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2200 PR.01 Gifts Processing and Stewardship
June 2, 2017
This procedure covers the steps to follow for gift receipt, gift recordation, and gift management. The procedure applies to all University offices and does not cover grants.
A. Gift Process
- Gift Planning: All solicitations and donor arrangements are coordinated in advance with the Office of Development. The Office of Development is responsible for establishing gift agreements, recording donor commitments, and sending official acknowledgments to donors.
- Gift Receipt (see Section 2 for details): When a gift for a new restricted purpose is received, the department contacts Gift Accounting. Gift Accounting establishes a new gift source as appropriate.
Gifts may be received by:
- the department that will benefit from the gift;
- the Office of Development; or
- another Department, for example the President’s office.
When a department receives a gift, whether or not it is intended for the benefit of the department, immediate action must be undertaken to record and deposit the gift and forward that documentation to the appropriate office, as described in Section 2 below.
If a gift benefiting the department is received by the Office of Development, that office will record and deposit the gift immediately in accordance with Section 2 below.
- Gift Management (see Section 3 for details): Schools and departments are responsible for carrying out donor wishes. Gift Accounting is responsible for the proper setup of gift accounts and proper accounting of specific gift transactions.
Gift Accounting enters the donor restrictions of each gift within the Workday Gift Event and attaches the official donor document to the Workday gift fund. This document summarizes the agreement between the University and the donor and describes the use restrictions of the gift. Lead Administrators will be notified automatically in Workday upon the creation of a new gift fund. Departments are responsible for reviewing the new gift fund, accessing the donor agreement and understanding the requirements of the gift.
B. Matching Gifts
A matching gift is a gift made by a company in accordance with its own program designed to encourage employee contributions.
Matching gifts are not intended to allow an individual to make a pledge that includes anticipated matching contributions from an employee or other source such as a donor advised fund or community foundation. Matching gift claims are only set up for current year gifts and payments. Matching gift claims are rejected for prior year donations. Each matching gift company has their own regulations regarding the type of donations they will match.
Contribution Processing is responsible for completing the required University information and authorized signatures on the matching gift form to release the funds only after the donor initiates the claim.
C. Gifts vs. Sponsored Awards
The language used by a donor or sponsor in providing support is generally the source for making a distinction between a sponsored award (grant) and a gift. For detailed guidance, see Procedure 1304 PR.02 Distinguishing between Gifts and Sponsored Awards.
D. Gifts vs. Other Income
Unrestricted funds, including Miscellaneous Income and Other Income earned by the University, should not be deposited or transferred/reclassified into a restricted gift fund. Only contributions, endowment spending, and restricted fiduciary and royalty income should be recorded in a restricted gift fund.
E. Gifts vs. Investment Income
A gift is a voluntary unconditional transfer of cash or other assets to the University by an individual or another entity, for which the donor does not receive goods or services in exchange.
Investment income is income relating to property held by the University for its benefit now or at a future date. While the original investment may have been acquired by the University as a gift, the subsequent receipt of income related to the investment is not considered a gift, but rather investment income. Dividends and gains from investment sales are investment income, not gifts.
- Example: A donor gives the University an interest in a limited partnership as a gift. The value of the gift on the date of receipt is determined to be $250,000. The University will record this amount as both a gift (credit to revenue) and an investment (debit to assets). Later, the University receives annual $50,000 payments from the limited partnership. These subsequent payments are investment income, not gifts. The University will credit the $50,000 to investment income when the checks are deposited.
The University may also receive fiduciary income or royalty income. If these are to be used for a restricted purpose (i.e., reinvestment of royalty income to the principal of an endowment or to be used for scholarship purposes only), they should be recorded in a restricted gift fund. Only unrestricted fiduciary or royalty income should be recorded to unrestricted source groups (such as GA or current use).
- Fiduciary income is income from trusts established outside the University.
- Royalty income is a share in the proceeds paid to an inventor or proprietor for the right to use his/her invention or services. Whether these are gifts or investment income from donated special investments held outside the University depends on the original donor intentions.
Investment income and other receipts that are not clearly gifts should be sent to the Office of Planned Giving, 157 Church Street, 9th Floor, for deposit and proper disposition, accompanied by copies of all related documentation.
If there is any doubt as to whether a receipt is a gift or investment income, any of the following offices should be able to help you:
- Contribution Processing: 432-5498; firstname.lastname@example.org
- Gift Accounting: email@example.com
- Investment Accounting: 432-3079
- Office of Planned Giving: 432-7025; firstname.lastname@example.org
F. Gift Sources
Gift sources are categorized in the following source groups:
- endowment gifts;
- spendable operating gifts;
- spendable gifts designated for physical capital;
- student loan gifts.
G. Purpose Codes
Purpose codes are a shorthand method to designate the general purpose of a gift. For example, purpose code 42 is for scholarship gifts and purpose code 65 is for general support.
There may be further restrictions within these purpose code categories that must be followed, e.g., the scholarship may be for a student majoring in English, or the general support fund may be for a specific project within the Art School. These restrictions are documented within the gift agreement of each fund. It is the responsibility of Department Lead Administrators and Operations Managers to review and understand the terms of each gift owned by any of their organizations. Gift agreements are attached to the gift fund upon setup of the new gift in Workday. If a Department does not have copies of gift agreements, contact Gift Accounting at email@example.com.
Endowment Gifts: Endowment Gifts are imposed a charge which represents a pro rata portion of costs incurred by the University in carrying out the purposes of the gifts. The assessment is charged annually and is withheld from the spending distribution when it is posted to the endowment gift. It typically ranges between 6% and 8% of annual endowment income. It is calculated annually based on the prior fiscal year’s actual costs.
Spendable Gifts: Spendable Gifts are subject to the University’s indirect cost recovery policy, which allocates 12% of the gift amount to offset a portion of the full costs associated with the program funded by the gift. See a full explanation of gift assessments in the Gift Policies section of the Yale Giving website.
I. Legal Notices
If any legal notice from a probate court is received, a government agency, lawyers for estates, bankruptcy proceedings, etc., deliver the notice immediately to the Office of Planned Giving, 157 Church Street, 9th Floor. Such notices are usually time-sensitive and therefore speed is essential.
A. Deposit Cash Gifts
If a department receives a cash gift, they must promptly deposit the gifts, including checks, via the Workday Cash Sale Event business process deliver the cash/checks to Treasury Services and attach the documentation in the Cash Sale (preferred) or send the donor documentation to Contribution Processing (as described below).
- Use Gift transaction type for contribution and fill out the COA and memo information.
- Enter the correct chart of account values (preferred gift fund), if it is known at the time of deposit, for the credit. Use the prime segments only.
- For a new or pending gift fund, leave the crediting account blank and enter “gift fund pending” in the description field. The gift will be transferred to the correct account through the Hopper system when all the information has been processed. Workday will automatically notify the Lead Administrator when the gift fund has been established.
- Split gifts: If a cash receipt includes both a gift and a payment such as membership, event ticket, etc., contact the Director of Gift and Records Services, 432-5867, before depositing the check.
- When a cash receipt is a payment from an estate or trust, payment of an insurance premium, or related to a special investment, send the check and documentation to the Office of Planned Giving, 157 Church Street, 9th floor, for deposit. Office of Planned Giving is the official custodian of original documentation related to trusts, estates and special investments.
For more information about Cash Sale Events see Procedure 2801 PR.01 Recording and Depositing Cash Receipts.
B. Determine if New Gift Fund is Needed
When a department receives a gift, determine if it can appropriately be added to an existing gift fund, or if a new gift must be set up.
Generally, a new gift fund is needed if:
- the gift represents or funds a new purpose or program; or
- the gift requires a fund title that is different from any existing gift fund title;
All new gift funds must specify a prime cost center, program, project, and assignee, which should reflect where most activity is expected to take place.
- new gift funds may use an existing cost center, program, project, and assignee, if appropriate.
To establish a new gift fund, or for assistance in determining if a new gift fund is needed, email: firstname.lastname@example.org.
C. Foreign Currency
The University does not accept foreign currency for deposit. This includes checks drawn from Canadian banks that say U.S. Funds. However, if you have a sensitive donor payment, please contact Treasury Services to discuss.
D. Send Gift Documentation to Contribution Processing
Every gift deposit is entered into the Hopper system. For every gift deposit, Contribution Processing requires the following documentation:
- a copy of the Cash Sale tracking slip;
- a copy of the front of each check – one check per page (these are filed separately); and
- originals of envelopes, cover letters, memos, notes, matching gift forms or any other documentation that accompanied the gift and that help to define the gift.
- If the gift was not accompanied by any documentation other than the envelope, send the envelope indicating the donor’s name and return address.
Contribution Processing is the official custodian of records such as information regarding any donor benefits (e.g. complimentary admission to events, memberships, etc.)
Attach all supporting gift documentation in the Cash Sale. If not practicable, deliver all gift documentation to: Contribution Processing, Office of Development, 157 Church Street, 8th Floor, New Haven, CT 06510-2100. Contribution Processing will not be able to complete the processing of the Cash Sale until all required documentation is received.
E. Matching Gift Processing
Attach the original matching gift form to other donor documentation and send to Contribution Processing as above. Contribution Processing will complete the University’s portion of the matching gift form and forward the form to the company for processing. Contribution Processing will deposit the company’s matching gift check to the fund where the check from the individual donor was deposited.
F. Wire Transfers and Non-Cash Gifts
For all non-cash gifts other than publicly traded securities, notification of the date of the gift, the donor’s name, a description of the item and an estimate of its value (for University purposes only, e.g. insurance) should be sent to the Office of Development.
If the donor sends the department an IRS Form 8283 (Noncash Charitable Contributions), forward it to the Securities and Special Assets Specialist in the Office of Planned Giving, which will complete required portions of the form and obtain appropriate University signature.
Contact the appropriate office to handle and record receipt of wire transfers and non-cash gifts:
Cash Wire transfers
Director, Gift and Records Services
Securities and Special Assets Specialist (Fax: 432-8633
Gifts-in-kind for use in conjunction with University’s mission (e.g., teaching, research, preservation of knowledge:
Manager of relevant collection or department depending on nature of gift (e.g., museum, library, athletics, etc.)
call appropriate department
Non-marketable securities and limited partnerships, charitable gift annuities, charitable remainder trusts, pooled income funds, life insurance policies, real estate, other non-cash gifts
Office of Planned Giving (Development Office)
Any of the above if from an estate or trust
Office of Planned Giving
G. Gifts Received by Development
When the Office of Development receives a gift for the benefit of a department, it processes the gift in the Hopper system. Contribution Processing records current fiscal year gift credits from the gift clearing account to the correct account in the General Ledger. A gift revenue credit will be seen in the financial statements of the gift-owning organization. To obtain more information about specific credits, contact Contribution Processing.
- Restricted gifts requiring a new fund: Gift Accounting will create the new gift fund. Workday will automatically notify the Lead Administrator when the new gift has been established.
- Additions to existing restricted gift funds: These are deposited to the appropriate fund by Contribution Processing based on the documentation received with the gift. If there is a question, Contribution Processing will contact the department.
- Alumni Fund gifts: These are credited to the department daily in the department’s Alumni Funds award.
H. Acknowledgment and Tax Receipt
Contribution Processing sends an official University acknowledgment to donors. This acknowledgment constitutes the University’s official receipt for income tax purposes. The acknowledgment also indicates to the donor that the gift has been directed in accordance with the donor’s wishes.
I. Record Retention
As stated above, Contribution Processing is the official custodian of originals of cover letters, memos, notes or any other documentation that accompanies a gift, as well as original matching gift forms.
The Office of Planned Giving is the official custodian of original documentation related to trusts, estates and special investments.
Departments should retain copies of such documents in their files for reference.
J. Bounced Checks
If a gift check bounces, Treasury Services does the following:
- debits the gift holding account for the check amount via Online Journal Entry;
- debits the gift holding account for the amount of bank fees; and
- sends a copy of the journal and documentation to Contribution Processing.
Contribution Processing contacts the donor to request a replacement check.
Stewardship of gifts involves:
- appropriately acknowledging gifts;
- ensuring that they are used in accordance with donor wishes; and
- reporting to donors and/or other parties when appropriate.
Although Contribution Processing sends official acknowledgments to donors, departments that have a direct relationship with a donor may also wish to send their own letter of thanks. If the department sends its own thank-you letter, send a copy to Contribution Processing as well. (Medical School departments should send an additional copy to the Medical School Development Office.)
Gift Accounting maintains a permanent file for each gift fund that is established. Each file contains the donor gift agreement and other pertinent documentation related to the gift. Gift agreements will be attached to the gift fund in Workday and the use restrictions, which describe how the gift should be used, will be visible for each gift in the Workday system. The gift agreement and use restrictions attached to the gift will be accessible only by the cost center that is responsible for the fund (i.e., the gift-owning cost center). The cost center manager must review the gift agreements and be familiar with the purpose of the gift including any special restrictions or requirements associated with the gift.
In summary, cost center managers are responsible for:
- reviewing the gift agreement to ensure that gift funds owned by any of their cost centers are used in a manner consistent with the stated intentions of the donor;
- being familiar with the purpose of the fund and any special restrictions or requirements associated with the gift;
- monitoring their gift funds for overdrafts and accumulating balances;
- overdrafts must be cleared before the end of the fiscal year. See Procedure 1310 PR.03 Deficit Fund Balances and Sponsored Agreement Overdraft;
- accumulating balances may indicate an inability to use a donor’s gift - consult with Gift Accounting for guidance in appropriate use of gift funds and endowment income;
- reviewing spendable gift funds for closure when the balance is zero or when the restricted purpose for which the gift was originally given has been fulfilled;
- a restricted spendable fund may be closed when the balance is zero and no future gifts are anticipated for the restricted purpose for which the fund was originally established and/or;
- a restricted spendable fund with an unspent balance may be closed when the restricted purpose for which the gift was originally given has been fulfilled. Any remaining balance will be used to offset the requesting department’s General Appropriations funding. Requests to close a fund with an unspent balance must be approved by the department’s responsible Deputy Provost (or appropriate lead administrator);
- the form to complete the closure of a restricted spendable gift is Form 2203 FR.06 Request to Close a Spendable Gift.
If changes to gift agreements are required, the cost center manager should contact the Office of Development. The Office of Development will work with the donor to determine if changes to the gift agreement are acceptable.
If changes to the gift fund chart of accounts values are required, such as requests to change the purpose code, these should be sent to Gift Accounting. Gift Accounting will review such change requests to ensure they are in compliance with donor intent and deemed allowable. Changes may need to be approved by the Provost Office or General Counsel. Once it has been determined that the requested changes are appropriate, Workday will be updated and a notification will be sent to the Lead Administrator.
Gift funds may need to be moved from one account to another in certain circumstances. Use the following procedures:
need to allocate a current year gift income from one project to another
Refer to Procedure 1305 PR.05 Reclassification and Transfer of Funds
need to allocate gift income to another source where expenditures meeting the restrictions were incurred and charged
Refer to Procedure 1305 PR.05 Reclassification and Transfer of Funds
need to change the prime project/task/org for a restricted fund
Contact Gift Accounting at email@example.com
a gift was deposited to an incorrect award or organization by the Department
Department should reverse the original entry and credit the gift clearing account (1011509.00.54999A..541005.02) using ET code 451102. Donor documentation, copy of the Online Journal Entry, and explanation of the correct gift fund in which the gift should be deposited should be sent to firstname.lastname@example.org.
Contribution Processing will then transfer the gift out of the clearing account into the correct gift fund using ET code 451101. Donor record will be properly adjusted in Hopper and new gift will be recorded properly in the general ledger.
a gift was deposited to an incorrect award or organization by Contribution Processing
Department should contact email@example.com and provide the correct COA fund where the gift should be deposited. Department should also provide all information known about the gift including the donor ID, gift amount, gift date and designation number. Contribution Processing will adjust the gift in Hopper and the general ledger.
Although donors often contact Development officers to find out how their gifts are being used, sometimes donors contact individual departments or faculty members. Departments should be prepared to respond to donor questions regarding the use of their gifts.
Department lead administrators or their designees should be familiar with donor reporting requirements for gifts which they are responsible, and should work with Gift Accounting and the University Recording Secretary in the Office of Development to prepare and submit reports accordingly.
Copies of any correspondence or reports to donors should be sent to the University Recording Secretary, Office of Development, 157 Church Street, 8th Floor.