, in its sole discretion, determines that the Gifts impose an undue burden, including but not limited to storage or insurance requirements, or other associated costs related to maintenance. Whenever a Donor estimates the value of a Gift of Personal Property to be $5,000 or greater, a written appraisal by a qualified independent appraiser is required. The University cannot appraise or assign valuation to Gifts of Personal Property. Qualified appraisal refers to a type of appraisal document that meets IRS appraisal standards. These appraisals must be conducted by a qualified independent appraiser. Determining the value of a piece of property is especially important when making a donation, since an improper valuation can result in either a lowered deduction or a red flag by the IRS for a valuation that seems too high. A qualified appraiser is an individual who has earned an appraisal designation from a recognized professional appraiser organization. This designation is awarded on the basis of demonstrated competence in valuing the type of property for which the appraisal is performed. An individual can also become a qualified appraiser if they have met minimum education and experience requirements set forth by the IRS. Additionally, a qualified appraiser has also successfully completed college and professional-level coursework, and has obtained at least two (2) years of experience in the business of buying, selling, or valuing similar types of property.It is the policy of the University to sell or otherwise dispose of all Gifts of Personal Property. Any Gifts of Personal Property that are to be retained by the University for use in advancing its mission are considered “Gifts in Kind” and are discussed below. The sale or disposition of the donated property will be executed in consultation with the Vice President for Development and Alumni Engagement. If the University disposes of the donated property within three (3) years of the date of the Gift, the University must file an information return on IRS Form 8282 and send a copy to the Donor. Any costs incurred by the University that are associated with the conveyance, delivery, and maintenance of the Gift should be borne by the Donor or by the University department, program, or unit that will benefit from the Gift.
Gifts-in-kind are Gifts of tangible or intangible Personal Property that will be retained and used by University faculty, staff, and/or students. It is imperative that the property be used to complement the core mission of the University in the areas of teaching, research, creative endeavors, outreach programs, or a combination thereof. Any restrictions placed on the use of the property by the Donor must be consistent with the institutional needs of the University. The need for and potential use of the Gift property should be approved by the respective University dean or director before the Gift is accepted. Title to the Gift property should be clear and unencumbered and properly documented, and will be immediately transferred to the University at the time of the Gift. Careful consideration will be given to the marketability, storage, transportation, and insurance and disposal costs of all Gifts of Personal Property. Any costs incurred by the University that are associated with the conveyance, delivery, and maintenance of the Gift will be borne by the Donor or by the University department, program, or unit that will benefit from the Gift.
- Gifts of Artwork, Manuscripts, and Special Collections
Gifts of artwork, manuscripts, and special collections must be made with the knowledge of the University and the approval of the appropriate University entity: the Arcadia University Gallery or the Landman Library. Gifts offered directly to those entities will be accepted according to their respective Collections Management Policies. If the Gift is a piece of artwork, an agreement must be drafted that includes the stated value of the work, as well as how the Donor wants the work to be recognized. If the artwork is valued at $5,000 or more, a copy of an independent appraisal (paid for by the Donor) needs to be attached to the Deed of Gift. If the artwork is valued at $20,000 or more, a picture of the artwork must accompany the gift agreement and appraisal. Provenance, a record of ownership, must also be included. In accordance with IRS regulations, Gifts valued at $5,000 or more require an independent appraisal. For Gifts received from the artist directly, the value of the Gift is determined by and limited to the cost basis.
- Gifts of Services
In accordance with IRS regulations and standards adopted by the Council for the Advancement and Support of Education (“CASE”), a person’s or organization’s time or service is not considered a charitable contribution. The value of that time or service will not be counted or credited as a contribution, regardless of whether the individual assists the University as a volunteer or as a professional providing a specialized service; e.g. accounting, legal work, consulting, or printing.
- Real Property
The University will accept Gifts of real property (improved and unimproved) including detached single-family residences, condominiums, cooperative units, apartment buildings, rental property, commercial property, farms, and acreage. These Gifts may include real property that is subject to a retained life estate or other planned gift vehicle. The University will not accept Gifts of time-share properties.All Gifts of real property are subject to a thorough review by the University’s Office of General Counsel and the Board of Trustees, who will consider the following factors:
- The usefulness of the property for University purposes;
- The marketability of the property;
- The existence of restrictions, reservations, easements, and/or other limitations;
- The existence of encumbrances, such as mortgages, deeds of trust, and mechanics’ liens;
- The existence of clear and properly documented title to the property;
- An environmental assessment study performed by a qualified company;
- Carrying costs, such as property owner’s association dues, real estate taxes, insurance, utility services, transfer fees and other maintenance expenses; and
- Fair market value in relation to the costs and limits listed above as determined by a qualified appraisal conducted in accordance with Internal Revenue Service standards, which is to be provided by the Donor at their expense.
Limitations and encumbrances will be carefully reviewed before a Gift can be accepted, including any and all mortgages, deeds of trust, restrictions, reservations, easements, mechanics’ or other liens and other limitations of record. Generally speaking, no Gift of real estate will be accepted until all mortgages, deeds of trust, liens, and other encumbrances have been discharged. Exceptions may be made when the fair market value of the University’s interest in the property, net of all encumbrances, is deemed to be substantial, or when a separate agreement to pay any encumbrances that might be charged to the University has been executed by a financially responsible party. Prior to the acceptance of any parcel of real property, an assessment of the potential environmental risks will be conducted. This assessment shall include the following:
- An inquiry of the present owner regarding his, her, or its knowledge of the history of the property;
- A title search to determine prior property ownership;
- A consultation with federal, state and local environmental agencies to determine whether the property has any history of hazardous waste contamination; and
- A visual inspection of the property for any evidence of environmental hazards.
An environmental audit conducted by a professional service in the form of a Phase I Environmental Site Assessment also may be required.
The University may require an inspection by a properly licensed or certified professional for all Gifts of real estate, including an interest in mining or oil and gas properties, as may be required to demonstrate due diligence and care in accepting the property as free from contamination. Any such inspection shall be documented properly for legal reasons.
All expenses associated with a Donor’s Gift of real property, including appraisals, surveys, and environmental risk assessments, shall be borne by the Donor. In general, the University’s policy is to dispose of all Gifts of real estate as expeditiously as possible. This policy must be communicated to the Donor when the University receives notification of the Donor’s desire to make the Gift.
- Remainder Interest in a Residence or Farm
A gift of remainder interest in a personal residence or farm should be credited both at the present value of the Gift calculated in accordance with Generally Accepted Accounting Principles (“GAAP”) guidelines and at face value. Such Gifts may not be accepted without prior written approval of the Board of Trustees.
- Bargain Sales
Bargain sales are a way to make charitable gifts using property – tangible, intangible, or real. If a Donor sells property to the University for less than fair market value with the intent of making a Gift, the transaction is partly a sale and partly a Gift. Bargain sales can also arise when a Donor transfers property to the University in exchange for like-kind property of lesser value, or when a Donor transfers property that is subject to indebtedness, thereby being relieved of the obligation.
Bargain sale transactions (other than charitable gift annuities) may be accepted by the University only with the prior written approval of the Vice President for Development and Alumni Engagement and the Vice President of Finance and Administrative Services, and as applicable, the Office of General Counsel. Since bargain sale transactions require the outlay of funds by the University, these transactions should first be approved by the President and only in very limited circumstances. One such circumstance involves property that the University intends to keep for use in its programs that may be acquired on beneficial terms in a bargain sale transaction. In limited circumstances, the University may consider bargain sale transactions to acquire property that would not be retained for use in the University’s programs, if it is determined in the approval process that the property can be sold for cash in a timely manner.
- Raffles, Sweepstakes, and Games of Chance
Due to the complicated laws and rules relating to raffles, sweepstakes, and games of chance, as well as their non-philanthropic nature, the University does not include this activity within the purview of UA.
- Planned Giving
Unless approved in advance by the Vice President for Finance and Administrative Services, the University or any of its employees, in their capacity as officers and/or representatives of the University, will not agree to serve as executor of a decedent’s estate or as trustee of a living trust or other trust intended to serve as a person’s primary estate planning document.
A Bequest is a gift to be made upon the death of a Donor, or the death of a Donor and other designated individual(s), to the University as documented in a Donor’s Last Will and Testament or other legally binding testamentary document. Gifts made via a Bequest may be specific, residuary, or contingent, unrestricted or restricted, and may include any item of value. If a Donor designates a Bequest for a restricted use for which the Donor did not execute an agreement with the University during their lifetime, to provide administrative ease and clarification, the Office of Gift Planning will oversee the preparation of a memorandum of understanding that is consistent with the terms of the Donor’s will regarding the designation of the Bequest, according to University Advancement procedures in place at that time. If the Vice President for Development and Alumni Engagement, in consultation with the Director of Gift Planning (or equivalent title), determines that a Bequest will place unreasonable constraints and/or conditions upon the University, or that any restrictions regarding the University’s use of a Bequest are unreasonable or legally impermissible, the Director of Gift Planning or their designee will contact the estate executor to request that the unacceptable restrictions be altered or eliminated. If this approach is not successful, the University may consider engaging legal counsel to petition an appropriate court for permission to alter or eliminate a restriction. Alternatively, acceptance of the Bequest may be refused or disclaimed. Once the Bequest has been approved for acceptance, the designated member of the University Advancement Team will cooperate with the executor of the Donor’s estate to complete whatever action is required to affect legal transfer of the Gift from the estate to the University. Bequests may provide for a specific dollar amount in cash, specific securities, specific articles of tangible Personal Property, or a percentage of the residue of the estate. Bequests may be given as unrestricted or restricted Gifts. Unrestricted bequests are applied to the unrestricted University endowment and can be designated to current needs but should not be conflated as a Gift to the University’s annual fund. A named unrestricted endowed fund may be established as indicated in the above section on “Outright Gifts.” A restricted Bequest supports a certain purpose or program as designated by the Donor. Again, such a fund may be established as indicated in the section on “Outright Gifts.” A Gift in any amount may be accepted as a contribution to an existing fund earmarked for a specific need of the University as long as the terms and conditions of the existing fund so permit. Among Donors’ options are residuary and contingent Bequests. A residuary Bequest will give the University all or a portion of the estate after all debts, taxes, expenses, and all other bequests have been paid. A contingent Bequest will ensure that, despite unforeseen circumstances, specified property will pass to the University. Gifts may be made to the University through the execution of a new will or through a codicil to an existing will. All unrestricted realized bequests will be placed into the University’s permanent endowment. The following terminology/counting rules will apply to Bequests:
- Bequest Intention
Bequest intentions are documented by evidence that the University will receive a Bequest upon a Donor’s death. The University generally does not record Bequest intentions as Pledges. The Gift Review Committee may make an exception in certain circumstances, such as when the University receives a legally binding, irrevocable Pledge to be paid in part from an estate.
- Bequest Gifts
Should the University receive a Bequest upon probate completion, and has not previously designated the Bequest as an intention or Pledge, the Gift upon receipt will be designated a bequest gift.
To be counted, a Donor must provide written documentation that the University is a listed as an irrevocable beneficiary. If the Donor is aged 65 or above at the time of the Gift (or by the end of the campaign public phase, if in a campaign), Bequests will be counted at face value. They will be discounted for Donors aged 45-64 per the following scale:
|Age 45-49: 20%||Age 60-64: 80%|
|Age 50-54: 40%||Age 65+: 100%|
|Age 55-59: 60%|
For Donors below the age of 45, written bequest intentions are welcome, but Bequests will not count toward achievement totals.
- Bequest Pledges
Once notified by a Donor’s estate representative, after the Donor’s passing and toward the completion of probate that the University will be receiving a designated amount, the amount will be recorded as a bequest pledge. Bequest pledges are irrevocable and are treated the same as gift pledges from an accounting and GAAP perspective. c. Bequest Gifts Should the University receive a Bequest upon probate completion, and has not previously designated the Bequest as an intention or Pledge, the Gift upon receipt will be designated a bequest gift.
- Charitable Gift Annuities
A Charitable Gift Annuity is a simple contract that articulates both a contribution and an investment. Funded with cash or readily marketable securities, the Charitable Gift Annuity is a simple contractual agreement that provides guaranteed fixed annual annuity payments to one or two named beneficiaries for life. The rate of the annual payment, which may begin immediately or be deferred for one (1) year or more, is determined by reference to the suggested rates as adopted by the American Council on Gift Annuities (“ACGA”) from time to time. Life income received by the Donor is not insured by any governmental agency, but is backed by the assets of the University. When the Charitable Gift Annuity is created, the Donor receives an income tax charitable deduction that may be carried over for an additional five (5) years. Moreover, a portion of the annual annuity amount may often be tax-free, since it is considered a return of principal.
The University will accept Charitable Gift Annuities that meet a minimum gift level of $10,000. For immediate annuities, the age of the income beneficiary must be sixty (60) or greater; if payable to joint annuitants, their average age must equal sixty (60) or greater at the time annuity payments commence. For deferred annuities, the age of the income beneficiary must be fifty-five (55) or greater; if payable to joint deferred annuitants, the average age must be at least fifty-five (55) at the time the annuity payments commence.
- Pooled Income Funds
A pooled income fund is a deferred giving vehicle which is not as popular as it once was. The fund operates to accept, commingle, and invest the gifts of numerous Donors. Obtaining a “unit” in a pooled income fund is similar to buying a share of a mutual fund. Just as a mutual fund combines investments, a pooled income fund combines gifts from Donors into a common investment pool. To invest in the fund, Donors may contribute cash, securities, or other assets.
The pool is invested in a diversified portfolio. A pro-rata share of income earned by the pool is distributed annually to each Donor and/or other income beneficiary. Donors also receive income tax deductions based on the fund’s rate of return the previous three (3) years, the number of beneficiaries, and the beneficiaries’ ages.
Upon the Donor’s death, the Donor’s share in the pooled income fund is severed and turned over to the University. The fund itself does not terminate, but continues to administer the gifts of other Donors. The University is not actively seeking to add new Donors to the University’s pooled income fund at this time.
Pooled income funds will be counted at face value for gift counting purposes. The discounted present value will also be recorded and tracked.
- Charitable Remainder Trusts
A charitable remainder trust is a custom-designed and individually managed trust that enables the Donor to receive annual income, claim a current income tax charitable deduction, and make a future Gift to the University. Charitable remainder trusts provide income to the Donor and/or their named income beneficiary(ies), either for life or for a term of one (1) to twenty (20) years. At the death of the last surviving beneficiary or the end of the term, the trust terminates and the remainder is passed to the University.
Remainder trusts can be funded with a wide variety of assets. They can be established during the Donor’s lifetime or through their estate, and the Donor (or the estate) will receive a current income or estate tax charitable deduction.
Charitable Remainder Annuity Trusts (“CRATs”) pay a fixed payout rate that remains unchanged over the trust term. While this means that additional contributions to an annuity trust are not permitted, it also provides the certainty of a fixed amount of income each year, regardless of any fluctuations in the value of the trust assets.
Charitable Remainder Unitrusts (“CRUTs”) pay an amount that is recalculated annually, based on the annual market value of the trust assets. This may provide a hedge against inflation: if the value of the trust principal increases, so does the Donor’s income. The converse is also applicable on an annual basis. Donors may make additional contributions to the trust principal. There are several different ways to structure a CRUT, each designed to suit a Donor’s specific circumstances.
The minimum gift level for the University to accept charitable remainder trusts is $100,000. Charitable remainder trusts will be counted at face value for gift counting purposes. The discounted present value will also be recorded and tracked.
- Charitable Lead Trusts
Charitable Lead Trusts may be viewed as the opposite of a charitable remainder trust. A Donor transfers property to the lead trust, which pays either a fixed amount or a percentage of the value of the trust assets to the University, usually for a term of years. At the end of the trust term, the trust terminates and all of the trust assets pass to the Donor’s designated heirs. A lead trust can offer significant income tax, gift tax, and estate tax benefits to the Donors and their families.
The University will accept income from a Charitable Lead Trust funded at any level. It will not, however, act as trustee or successor of any Charitable Lead Trust.
The minimum gift level for a Charitable Lead Trust is $100,000. A Charitable Lead Trust will be counted at face value for first five (5) annual payments, discounted present value for remaining years.
- Life Insurance
The University will accept gifts of cash value Life Insurance Policies where it has been named the owner and the beneficiary of the Policy. The University will also accept fully paid cash value Life Insurance Policies where ownership has been transferred to the University. In either scenario, the Policies must have a face value of at least $10,000. To accept a Policy, a Gift of a Life Insurance Policy must meet the following criteria:
- The University is designated as both the beneficiary and the irrevocable Policy owner.
- The Policy is a cash value Life Insurance Policy which is either:
- Fully paid as of the date of gift, or
- Not fully paid as of the date of the gift, but has a payment schedule of not more than five (5) years.
This situation requires charitable contributions to be made by the Donor to the University in an amount which is at least equal to any premiums, including unscheduled premiums, which may become due in order to maintain the Policy. The Donor’s payment of premiums is a condition of a gift of a Life Insurance Policy where the University has been named an irrevocable owner and beneficiary.
The University will pay Life Insurance Policy premiums on a timely basis (provided the Donor has not paid the premium directly). If a premium notice is received by the University before the Donor has made the gift to cover the required premium, the University will pay the premium in order to keep the Policy active and will notify the Director of Gift Planning (or equivalent title), who will send a reminder to the Donor. Premium non-payment by a Donor may result in a decision by the University to have the University absorb the cost of the premium, allow the Policy to lapse, cash in the Policy, or pursue a viatical settlement arrangement.
The Gift will be counted at cash surrender value for a fully paid Policy and for those within five (5) years of payments; and cash settlement amount for realized death benefits provided and not previously counted. Premium payments made by the Donor are treated and counted as a charitable gift if the five (5)-year payment clause is met.
The Gift will be completed upon the execution and delivery of the Life Insurance Policy to the University, or upon transfer of the Policy if the University is not the original owner of the Policy.
If the Donor designates the Gift to establish an endowed or restricted fund, the gift agreement will include the provision that the Gift must reach the required minimum gift level when the Gift is realized in order to establish such a fund.
- Remainder Interest in a Farm/Personal Residence/Life Estates
Donors can receive favorable tax treatment by making a Gift to the University of their personal residence or farm while retaining full use and rights to the property during their lifetime. Thereafter, the residence will either be sold or used by the University for purposes specified by the Donor but related to the University’s mission and objectives. The Donor irrevocably transfers legal ownership of the property to the University but retains a “life estate” for the lifetime of the Donor and/or their designee, and the University receives the “remainder interest” in the property.
Retained life estate gifts are subject to all of the policies and procedures for both Gifts of real estate and gift annuities. In addition, the Donor must sign a “life estate agreement” with the University, prepared by the Office of General Counsel, which will articulate the Donor’s on-going responsibility for maintenance of the property, taxes, insurance, and other expenses.
- Retirement Plan Assets
The University will accept funds it receives as the designated beneficiary of a Retirement Plan (e.g., an IRA, a 403(b) plan, a 457 plan, a 401(k) plan, or a defined contribution plan). Ideally, the Office of Gift Planning should obtain a copy of the executed designation form that the Donor has submitted to the retirement plan administrator to name the University as the beneficiary.
Also, Donors who are 70 ½ and required to take minimum distributions (“RMDs”) may authorize their IRA administrators to rollover up to $100,000 annually to a 501(c)(3) organization as a qualified charitable distribution (“QCD”). A rollover check received must be cashed in the calendar year in which the Gift is intended. The University must take prudent care to process these Gifts particularly at the end of the calendar year. These IRA charitable rollovers are not eligible for life income gifts, Donor Advised Funds, or additional favorable tax treatment.
- Corporate Giving
Corporate gifts will be defined as current use, endowment, plant gifts, or philanthropic grants for an approved, designated purpose for which the legal donor is a corporation or corporate foundation. Solicitation and acceptance of corporate gifts will align with the University’s social responsibility investment policy (e.g. regarding investments in tobacco companies.)
All potential corporate gifts that have associated rights to Naming Opportunities, as defined by the Naming Opportunities Policy, will be discussed with the Vice President for Development and Alumni Engagement and any University leader whose area may have a relationship with the potential Donor. The proposed Gift will be reviewed confidentially with the Gift Review Committee before a formal solicitation is presented to the prospective Donor. All potential corporate gifts of $500,000 or more from University vendors will be presented and discussed with the Gift Review Committee before an official solicitation is presented to evaluate any real or perceived conflict of interest.
All potential corporate gifts of $500,000 or more shall be reviewed in light of the University’s Financial Conflict of Interest Policy.
All potential corporate gifts of $1 million or more, whether or not they include a Naming Opportunity, will be discussed with the Vice President for Development and Alumni Engagement as soon as possible in the cultivation process. The proposed Gift will be discussed with any other University leader whose area may have a relationship with the Donor and will determine if the Gift Review Committee needs to evaluate the potential Gift before an official solicitation is presented.
E. GIFT AGREEMENTS
The University requires the use of a gift agreement signed by the donor and an appropriate representative of the University to codify and formalize (a) all outright gifts of $25,000 or more for which new funds need to be established, (b) all commitments (pledges) of $25,000 or more, (c) all outright gifts of more than $50,000 intended to supplement existing funds, and (d) any amendments to the terms of an existing fund.
The gift agreement must include:
- The amount of the Donor’s commitment to the University;
- A schedule of payments (generally not to exceed five (5) years) to fulfill the commitment made;
- A statement identifying the asset type used to fulfill the commitment made; and
- The purpose for which the commitment made will be used to facilitate stewardship and institutional compliance.
The commitment should not impose any unreasonable financial or administrative burden on the University and should be in accordance with the gift acceptance principles articulated in the gift agreement’s section pertaining to “Purpose.”
Outright gifts to the University in excess of $25,000 which are designated as supplemental to existing funds, and annual giving commitments in excess of $10,000 may be codified and formalized by a written letter signed by the Donor that clearly articulates the name of the fund into which the Gift is to be added. The signed letter may not include any modifications to the terms or purpose of the existing fund.
Any gift requiring a gift agreement must be accepted on behalf of the University by the Vice President for Development and Alumni Engagement. For all endowed gifts, the President and the Vice President for Development and Alumni Engagement must sign in order for the agreement to be fully executed. Acceptable signatures include originals (wet), pdfs, and electronic signatures. Email chains cannot qualify as gift agreements, including those referencing subsequent agreement revisions.
For gift agreements requiring an English translation, such translation must be made by a translator or translation service approved by the University. The English translation of the gift agreement will be the version that is officially signed on behalf of the University. In the event of a conflict or question of interpretation between the foreign language and the English versions, the English version will govern. Any exceptions to this procedure require the approval of the Gift Review Committee. The cost of translation, if not borne by the Donor, will be borne by the area benefiting from the gift.
A Bequest is a Gift from a Donor’s estate that is made by including language in the Donor’s will or living trust indicating that the Donor wishes to leave a portion of their estate to the University. Bequests may be made for a specific amount, a percentage of the Donor’s estate, or for all or a portion of what is left after other bequests have been made.
A Charitable Gift Annuity is a contract between a Donor and the University, whereby the Donor transfers cash or property to the University in exchange for a partial tax deduction and a lifetime stream of income from the University.
A Charitable Lead Trust is an irrevocable trust that provides an income stream for the University for a term of years or the life of one or more individuals, with the remainder passing to a family member or other noncharitable beneficiary.
A Charitable Remainder Trust is an irrevocable trust that allows the Donor and/or other beneficiaries to receive an income stream for a period of years or the life of one or more individuals, with the remainder of the assets passing to the University.
A Charitable Grant consists of payments by an institutional donor (i.e., a DAF, foundation, or corporation) in response to a recommendation made or proposal requesting funding for a school or specific project over a set period of time.
A Donor is an individual, or institution, or organization who has irrevocably transferred a monetary asset or tangible property to the University.
A Donor Advised Fund is a charitable giving vehicle maintained by a public charity that allows a Donor to make a contribution to that charity and receive an immediate tax deduction, and then recommend charitable grants over time to any IRS-qualified public charity.
An Endowment is a collection of funds whose principal/corpus cannot be spent.
A Gift (or charitable contribution) is an irrevocable, unconditional, voluntary and non-reciprocal transfer or donation of funds or property to the University from an individual or entity that is accompanied by philanthropic intent and for which the Donor does not receive or expect anything of value. This includes donations of surplus property by a governmental or other public sector entity. A charitable gift may, in some circumstances be described as a philanthropic or charitable grant.
A Life Insurance Policy is a contract with an insurance company that, in exchange for premium payments, provides a lump sum payment to named beneficiaries upon the insured’s death. This gift type can be revocable or irrevocable, depending on how the gift is structured.
A Matching Gift is a Gift that is made contingent on another Donor’s Gift. Matching Gifts are generally made by corporations that agree to match Gifts made by their employees, officers, directors, or retirees.
Gifts of Personal Property are Gifts of tangible or intangible Personal Property that will be retained and used by University faculty, staff, and/or students to complement the core mission of the University in the areas of teaching, research, creative endeavors, outreach programs, or any combination thereof.
A Planned Gift is a Gift that represents a Donor’s present decision to make a future Gift, as evidenced through a written gift instrument.
A Pledge is a good faith commitment to make a Gift to the University, as evidenced through a written gift instrument.
A Quasi-Endowed Fund is a collection of funds that have been restricted by the Board of Trustees to be invested in the long-term investment pool in order to provide income over a long period of time.
Gifts of Real Property are Gifts of real estate (improved and unimproved), including detached single family residences, condominiums, cooperative units, apartment buildings, rental property, commercial property, farms, and acreage.
A Restricted Gift supports a certain purpose or program as designated by the Donor.
Stewardship is meeting a Donor’s gift intentions and expectations within the parameters of the University to create a long-term, mutually beneficial relationship.
University refers to Arcadia University, its colleges, schools, affiliates, divisions, and subsidiaries.
VI. Effective Date
This Policy is effective on the date that it is signed by the President
VII. Date of Approval
June 25, 2020