Gift Accounting and Procedures Policy
Policy Number: 600.005.01
Approved: December 2010
Overall Gift Policy
It is the policy of Scripps College (“The College”) to credit and record all gifts received from individuals and other sources in accordance with the wishes of the donor, to issue appropriate receipts and/or acknowledgements in a timely fashion, to maintain such records as will clearly set forth the designation and restriction of each gift, and to ensure continued compliance with the provisions of each gift.
The matching of donor interest with the institution’s priorities is the College’s highest priority. Donors should be informed, served, guided, and assisted to realize personal fulfillment at their chosen levels of philanthropy.
Information related to a donor, or prospective donor, including name, beneficiary name, and gift amount shall be retained by the College in strictest confidence. Only with the permission of the donor shall such information be discussed or used for public recognition.
The College reserves the right to accept (or, in rare cases where absolutely necessary, to decline) any commitment which is offered to them. Scripps, through its Board of Trustees, other volunteers, and staff will not knowingly seek or accept any commitment which they believe is neither in the prospective donor’s best interest nor the best interest of the College.
Types of Contributions Accepted by Scripps College
Commitments to Scripps College and/or payment of same may take the form of one or a combination of the following:
- securities (stock)
- mutual funds
- closely-held securities
- real property (at documented full fair market value)
- irrevocable deferred gifts
- charitable remainder trusts, charitable lead trusts, trusts managed by others (if documented in writing); charitable gift annuities
- gifts in kind
- verbal and written pledges
- insurance policies
Gift Acceptance and Valuation
Gifts received by Scripps College should be immediately directed to the Office of Development Services for proper handling and crediting. Gifts should be valued on the date the donor relinquishes control of the assets to the College. Gifts that bear some real or implied obligation on the part of the College need to be approved by the Treasurer and the Vice President of Advancement prior to their acceptance. Gifts to the College will be valued according to the following guidelines:
- Cash – Gifts of currency, cash, or credit cards will be deemed to be received on the date that the donor relinquishes control of the assets to the College. At fiscal year-end, the gift will be deemed to be received on the date of constructive receipt. At calendar year-end, the postmark may be used to dictate the date of receipt. In the case of credit card numbers received verbally or in person, the date of receipt will be the date authorization is received from the credit card company.
- June 30 – The date June 30 in the discussion following is used to refer to the last day of business in the fiscal year. Online gifts for June 30 may be processed by Development Services on July 1 or whatever date is the first business day of the new fiscal year after the last business day of the current fiscal year.
- Securities – Gifts of securities should be valued at the average market value on the date the donor relinquishes control of the assets to the College. Neither losses nor gains realized by the sale of securities after their receipt, nor brokerage fees or other expenses associated with this transaction, shall affect the value reported; however, these charges will be applied to the General Ledger.
- Closely-Held Securities – Gifts of closely-held securities need to be approved by an on campus gift review committee prior to their acceptance. The valuation should be substantiated through comparable prices or by an expert appraisal.
- Real Property – Major gifts of real property – such as land, houses, etc. – should be reported at the fair market value placed on them by an independent, expert appraiser. Market value of a gift of real estate should be determined by an independent appraisal obtained by the donor at his/her expense. Gifts of real estate with a retained life interest may be accepted, but the donor normally will be expected to bear expenses of maintenance, real estate taxes, and homeowners insurance during his/her lifetime. Any gift of real estate must meet all EPA requirements. All real property gifts will be reviewed and approved by the Gift Acceptance Committee, which is a sub-committee of the Investment Committee of the Board of Trustees. Unless there is a demonstrated College use for the real estate or a reason to retain it as an investment or for income property, the property will normally be sold as soon as possible. At the same time of GAC approval, the Treasurer’s Office will submit a liquidation plan for the real estate; broker multiple listing, private sale, or public sale (auction).
- Gifts of Insurance – Gifts of insurance may mean a gift received when Scripps College is the beneficiary of an insurance policy, or it may mean a gift of cash when an insurance premium is paid. For accounting purposes, an insurance policy will be valued at the cash surrender value.
- Gifts-In-Kind—Tangible gifts that are other than cash, marketable securities or real property. Restrictions imposed by the donor regarding the sale, maintenance, administration, or display of such items are subject to review by the Treasurer and the Vice President of Advancement. Works of art are accessioned into the College through the Acquisitions Committee which is a sub-committee of the Gallery Advisory Council. Such gifts will be accepted only if any additional expenses resulting from such restrictions are underwritten by the donor or are considered reasonable expenses. These are not gifts to operations and are recorded below the line on the statement of activities in the financial statements.
Gifts-In-Kind of an undetermined value should be recorded at one dollar ($1.00) and acknowledged as received.
Donors wishing to have a tax deduction for a gift-in-kind should have the value determined by an independent appraiser at the donor’s expense. If the claimed valued of all property contributions exceeds $5,000, the donor must complete IRS Form #8283 and attach it to his/her return. For the donor’s protection, the College shall not pay to have an independent appraisal made for a donor’s own gift, but shall acknowledge the gift on the IRS Form #8283 to his/her tax return. Appraisals must be dated within two months of the gift per IRS regulations.
Under the IRS Gift Reporting requirements, all property gifts and gifts-in-kind that have a value over $5,000 and are sold or otherwise disposed of by the College within two years of the date of the gift shall be reported to the IRS by the College. The College must file IRS Form #8282 with the IRS regarding the transaction along with furnishing a copy of the form to the donor. The donor is encouraged to seek tax/legal counsel as it relates to his/her gift-in-kind.
Gifts in Lieu of Reimbursement
A donor who wishes to give the College a gift in lieu of reimbursement must send the original receipts to the Office of Development Services to indicate the value of the gift. This type of gift is a gift-in-kind, with the value being established through the receipts. After processing by Development Services, this gift with all relevant data will be sent to the Director of Budgeting to be entered in the General Ledger. All gifts in lieu of reimbursement will be credited by the Development officer as a gift-in-kind and recoded as an expense by the Director of Budgeting to an account related to the nature of the gift where appropriate.
Any activity that would result in a potential gift would need to be pre-approved if the gift falls outside these guidelines. Therefore, all raffles and/or auctions for fund raising purposes must be pre-approved by the College Treasurer and/or the Vice President of Advancement.
- Gifts of Services are not recorded. A tax deduction is not available for such services.
- Charitable Remainder Trusts and Gift Annuities – Gifts made to establish charitable remainder trusts and gift annuities are generally credited at fair market value — i.e., for gift recording purposes the gifts are valued at the full amount of the assets given. For accounting purposes, in accordance with generally accepted accounting principles, the gifts are valued at the fair market value of the assets contributed less the present value of payments expected to be made to other beneficiaries.
- Charitable Lead Trusts – In reporting the value of a charitable lead trust, for gift recording purposes, only the income received from it each year during the period of operation of the trust should be included in the College’s gift totals. For accounting purposes, the gift will be valued at the present value of estimated and expected future distributions.
- Trusts Administered by Others – For gift recording purposes, the gift will be valued at the fair market value of the assets of gifts in trust that the College or the donor has chosen to have administered by others, provided the College has written confirmation of the trust and irrevocable right to all or a predetermined portion of the income or remainder interest; and the trustee will provide an accounting of the trust at least once per year as of June 30. For accounting purposes, in accordance with generally accepted accounting principles, the gifts are valued at the fair market value of the assets contributed less the present value of payments expected to be made to other beneficiaries. Year end adjustments to mark to market are accounted for as unrealized gain/losses in the general ledger.
- Non-Government Grants and Contracts – Grant income from private nongovernment sources should be included in gift totals; contract revenue should not be included. Both may be based on line-item budgets submitted to the awarding agency and may involve the College in at least the responsibility of periodic and final reports on the uses made of the funds. The difference, however, between a private grant and contract may be judged on the basis of the intention of the awarding agency and the legal obligation incurred by the College in accepting the award.
For recording purposes in the development database, a pledge will be recorded according to the above valuation guidelines. For accounting purposes, the fair market value is based on the present value of the estimated future cash flow using the average adjusted Treasury bill rate of return or the appropriate discount rate.
Although members of the College’s development staff will provide all appropriate assistance, the ultimate responsibility regarding valuations, tax deductibility and/or similar legal, local, State and/or Federal compliance issues rests with the donor and/or such counsel as the donor may wish to secure.
The Financial Accounting Standards Board (FASB) Statement #116 (Accounting for Contributions Received and Contributions Made) states that a not-for-profit organization shall distinguish between unrestricted contributions received and those with permanent and temporary donor-imposed restrictions. It states that gifts with restrictions that will easily be met in the fiscal year of the gift should be recorded as unrestricted revenue.
Determining Donor Intent
Solicitations for temporarily-restricted and permanently-restricted gifts must always include a reply device that allows the donor to clearly indicate the intent of the gift. For example, using a business reply envelope that is designed for the Annual Fund is not appropriate to solicit an endowed gift since the donor is unable to indicate that his/her gift should be designated for the endowment.
Gifts to the College will be deemed to be unrestricted unless otherwise indicated by the donor at the time that the gift is made. If there is some question as to the restriction of the gift, the Office of Advancement needs to determine this restriction, if possible, within one month from the date of the gift and no later than the closing of the books in July of each fiscal year unless approved by the Treasurer and the Vice President of Advancement. The receipt of temporarily-restricted and permanently-restricted gifts of $5,000 or more will be evidenced by a written donor instrument (letter from the donor or letter to the donor with his/her signature of acceptance) confirming an oral donor restriction and will be reported by the Office of Development Services as soon as possible to the Office of Financial Services and the Office of the Treasurer along with a copy of the donor instrument. All account numbers will be established by the Director of Budgeting with corresponding written documentation.
The Assistant Vice President for Development is responsible for ensuring the designation of all gifts in the Development database. The Treasurer and the Vice President of Advancement must approve gifts of unusual form and/or schedule of payment. The Director of Development Services is responsible for making sure that the appropriate approval has been obtained prior to crediting the gift in the Development database.
Changes in Gift Designation
When a gift of any amount is moved between net asset categories or between like categories, a written donor instrument must accompany the journal entry to the office of the Treasurer and the Office of Financial Services in order for the change to be made.
Any movement of gifts into the endowment will be entered as of the date of the instructions from the donor and not the date the gift was made. There will be no retroactive pooling of the gift in or out of the endowment.
In order to establish a named endowed account, a gift must meet minimum amounts:
|Minimum for any endowment||$50,000|
|Faculty Research Fund||$100,000|
|Endowed Computing Equipment or Technology Replacement Fund||$100,000|
|Endowed Buildings and Grounds Fund||$100,000|
Other types of endowed accounts may be established on a case-by-case basis with the approval of the Treasurer, the Vice President of Advancement and other senior staff, if appropriate. For gifts less than the minimum amounts or where a naming opportunity is not important to the donor, there are generic restricted endowments for most of the above categories, such as scholarships, general maintenance, etc.
Documentation for endowed funds should be sent to the Director of Budgeting for account numbers and spending policy determination.
Any gifts that are building to the endowment level will go to the general endowment funds until these gifts reach the required amount to receive a separate account number.
Final Designation of Deferred Gifts
Termination of Contract/Agreements – Upon the death of the surviving beneficiary of a deferred gift agreement, the agreement shall terminate and the assets and any accruals shall be paid to Scripps for its general purposes or as restricted by the donor for specific use as stated in the agreement. Gifts for which there is no documented designation will be credited to unrestricted revenue and thereafter may be directed to a purpose by vote of the Board of Trustees if it exceeds the minimum amount for designation as outlined in the section below.
When the annuitant or final remainder beneficiary has died, the Office of Planned Giving will inform the Office of the Treasurer, the Director of Development Services, and the Office of Financial Services as soon as possible where the residual should go. The Office of Planned Giving is responsible for communicating all salient points to the Office of the Treasurer and the Office of Financial Services, including notification of a death. In the case of testamentary gifts, the Office of Planned Giving will distribute copies of the will at the time of death to the Office of Financial Services, the Office of the Treasurer, and the Office of Development Services. In the case of trusts and annuities, the Office of Planned Giving will distribute copies of the instruments at the time that the trust or annuity is established to the Office of Financial Services, the Office of the Treasurer, and the Office of Development Services. Development Services is responsible for reflecting Board resolutions of change to unrestricted gifts.
Policy on Operating Revenues and Expenses
The College reports operating revenues and expenses in the unrestricted section of the Statement of Activities. Operations are those annual activities which support the core mission of the College: “to educate women to develop their intellect and talents through active participation in a community of scholars, so that as graduates they may contribute to society through public and private lives of leadership, service, integrity and creativity.”
Operating revenues include charges for tuition, room and board, net of financial aid, gifts and grants, spending policy income, other investment income, releases of temporarily restricted net assets for operations and unrestricted annuity and life income, and miscellaneous income.
Unrestricted gifts and bequests of $500,000 and above each are considered non-operating, as are gifts in kind. The Board of Trustees designates unrestricted gifts of $500,000 and above for the benefit of the College. Gifts in kind, due to their non-cash nature, are not available to pay for operating expenditures.
Operating expenses (for which the operating revenues are used) include salaries and benefits, departmental expenses, depreciation, amortization and interest. These expenses are classified into four cost centers called: Academic Program, Co-curricular Program, Marketing and Administrative and General.
The College regularly accepts pledges of all sizes through verbal and written solicitations. Commitments of unusual size, designation, form and/or schedule of payment will be evaluated for suitability by the Treasurer and the Vice President of Advancement.
Written gift agreements, signed by the donor, must be obtained prior to recording the pledge in the Development database if the total amount of the pledge is more than $25,000 or if a pledge is $5,000 or more over multiple years. Upon receipt, the original copy of the signed pledge agreement should be sent immediately to the Director of Development Services. It is the responsibility of all staff in the Office of Advancement to ensure that proper pledge documentation is sent to the Office of Development Services. The Director of Development Services is responsible for making sure that a gift or pledge has adequate documentation before it is entered on the Development database and the documentation has been passed on to the Office of Financial Services and the Office of the Treasurer.
In the case of a verbal pledge at the material level, but no written agreement, a copy of the call report will be sent to the Assistant Comptroller in Financial Services and to the Director of Budgeting. This verbal pledge will be included in the fiscal year end pledge report to the Assistant Comptroller along with appropriate comments.
Copies of the signed pledge agreements and documentation of verbal agreements will be sent by the Director of Development Services to the Office of Financial Services and the Office of the Treasurer.
Pledge reminders are sent out monthly by the Annual Fund office (for Annual Fund pledges) and the Assistant Vice President for Development (for all other pledges). All outstanding pledges that are due by the end of the fiscal year will be evaluated as to its status. At the end of the fiscal year, the Director of Development Services will send to the Assistant Comptroller a list of all outstanding pledges.
It is the responsibility of all staff in the Office of Advancement to ensure that gifts go immediately to the gift preparer for proper handling. The gift preparer, who is not a member of the staff of Development Services, will open all envelopes and give a copy of each check with any documentation from the donor indicating the intent of the donor and/or designation of the gift to the Office of Development Services. After the gifts for the day have been entered in the database from these copies, the deposit is created from the database by the gift preparer and compared to a calculator tape of all the checks processed. This tape is stapled to the second page of the deposit. The gift preparer then takes this deposit with the checks to Cash Receipts.
Any checks that were to be processed for that day but were held from processing for any reason are to be entered in the log provided for that purpose. The donor’s name, the date the check was held, and the amount of the check will be entered in the log along with any pertinent remarks as to why the check has been withheld from processing. When the issue is resolved, the date of processing is then entered to close the entry.
A calculator tape is also run for any withheld checks on a given day and attached in the log.
Gifts of stock certificates are copied, attached, and given to Development Services. Gifts are then sold as soon as possible through the then approved broker.
In accordance with CASE (Council for Advancement and Support of Education) guidelines, gifts from businesses or organizations that match the voluntary contributions of their employees or other participants, are recorded as coming from the business or organization making the gift. A receipt is issued to the organization, and the gift is applied to the same fund as the original gift made by the donor. The donor whose gift is matched receives matching or “soft” credit toward College gift club membership. Matching gifts may not be applied toward a pledge made by an individual.
Development Services will record the premiums as a gift in a special account for that purpose. When a new life insurance policy is established, with Scripps College as the beneficiary, the Assistant Comptroller through Financial Services will receive the original paperwork. A copy will be kept by the Planned Giving department and another copy will be given to the Assistant Treasurer.
Third Party Trusts
A third party trust is a deferred gift where Scripps College is not the Trustee. Development Services is to let Financial Services know as soon as possible when there is a third party trust. Development Services will enter the third party trust as a pledge with a comment that this is a third party trust.
A donor may transfer cash gifts to the College electronically through the Automated Clearing House (ACH) or FEDWire system. All ACH transactions are value dated one business day in the future and FEDWire transactions are value dated for the current day and given immediate availability. The following procedures need to be followed for electronic gift payments:
- Send instructions to the donor. (Instructions may be obtained from the Director of Development Services). Included in the instructions, please ask the donor to include the following text in the remitters reference box: “A gift to Scripps College.” The text facilitates the identification of the electronic payment and expedites the processing of the gift.
- Notify the Director of Development Services a gift is expected to be delivered to the College electronically.
- The Director of Development Services must notify the Office of Financial Services with the following information: (1) The actual or estimated amount of gift, (2) the name of the donor, (3) the account to credit, and (4) the location of the origin of the wire (if possible).
- The Office of Financial Services will watch for the credit to the Scripps College’s account, daily, until receipt of payment.
- The Office of Financial Services will fax a copy of the transmittal receipt to the Director of Development Services to process in the college’s gift system.
- The Office of Financial Services will forward to the Director of Budgeting any unusual electronic payments received that can not be identified. The Director of Budgeting is responsible for determining what account the funds should be credited to and notifying the Office of Financial Services of the resolution.
Recognition and Acknowledgement
Recognition and Anonymity – Commitments will be publicly recognized and/or commemorated in an appropriate manner with the permission of and in consultation with the donor. Requests by donors for anonymity will be honored.
Naming Opportunities – Naming opportunities and minimum amounts for fund-raising projects are approved by both the Buildings and Grounds Committee and the Institutional Advancement Committee according to the Signage Protocols and Policy for Donor Recognition. The names of buildings are approved by the full Board of Trustees. The Vice Presidents for Business Affairs and Advancement are responsible for carrying out these protocols with the Buildings and Grounds Committee and the Institutional Advancement Committee, respectively.
Acknowledgements – The responsibility for overseeing the acknowledgement of all gifts to the College resides with the Office of Advancement.
For the purpose of maintaining proper control, all receipts are mailed directly to the donors from the Office of Advancement, even though other offices on campus may send additional acknowledgements for gifts that benefit their departments.
All gifts are to be acknowledged by the Office of Advancement within five working days of receipt by the College. Receipts are only to be mailed to the donor who, for legal and tax purposes, actually made the gift to the College. Similar acknowledgement letters, without the receipt, can be sent to other parties, as needed, who may have been involved with the gift but did not legally or for tax purposes make the gift to the College.
In the case of gifts in honor or in memory of someone, a letter is sent to the person so honored or to family members of the deceased.