ORGANIZATION AND ADMINISTRATION OF FUND RAISING

Transcription

1 ORGANIZATION AND ADMINISTRATION OF FUND RAISING Authority: History: Source of Authority: Related Links: Responsible Office: Vice Chancellor, University Advancement Revised August 28, 2006; supersedes former Administrative Policies ADV 1.00 Organization and Administration of Fund Raising for the University, ADV 1.30 Cash Gifts to the University and ADV 1.40 Non Cash Gifts to the University UNC Policy Manual Endowment Funds University Advancement I. Purpose Explains university policy and procedures concerning the solicitation and acceptance of donations to the university, to include cash, stocks and securities, and gifts in kind. II. Scope Includes all donations to the university, or any division or department of the university. III. Policy The university strongly encourages the solicitation and acceptance of private gifts and grants, which enables it to fulfill its mission of teaching, scholarship and community service. Gifts may be sought from individuals, corporations, and foundations. However, they may be sought only for purposes, positions, and programs which have appropriate academic or administrative approval. The university values and will protect its integrity, its independence, and the academic freedom of the university community. Gifts that may expose the university to adverse publicity, require expenditures beyond the university s resources, or involve the university in unexpected responsibilities because of their source, condition or purposes or are not consistent with the mission of the university will not be accepted Organization and Administration of Fund Raising 1 of 24

2 The university is unable to accept gifts too restrictive in purpose or inconsistent with its stated academic purpose and priorities. Gifts received by the university must not inhibit it from accepting gifts from other donors. Further, no gift can be received which limits, beyond a general definition of subject area, the research that a faculty member or student can perform. The university cannot accept gifts which involve unlawful discrimination based upon race, sex, age, religion, national origin, color, disability or any other basis prohibited by federal, state, and local laws and regulations. Nor can the university accept gifts which obligate it to violate any other applicable law or regulation. This policy is designed to provide guidance to the university community and the general public so as to facilitate the gift giving process. The university encourages philanthropic creativity; therefore, this policy is to be interpreted liberally so that prospective donors may enjoy the greatest freedom possible in formulating their gifts. IV. Procedure A. Gift Acceptance Committee Consistent with applicable law, the university shall adhere to the valid terms and conditions of every gift agreement. The Gift Acceptance Committee (GAC) at the request of the Vice Chancellor for University Advancement is responsible for reviewing and making recommendations regarding gifts in which present and/or future encumbrances may be incurred and in cases involving certain types of unusual non cash gifts. Committee members should include the Director of Advancement Services, university attorney, director of investments and endowments, Vice Chancellor of University Advancement, Associate Vice Chancellor of Business Affairs. Types of gifts reviewed by the committee may include, but are not limited to: 1. Gifts of real property or an interest therein; 2. Gifts of closely held securities, promissory notes, partnership interests, stock options, or other negotiable instruments; 3. Gifts of undivided interest or future interests; 4. Bargain sales or gifts subject to any encumbrance; 5. Gifts of tangible personal property such as paintings, sculpture, furniture, or other works of art, or collections of such, if made on the condition or Organization and Administration of Fund Raising 2 of 24

3 expectation that the items will be permanently exhibited, or that the collections will be maintained and shown as such; 6. Gifts that, because of their unusual nature, present questions as to whether they are within the role and scope of the university; 7. Gifts that, because of their size or nature, present questions as to the impact on the university, or a particular program or area; 8. Gifts that might raise questions about the university s integrity, independence, or academic freedom, or potentially expose the university to adverse publicity, financial risk, or litigation; and 9. Gifts that present the potential for an obligation on the university under local, state or federal law that either may be unwilling or unable to assume It is the responsibility of any major gift officer, departmental representative or other university administrator, when presented with a gift or while working with an estate, to bring all gifts that meet the above guidelines to the attention of the Vice Chancellor of University Advancement prior to accepting such gifts. B. Definition of a Gift For tax purposes, a gift is defined as a voluntary transfer of assets from a person or an organization to the University where no goods or services are expected, implied or forthcoming for the donor. Gifts usually take the form of cash, securities, real property or personal property. The following criteria generally identify a gift: 1. A gift is motivated by charitable intent. 2. Gifts are irrevocable transfers of assets. The university is not obliged to return unexpended funds. (If, for some reason, the university is unable to comply with the donor s intent, or if the gift has been misdirected to the university, a return of gift may be issued at the university s discretion. Out of pocket expenses may be deducted from the gift before it is returned. The Vice Chancellor is authorized to approve the return of a gift if the university is unable to comply with the donor s intent or if the gift has been misdirected to the university. The return of a gift for any other reason must be reviewed and approved.) 3. Gifts are not generally subject to an exchange of consideration or other contractual duties between the university and the donor, except for certain deferred gifts as set out in this policy. 4. A period of performance is not specified Organization and Administration of Fund Raising 3 of 24

4 5. Formal financial account to the donor is not required as it would be, for example, with a research grant. 6. Generally, funds received from individuals, closely held corporations, and family foundations and other major foundations are classified as gifts unless the grant requires performance or other consideration. 7. A gift is not completed until it has been accepted by the university. C. Gift Acceptance Conditions 1. The University will accept only gifts and grants that are consistent with the core educational values of the university and are: a. Compatible with the missions of the university and of its individual programs; b. In compliance with the Internal Revenue Code of 1986, as amended, and other federal statutes, regulations, rulings, or court decisions that stipulated the conditions under which contributions can be tax favored; c. In compliance with UNC General Administration regulations and other university policies that stipulate the conditions under which contributions can be given and received; and d. In compliance with all federal and state laws and regulations 2. Unless a specific exception is granted by the Chancellor, the university will not accept any gift that: a. Violates any federal, state or local statute or ordinance; b. Creates a fund to provide for scholarships, fellowships, professorships or lecture series with restrictive clauses that could cause embarrassment to the university, or reserves to the donor or his/her representative the right to designate the recipient; c. Contains a condition that requires any action on the part of the university that is unacceptable to university administration; d. Commits the university to name a fund where the gift is potentially revocable in any way; e. Requires the university and its administration to employ a specified person at a future date; Organization and Administration of Fund Raising 4 of 24

5 f. Contains unreasonable conditions (i.e. a lien or other encumbrance) on gifts of partial interests and real property; g. Requires tuition payments for a family member; h. Exposes the university to potential litigation or other liabilities (e.g. environmental violations or constitutional violations); i. Requires the payment of maintenance costs or other expenses (e.g. debt service) for which no specific provision has been made; j. Generates unrelated business income tax; or k. Appears to be financially unsound 3. Unless a specific exception is granted by the university, the university will immediately sell all gifts of stock or property so that it can invest the proceeds in accordance with the university s investment policies. D. Fees 1. Finder s Fees or Commissions Consistent with the codes of ethics of the Association of Fundraising Professionals and the National Committee on Planned Giving, no finder s fee or commission of any type will be paid by the university to any party in connection with the completion of a gift to the university without the prior written approval of an authorized representative of the university. 2. Professional Fees Reasonable costs of gift acquisition, such as transaction costs, appraisals, and professional fees, will normally be borne by the donor. However, there may be occasions when a prospective donor conditions the gift on the university s agreement to pay such costs. The university will verify the reasonableness of the costs and that the cost reimbursement complies with state and federal requirements, including but not limited to tax laws and professional ethical guidelines. If appropriate, the university may agree to cover gift acquisition costs from its operating budget. 3. Administrative Fees To the extent permitted by law, the university reserves the right to levy an administrative fee or trustee fee on endowment accounts, life income plans, and charitable trusts and generally where appropriate. University Organization and Administration of Fund Raising 5 of 24

6 Advancement in conjunction with Business Affairs may establish fees annually based on the university s actual cost of administration of gifts. 4. Appraisals All appraisals of real and personal property contributed to the university shall be done in accordance with IRS Publication 561, Determining the Value of Donated Property. A real property valuation should be prepared by an MAI appraiser. Personal property should be appraised by a qualified appraiser acceptable to the university. Expenses incurred to obtain an appraisal shall be the responsibility of the donor unless special circumstances exist that makes it appropriate for the university to share the cost. Any appraisal borne by the university must have prior approval of the Chancellor or chancellor s designee. 5. Professional Advisors All prospective donors will be urged to seek their own counsel in matters of estate planning, taxes and planned gifts. It is not the province of University Advancement to give legal advice, which function is for the donor s council who alone must bear responsibility for all legal conclusions and advice. Prior to accepting any gift, the university shall advise the prospective donor to seek professional advice from their attorney and/or accountant, particularly if the prospective donor intends to make a deferred gift through use of a will, trust, annuity contract or other instrument. 6. Legal Counsel Review All form agreements of the university shall be reviewed for legal sufficiency by the university general counsel s office upon adoption of this gift acceptance policy. E. Written Summary The University s development officer submitting a proposed gift for approval will prepare a written summary of the gift proposed and submit it to the GAC. At a minimum, the summary shall include the following information: 1. Description of the asset; 2. The purpose of the gift (e.g., an unrestricted gift, to fund an endowed chair or a deferred gift) and the department (s) or endowment (s) to benefit from the gift; 3. An estimate or appraisal of the asset s fair market value and marketability; Organization and Administration of Fund Raising 6 of 24

7 4. Potential for income and expenses, encumbrances, and carrying costs prior to disposition; 5. Any environmental risks or problems revealed by audit or survey; 6. Credit history or financial statement of financially responsible party, if applicable; and 7. Any special arrangements requested by the donor concerning disposition (e.g., price considerations, time duration prior to disposition, potential buyers, realtors or brokers with whom the donor would like the Foundation to list the property, etc.) The GAC will review the material presented by the development officer and either accept or reject the proposed gift (or, if necessary, to postpone a decision pending the receipt of additional information.) F. Types of Acceptable Gifts Gifts are either outright or deferred. The most common gifts to the university are outright gifts. In addition to cash gifts, the university accepts gifts of securities, real property, and personal property. Deferred gifts, also called planned gifts, are arranged with the university during the donor s lifetime, but the benefits to the university do not accrue until a later time, usually after the death of the donor or his/her beneficiaries. Bequests are the most common deferred gift. Other such gifts include naming the university as the beneficiary of a life insurance policy, a charitable gift annuity and a life income agreement. The university has approved the following types of gifts to the university subject to the guidelines and policies set forth below and established policies to be followed in the solicitation and acceptance of gifts and grants to the university. 1. Outright Gifts a. Cash and Checks Policy Cash and checks shall be accepted regardless of the amount. Guidelines: Checks shall be made payable to the University of North Carolina at Wilmington or designated affiliated entities. The value of any cash or check gift is its face value. b. Securities and Mutual Funds 1) Publicly Traded Securities Policy Organization and Administration of Fund Raising 7 of 24

8 Securities that are traded on the New York and American Stock Exchanges, as well as other major U.S. foreign exchanges and the NASDAQ; corporate bonds; government issues and agency securities may all be accepted by the University, except as related to restricted securities (see section below). Guidelines: The University shall sell such securities as soon as possible after the securities have been transferred to the University. The value of a gift of securities is the mean (average) of the high and low of the stock(s) or bond(s) on the day the transfer is affected by the donor to the University. The value of less actively traded securities, rarely traded securities or a security that does not trade on the gift date should be determined according to IRS Publication ) Closely Held Securities Policy Closely held or non publicly traded securities, sole proprietorships, general or limited partnership interests, S Corporation securities, interests in real estate investment trusts ( REITs ) and limited liability company interests may be accepted only after prior review and approval by the University. Guidelines: Valuation of closely held securities may be difficult due to infrequent trading which makes it difficult to establish fair market value. If a donation of closely held stock is being considered, IRS Publication 561 should be followed in valuing this type of security. Unless there is an active market for a security, if the value of the gift is estimated to be $5,000 or more, the donor shall provide a documented appraisal prepared by a qualified appraiser. The University will consider the marketability of closely held securities before accepting such a gift. It is the intention of the University to sell all securities as soon as possible after the transfer from the donor. If it appears that a gift of closely held securities will take longer than eighteen months to sell the University may decline the gift. 3) Restricted Securities Policy Restricted securities (also known as unregistered securities, investment letter stock, control stock or private placement stock) are infrequently given as gifts because of the difficulty in transferring ownership and determining fair market value. They may be accepted only after approval by the University Organization and Administration of Fund Raising 8 of 24

9 Guidelines: If restricted securities are being considered as a gift to the University, IRS Publication 561 should be consulted when determining the value of the securities. If the value of the gift is estimated to be $5,000 or more, the donor shall provide an appraisal report prepared by a qualified appraiser. 4) Mutual Fund Shares Policy Mutual fund shares may be accepted by the University. Guidelines: The fair market value of mutual fund shares can be determined by the public redemption price of the share on the valuation date of a gift of this nature. If such a price is not readily available, then the value shall be determined as if the share were untraded securities in IRS Publication 561. c. Gifts of Real Property Policy The University may accept gifts of real property, both improved and unimproved, only after review and approval by the University and in consultation with legal counsel. Guidelines: The University will require the following items in order to review a gift of real property: 1) A preliminary title report clear of unacceptable encumbrances, performed by a reputable title insurance company. 2) An MAI appraisal by a qualified appraiser. 3) A phase one environmental audit indicating that ownership will not expose the University to environmental liabilities. The University may waive the phase one requirement for non farm residential properties. 4) A market feasibility study for purposes of liquidation. 5) An on site evaluation by the University s major gifts officer. 6) Evidence of compliance with ADA (where applicable). 7) A structural engineering report (when applicable). 8) A review of leases (for commercial properties). 9) A disclosure statement for residential properties (where applicable) Organization and Administration of Fund Raising 9 of 24

10 Under Treasury regulations, a donor must pay for any initial appraisal made on the property. Unless waived by the University, it is the responsibility of a donor to cover all costs involved in an environmental impact study, title search and any other relevant due diligence. d. Gifts of Real Property with Retained Life Estates or other Restrictions or Limitations Policy The University may accept either a gift of real property with a retained life estate or subject to other interest(s) for a term of years, or other limitations as to timing of the interest or use or sale restrictions only after review and approval by the University. Description A gift of real property with a retained life estate involves the transfer of the title to a personal residence, farm or timberland to the University whereby the donor or another person retains use of the property for a term of years or the life/lives of the donor and/or another person. Guidelines: Such gifts are subject to both the general conditions and the guidelines for acceptance of outright gifts of real property as set forth in subsection 6 Gifts of Real Property. The University shall encourage donors to consult independent tax and/or legal counsel prior to making the life interest must provide that the donor and/or life tenant shall remain responsible for the payment of mortgages, taxes, insurance, utilities, maintenance/repairs and other costs associated with the property, unless other specific provisions are made for the payment of these expenses. Donor(s) shall not violate or allow to be violated any environmental laws/ordinances covering this property. e. Charitable Gift Annuities Policy Charitable Gift annuities shall not be accepted by the university without prior review and approval by the GAC. Description A Charitable Gift annuity is a contract between the university and the donor. The university agrees to pay the donor (or other person named by the donor) a lifetime annuity in return for a gift of cash, securities, or other property. The payment may continue for the life of a second individual, such as a spouse. The annual payment is a fixed sum, the amount of which is based on the size of the gift and the number and ages of the beneficiaries. Rates of return under a charitable gift annuity are lower than the rates offered by Organization and Administration of Fund Raising 10 of 24

11 commercial insurance companies so that a significant residuum will remain for the university. Guidelines: The minimum contribution amount for a gift annuity is $10,000. The Rates of return payable to annuitants shall not exceed those recommended by the American Council on Gift Annuities as of the date of contribution. Annuity Agreements shall be limited to two lives. Generally, the minimum age for the annuitants shall be 60 for immediate annuities and 45 for deferred annuities. Exceptions may be made subject to the prior approval of the GAC. Gift annuities shall be managed by the university, and the university may employ agents and advisors to assist with administration and investment of gift annuity assets. f. Charitable Remainder Trusts Policy The university shall not accept a charitable remainder trust without prior review and approval of the GAC. Where the trust is testamentary, that is, one that arises upon the death of the donor, the university reserves the right to disclaim any interest that would be in violation of this gift acceptance policy. Description A Charitable remainder trust is an irrevocable trust created either during the life of the donor or through the donor s will or trust. The trust must provide that a specified sum (not less than 5%) of the trust s value is paid to one or more beneficiaries on an annual or more frequent basis. At least one beneficiary must be noncharitable. In order to qualify as a charitable remainder unitrust, the trust must meet all of the requirements set for in IRC Section 664, and related regulations. Guidelines: The university may agree to serve as the trustee of charitable remainder trusts that meet the requirements set forth below. The initial contribution to the charitable remainder trust shall be at least $100,000 unless the GAC waives this requirement. The university may serve as trustee of any charitable remainder trust to which the initial contribution is at least $ 100,000 unless the GAC approves a smaller amount. If the income interest is for life, the beneficiary (ies) must be at least 45 years of age for a NIMCRUT, NIMCRUT or FLIPCRUT and 60 for a standard or straight charitable remainder trust unless the GAC approves a younger age Organization and Administration of Fund Raising 11 of 24

12 Where payments are to be made for the lives of multiple beneficiaries, there may be no more than two. The university will not serve as trustee of a charitable remainder trust interest unless the trust is designed so that its net present value at the time of future distribution to the university is not less than 50% of the initial gift. Calculation of net present value will consider a reasonable return over time, growth of trust assets, allowance for management expenses, and discount (inflation) factor in accord with practices of similar charitable organizations. Exceptions may be recommended by the GAC in light of such factor as assets involved, size of gift, potential for additional gifts or additions to the unitrust, age and life expectancy. Any donor who wishes to create a charitable remainder trust must chose between an annuity and unitrust formats. No blending is allowed. 1) Charitable Remainder Annuity Trust (CRAT). A CRAT is an irrevocable trust that provides for paying a fixed sum(not less than 5%) but not more than fifty (50%) percent of the initial fair market value of the trust corpus; at least annually; to one or more persons, at least one of whom is not a charitable beneficiary; for life or the lives of a named individual(s) or for a term of years not to exceed 20; after which the entire trust principal will be retained for the use of the university (a qualifying Charity); and the value of the charitable remainder being at least 10% of the trust s net fair market value of property transferred in trust on the date of transfer to trust. Since the amount is stated as a fixed sum that fixed amount cannot be changed regardless of fluctuations in portfolio value. For this reason, additional contributions are not allowed. 2) Charitable Remainder Unitrust (CRUT). A CRUT is an irrevocable trust that provides for paying a stated percentage (not less than 5%) of the net fair market trust principal; determined and paid at least annually; to one or more persons at least one of whom is not an IRC Section 170 (c) organization; for life or the lives of a named individual (s) or for a term of years not to exceed 20; after which the entire principal is irrevocably transferred or retained for the use of, in this case, the university; and the value of the charitable remainder being at least 10% of the trust s net fair market value of property transferred in trust on the date of transfer to the trust. Unlike an annuity trust, additional contributions may be made to a unitrust. Unitrust options include: Organization and Administration of Fund Raising 12 of 24

13 a) Standard or straight Unitrust. A Standard unitrust requires a payout or distribution of an amount of at least 5%, and no more than 50%, of the annual value of trust assets. b) Net Income Unitrust (NICRUT). A Unitrust requires the trustee to pay, for any year, the lesser of the full unitrust amount and trust income (as defined in IRC Section 634 (b) and related regulations). This type is commonly referred to as a Net Income, Income only option. c) Net Income with Make up Unitrust (NIMCRUT). If a net income option is selected, the trust will pay income in excess of the full unitrust amount to the extent the aggregate amounts paid in prior years were less than the aggregate of the fixed percentage amounts for those prior years. In other words, the trust can make up past deficiencies. This type of format is called a net income with make up unitrust. d) Flip Unitrust (FLIPCRUT). The decision to create a unitrust with a net income option is, in most cases, based on the fact that funding asset (often real estate) does not produce enough initial income to pay the annual unitrust amount. A unitrust can be drafted to allow a switch or FLIP from a net income option to a standard income provision upon the occurrence of a specific event such as the sale of the real estates. g. Charitable Lead Trusts Policy Charitable lead trusts shall not be accepted by the university without prior review and approval of the trust agreement by the GAC. Where the trust is testamentary, this is, one that arises upon the death of the donor, the university reserves the right to disclaim any interest that would be in violation of this gift acceptance policy. Description A Charitable lead trust is a trust in which the income, or lead interest is given to one or more non charitable beneficiaries, who could be either the donor or family members. The amount paid to the university may be either a fixed sum (an annuity trust interest) or a percentage of the trust assets as valued each year (a unitrust interest) Organization and Administration of Fund Raising 13 of 24

14 At the conclusion of the payment period, the trust assets are returned either to the donor or to someone designated by the donor. Guidelines: The university may serve as trustee of a charitable lead trust to which the initial contribution is at least $100,000. A trust may be funded with a smaller amount, subject to the approval of the GAC. The trust term may be at the discretion of the donor, subject to the approval of the GAC. h. Bargain Sale Policy The university, upon review and approval of the GAC and legal Counsel, may purchase real estate, securities, or other property on a bargain sale basis in accordance with State of North Carolina regulations for such purchases. Description A bargain sale is a sale of property to the university for an amount less than the property s current fair market value. The excess of the value over the sales price represents a contribution. Guidelines: The purchase price for the property is subject to prior approval of the GAC. The bargain sale price may be paid either in a lump sum or in installments. If the property being sold is real property, the guidelines for the acceptance of such a gift as set forth above shall apply. i. Tangible Personal Property Policy The University will consider gifts of tangible personal property, including but not limited to works of art, manuscripts, literary works, boats, motor vehicles, and computer hardware, only after a review indicates that the property is readily marketable, free of encumbrances. The actual use of a gift of tangible personal property will determine whether the University accepts the gift. Gifts of tangible personal property that are to be used by the University should be donated directly to the University. Authority to accept gifts of tangible personal property estimated at less than $5,000 has been delegated to the Associate Vice Chancellor of University Advancement. Gifts of tangible personal property valued at more than $5,000 must be reviewed and approved by Vice Chancellor of University Advancement. Guidelines: No gift of personal property subject to the requirement of ownership in perpetuity shall be accepted without prior approval of the University. No perishable property or property that would require special Organization and Administration of Fund Raising 14 of 24

15 facilities or security to be properly safeguarded shall be accepted without prior approval. For tangible personal property with an estimated fair market value of less that $500, the donor must furnish the University with the following information: 1) Donor s name, address, and telephone number 2) Contact person if the donor is a corporation 3) Donor s social security number or federal tax identification number 4) Brief physical description of the donated asset, including an explanation of the method used to determine the fair market value 5) UCC1 lien search in the state where the asset is located and if, different the state(s) where the donor resides or conducts business which involves the asset. Prior to the donation of personal property with an estimated fair market value over $500, the donor must furnish the University, in addition to the items listed above, with an independent evaluation from a qualified appraiser of the donated asset. j. Other Personal Property Policy Other personal property of any description, including mortgages, notes, copyrights, royalties, partnership interests, closely held business interests, undivided interests in property, future and partial interests and other liquid financial assets my be accepted on upon prior review and approval of the GAC. 2. Deferred Gifts Any planned giving agreement that requires execution by the university shall first be reviewed and approved as to form and substance by the university s legal counsel. It is recommended that prospective donors, who are considering gifts to the university that will take effect at the donor s death, consult with development officer of the university director of planned giving regarding how to properly designate the gift and to discuss any trust or bequest restriction that is being considered. a. Bequests Policy Organization and Administration of Fund Raising 15 of 24

16 Direct, unencumbered bequests shall be accepted by the Foundation without prior approval of the GAC if the underlying assets are in conformance with the guidelines set forth in Section A, Outright Gifts. If the underlying assets are not in conformance with the guidelines, the bequest shall be referred to the GAC for review. The Foundation reserves the right to disclaim gifts from the estates or trust of deceased donors that are not in keeping with the terms of this policy. Description A bequest to the university is made in the donor s will or revocable trust. The donor can designate a specific amount, a percentage, or the remainder of an estate to the university. Guidelines: Donors should be encouraged to notify the Foundation or University development officers when considering a bequest in order to ensure that the assets left to the Foundation meet the criteria set forth in this gift acceptance policy and to ensure that the donor s wishes are carried out. b. Designating the University as Beneficiary Policy The university will accept any proceeds that it receives as a designated beneficiary (or an alternate beneficiary) of a life insurance policy, a deferred annuity contract, an IRA, a defined benefit plan, a 401 (k) plan, a defined contribution (profit sharing) plan or other qualified plan without prior review and approval of the GAC, unless the designation imposes restrictions or trust arrangement, in which case, GAC Prior Review and approval is required. c. Life Insurance Policies Policy The university will accept, without the necessity of prior review and approval by the GAC, gifts of life insurance policies, including whole life, variable and universal life policies, which meet the guidelines specified below. Guidelines: Gifts of life insurance policies which meet the following three criteria may be accepted without prior GAC approval. If a Proposed life insurance Policy gift does not meet the criteria listed below it must be reviewed by the GAC before being accepted. 1) The Policy is paid up. 2) The university is designated as the Owner and the Beneficiary of the Policy. (While the policy will identify the university as the beneficiary, the development officer should work with the donor to clarify the Organization and Administration of Fund Raising 16 of 24

17 G. Pledge Policy purpose of the gift by attachment of a memorandum, letter, or account agreement to the policy.) 3) If intended for endowment purposes, the face value of the policy meets the minimum funding standards for endowments for its stated purpose(s) established by the university and in effect at the time of the gift of the policy. All Pledges other than annual fund telephone pledges are required to be in writing. Documented pledges are recorded on the University database and included in financial reporting. Annual Pledges are cancelled (written off) annually in July. Any annual pledges remaining at this time are due to special circumstances and are documented and procedures noted below are followed. Description Pledges are commitments to give a specific dollar amount according to a fixed time schedule. 1. Legally Binding Pledge Form A Legally Binding Pledge Form is appropriate where the Foundation or university is taking on financial or other obligations in reliance on the anticipated gift (e.g. to start a capital construction, to initiate a name program, to hire faculty for a specified position, etc.). In such cases, the Development Officer must consult with the Associate Vice Chancellor of Advancement or the university General Counsel to appropriately modify/use the Legally Binding Pledge Form attached to these policies. In cases where a legallybinding pledge is needed in the creation of a new fund, the language from the Legally Binding Pledge Form can be incorporated into the Gift Agreement with the aide of either the VC of University Advancement or the university General Counsel. 2. Non Legally Binding Pledge Language within the Funding Section of a Gift Agreement Where no legally binding pledge is being used to establish a current or endowed fund the necessary pledge language may be incorporated into the Funding section of the gift agreement. In such cases, a copy of the gift agreement MUST be sent to Advancement Services so that the pledge can be booked in the Advancement database. 3. Other All other pledges may be documented on materials prepared by University Advancement Organization and Administration of Fund Raising 17 of 24

18 4. Minimum Information All Pledge forms and solicitations must contain the following minimum information: a. Amount of the pledge b. Checks to be made payable to UNC Wilmington or other designated affiliated entities. c. Payment schedule d. Designation for use of the funds e. No contingencies or conditions f. Donor s printed name 5. Pledge Payments a. Pledges typically will be fulfilled through payments of cash or publicly traded securities. b. If real estate or other non marketable assets are used as payment, the initial value recorded against the pledge shall be the fair market value of the real estate or assets as determined by an independent qualified appraisal supplied by the donor. If, upon sale of the real estate or asset, the sale proceeds net of all expenses is less than the amount booked against the pledge, an additional pledge shall be booked in an amount equal to the difference between the amount initially booked against the pledge and the net sales price. c. If publicly traded securities are used as payment, the amount booked against the pledge shall be valued at the mean of the high and low prices on the date of receipt. d. Expected matching gifts amounts (such as from employers) are not included in posting pledges. That is, matching gifts do not satisfy pledges. 6. Canceling (Writing Off) Pledges a. Telephone pledges and annual pledges will be written off annually Organization and Administration of Fund Raising 18 of 24

19 b. Multi year pledges will be written off after proper notification of the Development Officer and consultation with appropriate department head, dean or vice chancellor and a response in writing. H. Premiums or Goods/Services Rendered The IRS requires nonprofits to verify that no goods or services were received in exchange for a contribution, in order for the gift to qualify for a full charitable deduction. Standard receipts verify this qualification. Where premiums or services are offered, only the qualifying gift amount is receipted. Gifts to Athletic programs that give donors the right to purchase tickets are subject to the rule; that is, 80% of the amount qualifies for tax deduction and 20% does not. I. Trade and Barter Gifts When services are provided to the university and athletic tickets or other deliverables are offered in return, no gift transaction is considered to have occurred, even if the value of the service exceeds that of the traded/bartered item. J. Establishing Scholarships and Awards 1. Establishing Endowed Scholarships An endowed scholarship is a scholarship that has no less than $25,000 ($25,000 is the current amount needed, this amount has been less in the past, and may be adjusted in the future to a higher level, due to the rising costs of education). The principal $25,000 will be deposited into an interest bearing account. The principal amount will remain untouched, $25,000, while the interest generated from investing the principal will be used to fund an annual scholarship. Interest generated from the principal will be awarded 1 year from the date the principal reaches $25,000. Before fundraising for such an endowed scholarship may begin, the following needs to take place. a. 75% of the funds must be committed to be raised or gifted to UNCW within 3 years of the start date of the scholarship drive. b. A written plan must be documented and approved by University Advancement, to raise the remaining balance over 3 years. c. A signed scholarship agreement must be in place before the formal fundraising process may begin. 1) Signed by department head and/or a majority donor 2) Signed by Chancellor, Vice Chancellor of Advancement or Associate Vice Chancellor of Advancement Organization and Administration of Fund Raising 19 of 24

20 d. Donors/Stewardees will be invited to an annual scholarship event to honor their contributions. 2. Establishing an Annual Scholarship An Annual Scholarship is a scholarship that is renewable by a donor(s). These monies are not invested; they are awarded on a yearly basis, provided donations are in place by March 15 of the year prior to awarding so that the funds may be processed by Financial Aid. Before such Annual Scholarships are established the following requirements need to be met. a. 75% of the gift needs to be pledge or committed before an agreement may be executed and fundraising can begin b. A signed Annual Scholarship agreement must be in place before the fundraising may begin 1) Signed by department head and/or a majority donor 2) Signed by Chancellor, Vice Chancellor of Advancement or Associate Vice Chancellor of Advancement c. The annual scholarship must be funded with a minimum of $500 by deadlines listed above, in order for the scholarship to be awarded for the fall academic semester d. Donors/Stewardees will be invited to annual scholarship event to honor their contributions 3. Establishing an Award An award is any gift of less than $500 that is awarded to a student to defray the cost of their education. These types of awards will not be processed or awarded through Financial Aid. These awards will not receive their own account number and will be deposited into the trust account for the department. It will be the department s responsibility to track the award, make the award and be responsible for any stewardship of the donor, beyond a gift receipt. Donors will not be included in the annual scholarship event. K. Diversity Gifts Organization and Administration of Fund Raising 20 of 24

21 Gifts designated to support the university s core value for diversity are readily available provided that they meet the university s definition and are in accordance with applicable federal and state law. L. Memorial, Honorary and on the behalf of Others Memorial and honorary gifts are encouraged by the university as generous and thoughtful ways to recognize people s lives and accomplishments. When a memorial gift is made the decedent s next of kin is notified by the university. Such notifications must not specify gift amounts. The next of kin will be consulted about the designated use of memorial monies, including whether the funds will be endowed or spent as current funds. See Endowment Management Procedures Policy, number , for required levels and other details. In the case of honorary gifts, the honored person is notified, again without detail about gift amounts. M. Gifts for the Benefit of Specific Individuals A gift that is made with the condition that the proceeds will be spent by the university for the Personal Benefit of a named individual or individuals is not deductible as a charitable contribution. The university GAC shall review and view with caution gifts that are inappropriately targeted toward the benefit of particular individuals. The GAC will also review all proposals for endowed student aid funds that contain unusual restrictions, and proposed gifts for research projects or other scholarly activities undertaken by named individuals. N. Matching Gifts Policy The university honors each organization s matching gift rules while optimizing matching opportunities as fully as possible. If the university has reason to believe that a donor is not in compliance with a matching entity s policies, staff will contact the donor for clarification. Examples may be gifts directed to nonqualifying programs (in some cases, Athletics) or pooling of gifts with nonemployee donors. The university will not submit claims for non qualifying gifts. The Director of Advancement Services is the agent designated by the university to ensure compliance and process all matching gift forms for return to the matching entity. O. Gifts from University Employees or Fund Managers Gifts to the university from university employees are encouraged, and may be accepted if the purpose of the gift is to support bona fide university activities and/or purchases. Such gifts are subject to the university policies and procedures for expenditure. However, because a gift to support an employee s own research account, business travel account, or any account in which the employee is an Organization and Administration of Fund Raising 21 of 24

22 authorized signer may have potential for abuse or for conflicts of interest, an appropriate third party (such as the dean, department chair, chancellor, or other person in a supervisory role to the employee) must be the fund administrator on any such account and must take special care in approving expenditures in order to ensure that the university s use of the gift supports its charitable purposes. If the donor does not wish to change the signature authority on the primary account, the donor may choose to have the gift deposited into a separate account earmarked for their area/department managed by the donor s supervisor. P. Events with a Donor Component Any event this is organized by an agent of the university and advertises the purpose of the event to be fundraising for the university must receive prior approval on the fundraising aspect by the Associate Vice Chancellor of University Advancement. The following information must be provided to Advancement Services (AS) for approval to be considered. 1. Description of the event and fundraising purpose 2. Any forms that will be used in the solicitation 3. If the ticket price will include a donation component, AS needs a itemization of the ticket price which may include the following a. Anticipated donation portion b. Meal cost c. Golf fees d. Gifts (t shirts, towels, mugs etc) e. Entertainment (this can be an approximation) While all ticket monies will need to be processed through Advancement Services, provided there is a donation portion, Advancement Services will process the monies into the funds as designated by the event organizer. Q. Mailings with an Appeal for Money Any mailings with an attached appeal for monies need to be approved by Advancement Services before final printing and mailing of any such appeal. 1. Advancement Services will ensure the wording of the appeal is within IRS guidelines Organization and Administration of Fund Raising 22 of 24

23 2. Advancement Services will ensure that the any reply vehicle (pledge card or business reply envelope) contains the appropriate verbiage to ensure donations are processed most efficiently into Banner Advancement. 3. Advancement Services can also supply solicitation codes to be printed on a reply vehicle to track donations received by such an appeal. 4. Departments who are mailing will be responsible for all costs associated with the mailing including but not limited to a. Postage for outgoing piece b. Return envelopes and postage for any reply vehicle c. Stationary and mailing labels for outgoing or incoming piece d. The return or forwarding service on any outgoing mail project R. Gift Handling and Delivery Policy 1. All gifts to the university are to be deposited by Advancement Services. Gifts may not be carried directly to the Cashier s office as proper receipting cannot occur to the donor. 2. All gifts should be hand delivered in a locked gift bag, with a transmittal sheet itemizing the gifts being delivered, the designations for the gifts and the amounts. 3. All gifts will be logged into a delivery notebook to be initialed by deliverer. 4. All gifts of cash should be delivered, counted and receipted in the presence of the person delivering. 5. Gifts should never be delivered through interoffice mail. 6. If the Advancement Services office is closed, deliverer may drop gifts in blue locked mailbox, labeled Advancement Services behind Alderman. In this case the deliverer should contact Advancement Services on the next business day to ensure gifts received. S. Moving Gift Monies Any gift monies (monies with the object code of 10269) must be moved by Advancement Services or with the knowledge of Advancement Services. It is crucial that donor s gift record reflects the movement of their monies into the correct accounts Organization and Administration of Fund Raising 23 of 24

24 Normal transactions to move monies from the following do not fall under this policy: 1. Endowment accounts into spending accounts 2. University accounts into foundation accounts (provided the account is the same account on the foundation side) T. Gift Acknowledgement The university will acknowledge the receipt of all gifts in writing and in a manner which satisfies the IRS s substantiation requirements set forth in IRS section 170 (f) for the deduction of charitable gifts by individual donors. It is the intent of the university to disclose appropriate information about the operation of annuities and trust arrangements to donors prior to and at the time of the gift. U. Gift Refunds The university does not as a rule refund contributions. However, when circumstances are compelling, a request to refund a gift must be documented and approved by the GAC. The tax implications of a returned gift will be made clear to the donor. V. Policy Effective Date All gift agreements in effect at the time these policies become effective shall continue in effect under the policies in place at the time the original gift was accepted Organization and Administration of Fund Raising 24 of 24