Gift & Endowment Income Funds FAQs & Answers

Transcription

1 Gift & Endowment Income Funds FAQs & Answers Gift Funds - Basic Information Q. I need to set up a new gift or endowment income fund. What steps do I need to take? A. A University of Illinois Foundation (UIF) fund (which is separate from a Banner gift fund, as the UIF maintains its own set of records in a separate system outside of Banner) is required when your unit will be receiving gifts from donors. This is required as the UIF processes all incoming donations for the University via these UIF gift funds. The UIF can establish endowment funds for gifts that are to be held for investment, current use funds for gifts that are available for immediate use, and non-gift funds which are used to process fundraising proceeds. So, the Request to Create a Foundation Gift Fund is the form to complete when a new UIF gift fund needs to be established. Once these UIF funds are established, the UIF has the capability to sweep the related endowment income & gift/non-gift revenue from these UIF funds to the related Banner gift funds. Once this revenue has been swept to the related Banner gift funds, it is then available to the unit for spending out of Banner. Once the UIF gift fund is established, there may also be a need to request a new Banner gift fund to tie to this UIF fund, as this is where UIF will sweep the related revenue to for spending. To request a new Banner gift fund, complete the Banner Fund, Program, Index Code Request Form and the completed form to the UIF at newaccounts@uif.uillinois.edu. The UIF will review these requests for donor intent coding purposes and will then forward the requests on to UAFR for completion. Once the Banner gift fund is established, the UIF will link this new Banner gift fund to the related UIF gift fund. Units also may wish to occasionally create a new gift fund in Banner which will be funded from another Banner gift fund (as opposed to being funded from a UIF fund). For example, a unit may want to transfer funds out of one of their unrestricted gift funds and into a new gift fund which they want to use for a different isolated purpose (for example, a professor s research). In these cases, the unit does not need to complete the form for creating the UIF fund (since this new Banner fund will be funded via fund transfers from another Banner gift fund, not from UIF) they would simply need to complete the Banner Fund, Program, Index Code Request Form in that type of situation. However, the request for the new fund still must be sent to newaccounts@uif.uillinois.edu since the Foundation is responsible for adding the applicable donor intent codes to these funds. One other note worth mentioning - occasionally, gifts are given directly to the University (i.e., the gifts are made out or left to the "University of Illinois" as opposed to the "University of Illinois Foundation"). These type of gifts are held as University endowments and the related investment income sweeps into a 4J endowment income fund. To establish a 4J University endowment income fund, simply complete the Banner Fund, Program, Index Code Request Form and the completed form to newaccounts@uif.uillinois.edu. The UIF will then review these requests and add the applicable donor intent codes, and then forward the requests

2 to UAFR for completion. If you have any specific questions on how to complete these forms or how this process works, call either UAFR at (217) or the Foundation at (217) Q. What will the new fund number on these gift and endowment income funds look like? A. Gift funds have a 4M ("Trust - Private Gifts") fund type (you can find the fund type of a fund on Banner form FZMFUND). These 4M funds have a fund number that falls into the range. Note that other fund types also fall within this numerical range (for example, 4S - Medical Service Plan funds), so this numerical range is not limited strictly to gift funds. The endowment income funds, which were defined in the previous FAQ, have a 4J fund type. The fund numbers for these 4J endowment income funds fall within the range. If you have additional questions, contact UAFR at (217) Q. How do we know which program codes to assign to these new Banner gift and endowment income funds? Also, how do we know whether the current program codes assigned to our existing Banner gift and endowment income funds are correct? A. Gift & endowment income funds are assigned generic program codes in the 19nnnn range, where the last four digits of the generic program code represent the assigned NACUBO function. For a full listing and description of the various NACUBO functions, see Banner Program Codes and NACUBO Function Assignment. Gift funds and endowment income funds should have default program codes assigned to them which are in line with the donor intent restrictions assigned to those funds and how the funds will be used. For example, a gift fund restricted for scholarships should use the program code, since that is the generic program code which contains the 1787 Scholarships NACUBO function. Thus, when requesting a new gift or endowment income fund, or when reviewing your existing gift or endowment income funds, it is important to keep these guidelines in mind to ensure the proper type of program code is assigned to your gift or endowment income fund.

3 Q. Where do we go to see the donor intent restrictions on our gift or endowment income funds? A. The best way to get a full understanding and detailed description of the specific donor intent restrictions assigned to a gift or endowment income fund is to obtain access to the UI Foundation s online database located at By using this UIF Online system, you can search on either the Banner gift fund or the UIF gift fund using a variety of search parameters, such as fund title, fund number, etc. Once you locate the fund in question, you can see detailed documents that give specific information on the fund's restrictions, including language from the actual fund agreement with the donor. This is where you ll find the most detailed information regarding your fund s donor intent restrictions. We highly recommend you obtain access to this system so you can have the capability to properly research the restrictions on all of your Banner gift and endowment income funds. Contact the Foundation at (217) or visit their website at if you have further questions on how to use or how to obtain access this online database. Another tool which you can use to get a sense of what a Banner gift or endowment income fund is restricted for is the FTMFATA form in Banner. This form maintains general donor intent coding for your gift or endowment income fund. While it is nowhere near as detailed & helpful as the restrictions maintained on the UIF Online database, it does give a sense and direction of what a fund is restricted for. To use this form, simply enter the chart and fund number of your gift or endowment income fund and then click "Next Block". The first four entries (i.e., the Donor Intent Function, the Donor Intent Flag Field, the Donor Intent Objective, and the Donor Intent Organizational Unit) show you the donor intent code restrictions assigned to your gift fund in Banner. Once again, these are simply general guidelines, but will give you a sense of what your fund is restricted for. Q. If we need to make any edits to our gift or endowment income funds (such as changing the fund title, default organization code, or default program code), how do we get this done? A. To change the fund title, default organization code, or default program code that is assigned to your gift or endowment income fund, please submit an request to UAFR at cfoapalmaintenance@uillinois.edu detailing the changes you d like to make to your chart-fund code combination. UAFR will then review the request and submit it to UIF for their review, if applicable. UIF will then review the request to determine if the changes are allowable and in compliance with the fund s donor intent restrictions. If the Foundation approves the changes, they will then update their related UIF funds and will then forward the changes to UAFR for completion in Banner. The UAFR staff will then work on making the changes to the related Banner funds. You will be notified via when the change is complete. Also, note that if you are changing the default organization or program code on your gift or endowment income fund, you will need to coordinate with UAFR to ensure all current operating

4 ledger balances on the gift or endowment income fund are moved over to the new organization and/or program code. Q. How can I tell how much money I have available to spend in my gift or endowment income fund? A. In order to determine the budget balance available (BBA) to spend in your gift or endowment income fund, use Banner form FGIBDST. Once you have your chart & fund entered into the top section of this form, un-check the "Include Revenue Accounts box and then hit the Next Block button, and the resulting balance in the lower right-hand corner of the Available Balance column is your available balance to spend in that fund. Also, see the Guide to Finding Your Accounting String Balance table which further outlines this process. Call UAFR at (217) for further guidance on this topic. Q. If our gift or endowment income fund has unspent funds left at the end of the fiscal year, then does these unspent funds roll over into the next fiscal year? A. Yes any unspent balance in a gift or endowment income fund at the end of a fiscal year automatically rolls over to the next fiscal year in budget account code once period 14 has officially closed. So, any unspent money at the end of one fiscal year is available to spend in the subsequent fiscal year. The same theory applies as well if you end the year in a deficit. The deficit you ended the year in rolls over into the budget account code once period 14 is closed, so you would start the new fiscal year in a deficit in those cases. If that happens, you will need to investigate ways to clear up that deficit as soon as possible. Contact UAFR at (217) for guidance in these situations if needed. Q. We have an accumulated cash balance in our Banner gift fund that we would like to re-invest into a new or existing endowment or quasiendowment at the UI Foundation. How do we complete this process? A. If your unit does not have immediate use for funds which have accumulated in your Banner gift fund (i.e., if you don t anticipate spending the funds within the next five years), then you may want to consider returning a portion or all of this funding to the UI Foundation for reinvestment into either the related UIF endowment or into a new UIF quasi-endowment. Typically, the Foundation recommends only doing this with funds that you can afford to invest into the market for a minimum of at least five years. This helps protect your funds against short-term market fluctuations. For more information on

5 how this process works, contact the UI Foundation at (217) If you ve decided that you d like to pursue this option, then you will need to complete the Banner to Foundation Endowment Pool Transfer Request Form (PDF) and submit it to the UI Foundation as instructed on the form. The UI Foundation will then review your request and if they approve, they will then forward it to UAFR. Then, UAFR will process the return of funds to the Foundation during the monthly returns process. For further details on this process, refer to Section 11.8 of OBFS Policies and Procedures or call either UAFR at (217) or the Foundation at (217) Q. How can we terminate our Banner gift or endowment income funds (and any related UIF funds) which we no longer need? A. To request termination of any gift or endowment income funds that are no longer needed, send an request to UAFR at cfoapalmaintenance@uillinois.edu asking to terminate the Banner fund and any related UIF fund which may be tied to it. Once UAFR receives that request, it will be reviewed to determine whether the request needs to be forwarded to UIF for their review. UAFR will then forward the request to UIF (if applicable) so that UIF can review and approve the termination and so that UIF can close any related UIF funds as well. UAFR will also review the Banner fund to ensure all balances have been cleared and to ensure there are no dependencies still tied to the fund (such as payroll appointments, open purchase orders, p-card assignments, etc.). If there are any balances, dependencies, etc. still tied to the fund which need addressed, UAFR will contact you to assist you in that closeout process. Then, once that is all complete, UAFR will finalize the termination process in Banner. Gift Fund Deposits Q. Our unit received a gift from a donor - what is the proper procedure for processing and depositing this gift? A. Gifts/donations must be deposited through the UI Foundation on a Report of Gift Received Transmittal Form. This includes any type of gift, whether the gift is received via cash, check, credit card, securities, or gifts-in-kind (which would include donated services). Once the Foundation receives the completed gift transmittal form, they will process the gift in their system to ensure the proper gift acknowledgement letters/tax receipts are sent to the donor and that the donor's giving history is updated in the

6 Foundation s records. Then, once the processing is complete, UIF will either sweep the gift receipts into the unit's appropriate Banner fund the following week, or they will add the gift to the applicable UIF endowment. For further details on how to complete gift transmittal forms and how the process works, call either UAFR at (217) or the Foundation at (217) Q. How do we deposit proceeds from fundraising events, such as fundraising dinners? A. Proceeds from fundraising events (such as fundraising dinners) must be deposited through the UI Foundation on a Report of Gift Received Transmittal Form. When completing the transmittal form, be sure to properly break out the gift & non-gift portions of the payment accordingly in the Gift Portion and Non-Gift Portion boxes on the transmittal form. For example, if you receive a $100 check from an attendee at a fundraising dinner, where $25 covers the cost of the meal and $75 covers the related charitable contribution, then you would enter $25 in the Non-Gift Portion box and $75 in the Gift Portion box. Then, the Foundation would sweep the $25 non-gift to the non-gift revenue account code on your related gift fund, while the $75 gift portion would sweep to the gift revenue account code on your related gift fund. For further details on how to complete gift transmittal forms and how the process works, call either UAFR at (217) or the Foundation at (217) Q. When the Foundation sweeps gift revenue into our gift fund, what Banner entries are made? Which account code do these gift revenue sweeps post to? A. When the Foundation sweeps gift revenue from current use donations into the applicable Banner gift fund, the year-to-date revenue entry is made to account code The related revenue & expense budget entries are made to account codes and , respectively. This gift revenue increases the amount of cash available to spend in the gift fund. The Foundation also sweeps over investment income earned on UIF endowments on a monthly basis. These year-to-date & budget entries for the endowment income are recorded in Banner account code The revenue & expense budgets are recorded around the beginning of the academic year (typically around August), and then 1/12 th of this endowment income is swept over each month as year-to-date revenue. By the end of the year, the entire budgeted amount (12 months of sweeps) is swept to account code , so the budgeted revenue and year-to-

7 date revenue in account code should then agree to each other. Once these monthly sweeps post, it will increase the amount of cash available to spend in the related Banner fund. Finally, if any fundraising proceeds (for example, from a fundraising dinner) are deposited through the Foundation, the UIF sweeps this non-gift revenue to the applicable Banner gift fund using Banner account code The related revenue & expense budgets are posted to account codes and , respectively. Q. Is it ever appropriate to directly deposit money into a gift fund through the USFSCO Cashiering Office? A. As mentioned in an earlier FAQ, all gifts/donations received should be deposited directly through the UI Foundation. Donations should never be deposited through the USFSCO Cashiering Office. Typically, the only times it would be allowable to deposit money directly into a gift or endowment income fund through the USFSCO Cashiering Office is when you are depositing something such as a rebate check or a reimbursement of a personal expense which was accidentally charged to the gift or endowment income fund. For example, a unit may occasionally receive a rebate for an expense that was posted to their gift fund, such as a rebate for some office supplies which they purchased from their unrestricted gift fund. In those types of cases, this rebate check can be deposited directly into the Banner gift fund via Cashiering, applying the deposit to the exact same expense account code where the related supplies expense posted to (which would probably be Office Supplies in this example). Another common example would be times where an employee may be traveling for business and may accidentally charge a personal expense on their expense report which was charged to the gift or endowment income fund. Since that is a personal expense, and not a business expense, they would obviously need to pay back. In those cases, the reimbursement from the employee would be deposited back into the gift or endowment income fund C-FOAP where the personal expense was accidentally charged to, being sure to credit the same expense account code where the personal expenses was accidentally posted to. Q. Our department accidentally deposited a gift/donation through the USFSCO Cashiering Office. What do we do to correct this? A. If your gift was accidentally deposited through the USFSCO Cashiering Office (for example, if it was deposited to a self-supporting fund or to an expense account code on a gift fund), then your unit must complete a Gift Transmittal Form for the gift and forward this completed form (along with any other related gift documentation you have on hand, such as a donor letter, copy of the check, etc.) to UAFR at uas@uillinois.edu. Include the exact C-FOAP string where the gift was accidentally deposited to and the Banner gift fund where the gift needs to be

8 recorded. UAFR will then making the adjusting entries and will also notify the UI Foundation so they can update their records as well. For further guidance, contact UAFR at (217) or Q. Our department accidentally deposited a gift/donation into a grant fund (or grant funds into a gift fund). What do we do to correct this? A. The unit must contact their applicable campus' Grants & Contracts Office (GCO) for guidance on how to handle the necessary corrections (see The GCO will then work with UAFR to post a set of entries to either: (1) move the money out of the grant fund and into the applicable gift fund, or (2) move the money out of the gift fund and into the appropriate grant holding fund. If the money is being moved from a grant fund to a gift fund, then the unit also must complete a Gift Transmittal Form for this gift and send that completed form (along with any other related documentation such as a copy of donor letter, copy of check, etc.) to UAFR. UAFR then makes the adjusting entries to get the money into the applicable gift fund and then sends this information to the Foundation so they can record their related entries. Gift Fund Expenditures Q. How do I properly monitor the expense activity on my gift & endowment income funds? A. To help ensure compliance with donor intent restrictions on your gift & endowment income funds, it is very important to regularly monitor the expense activity on your gift & endowment income funds (for example, during your monthly reconciliation process). If you find any expense activity which is not in line with the donor intent restrictions on your fund, it is important to transfer those unallowable expenses off of your gift & endowment income funds. If any questions arise as to whether or not the expenditure would be in compliance with the assigned donor intent restrictions, log onto the UIF Online database (see our earlier FAQ for guidance on how to obtain access to UIF Online) to look up the donor intent restrictions of the fund in question. Also, note that even if there are no clear violations from a donor intent perspective to certain expenditures, it is still important to ensure that the expenditures are in compliance with all applicable University policies & procedures.

9 Q. Are there any special considerations on how to track my fundraising expenses, such as telemarketing expenses, direct mail campaign expenses, and salaries of development officers? A. Yes, the requirements related to fundraising expenses are covered in Section 11.6 of OBFS Policies and Procedures. In summary, any gift or endowment income funds that are used to track fundraising expenses must have: (1) The word "Fundraising" in the fund title; (2) A default program code of either or ; and (3) The UFR A-21 attribute code assigned to it (you can see if this A-21 code is properly assigned in the FTMFATA Banner form). If another funding source (such as a state or ICR C-FOP) is used to track these fundraising expenses, then the related program code which is being used to track these fundraising expenses on that state or ICR C-FOP must have: (1) The word "Fundraising" in the program code title; (2) A predecessor program code of either 1399 or 1599 assigned to it (you can find the predecessor code assigned to your program code in Banner form FZMPROG); and (3) The UFR A-21 attribute code assigned to it (you can see if this A-21 code is properly assigned in the FTMFATA Banner form). These requirements are in place to allow the UI Foundation to track and analyze how much is spent on fundraising activities for each unit. Gift Fund Transfers Q. How do I transfer funds from one gift or endowment income fund to another gift or endowment income fund? A. In order to transfer funds from a 4M gift fund to another 4M gift fund (or from a 4J endowment income fund to another 4J endowment income fund), follow the following steps: First, ensure the transfer you are completing is in compliance with the donor intent restrictions of the applicable funds. For example, it would be allowable to transfer funds from an unrestricted gift fund into a gift fund restricted for scholarships. However, it would not be allowable to transfer funds restricted for scholarships into a gift fund which is restricted for

10 research. If you have determined that the transfer is allowable with the applicable donor intent restrictions, then complete a journal voucher: o Debiting (+) the fund where the money is coming out of and crediting (-) the fund where the money is going into; o Using a 104 rule code/journal type on both sides of the JV; and o Using a transfer account code on both sides of the JV if transferring from a 4M gift fund to another 4M gift fund; or o Using transfer account code on both sides of the JV if transferring from a 4J endowment income fund to another 4J endowment income fund. Also, note that it is typically not allowable to transfer funding between different fund types. For example, it is not allowable to complete funding transfers between 4M gift funds and 4J endowment income funds. Contact UAFR at (217) for further guidance if needed. Q. How can I provide funding to cover my fundraising expenses when I have no revenue sweeping into my fundraising gift fund? A: Since fundraising gift funds do not receive revenue sweeps from the UI Foundation, it is necessary to complete fund transfers from an unrestricted gift fund to cover your unit s various fundraising expenses which post to your fundraising gift fund. If this situation applies to you, then follow the guidelines in the previous FAQ to debit an unrestricted gift fund within your unit and to credit the fundraising gift fund where you post your fundraising expenses to. Note that this option is not allowable to use if you post your fundraising expenses to a state or ICR C-FOP. In those cases, you will need to work with your applicable Budget Office to transfer expense budget into those state or ICR C-FOPs.