2200 PR.01 Gift Receipt and Processing

Contents

1.     Overview

2.     Distinguishing Gifts from Other Funds

3.     Gifts Received by the Office of Development

4.     Gifts Received by a Department

5.     Set Up of New Gifts

6.     Record Retention

This procedure supports Policy 2200 Gifts to the University.  It details the steps to follow for the receipt and processing of Gifts.  It does not cover sponsored awards (i.e., grants and contracts), nor does it cover the stewardship and management of Gifts.  For specific information on the stewardship and management of Gifts, refer to Procedure 2200 PR.02 Gift Stewardship.

The University may receive Gifts in either of two ways: through the Office of Development (Section 3); or through a department (Section 4).  Please note, the Office of Development is the University’s preferred receiver of Gifts.  Yale strongly discourages receipt of Gifts by units and individuals outside the Office of Development.  In the event a University unit or individual outside the Office of Development receives a Gift, they must do so in accordance with this procedure.

Regardless of the method of receipt, the receiver needs to determine whether received funds are a Gift or another type of funding, using the guidance in subsections A through C, below.  If the funds constitute a Gift, this procedure’s subsequent sections provide the steps to be taken.  If the funds do not constitute a Gift, receivers should follow the procedures in subsections A through C, below.

A.  Gifts v. 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 and a Gift.  Sometimes, however, the wording of the governing document makes it difficult to determine whether the document represents a sponsored award or a Gift.  For detailed guidance, see Procedure 1304 PR.02 Distinguishing between Gifts and Sponsored Awards.

B.  Gifts v. Investment Income, Fiduciary Income, and Royalty Income

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 investments are investment income, not Gifts.

• Example: A donor gives the University an interest in a limited partnership as a Gift.  The University values the Gift at $250,000 on the date of receipt for financial statement purposes.  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, 9^th Floor) for deposit and proper disposition, accompanied by copies of all related documentation.

C.  Gifts v. 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.

If there is any doubt as to whether funds constitute a Gift or other income, contact any of the following offices for assistance:

• Contribution Processing, a unit within Gift and Records Services (hereinafter, “Contribution Processing”): 203-432-2206; contribution.processing@yale.edu
• Gift Administration: giftawards@yale.edu
• Investment Accounting: 203-432-3079
• Office of Planned Giving: 203-432-7025; development.plannedgiving@yale.edu

Departments should coordinate all solicitations and donor arrangements in advance with the Office of Development.  This is the University’s preferred method, as it streamlines the Gift receipt process, ensures the proper classification of funds received, and ensures consistency in the handling of Gifts.  The Office of Development is responsible for establishing Gift agreements.

A. Receipt and Processing

Upon receipt of a Gift for the benefit of a specific department, the Office of Development records 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.  The department’s financial statements show a Gift revenue credit.

Gifts are processed depending on the Gift type and whether an appropriate Gift fund already exists.  The points below describe particular circumstances and the corresponding action(s) taken:

• Restricted Gifts requiring a new fund – Gift Administration receives a new Gift request form from Development, along with relevant documentation, and creates a new Gift fund.  Gift Administration contacts the department business office via email when the new Gift is established.
• Additions to existing restricted Gift funds – Contribution Processing deposits these contributions into the appropriate Gift, based on the documentation received with the Gift.  Contribution Processing will contact the department with any questions.
• Alumni Fund Gifts – These are credited daily to the department’s Alumni Funds Gift fund.

B. Acknowledgment of Gifts

Contribution Processing is responsible for acknowledging all Gifts received by the University by sending a contemporaneous written acknowledgement to the donor.  This acknowledgment indicates to the donor that the Gift will be directed in accordance with the donor’s wishes.  This contemporaneous written acknowledgment issued by Contribution Processing satisfies the IRS substantiation requirements for contributions with a value of $250 or greater and constitutes the University’s official receipt for income tax purposes.

In addition, the IRS requires the University to provide a written disclosure statement to donors of a quid pro quo contribution in excess of $75.  A quid pro quo contribution is a payment made to a charity by a donor partly as a contribution and partly for goods and services provided to the donor by the University.

• Example: if a donor gives a charity $100 and receives a concert ticket valued at $40, the donor has made a quid pro quo contribution.  In this example, the charitable contribution portion of the payment is $60.  Even though the part of the payment available for deduction does not exceed $75, a disclosure statement must be filed because the donor’s payment (quid pro quo contribution) exceeds $75.

Departments may receive Gifts directly, although the University’s preferred method is for the Office of Development to receive Gifts, as detailed in Section 3, above.  If a department receives a Gift directly, the department is responsible for adhering to the following procedures.

A. Distinguish Gifts from Other Funds

Following the procedures in Section 2, above, determine whether the funds received constitute a Gift or another type of funds.  If the funds constitute a Gift, proceed to the following subsections.

B. Foreign Currency

Yale does not accept foreign currency for deposit (this includes checks drawn from Canadian banks that say “U.S. Funds”).  If there is a sensitive donor payment in foreign currency, contact Treasury Services (203-432-4100) to determine the appropriate way to proceed.

C. Determine if New Gift Fund and Designation is Required

Upon receipt of a contribution, determine if it can appropriately be added to an existing Gift fund, or if a new Gift fund and designation is required.  Generally, a new Gift fund and designation is required if:

• the Gift represents or funds a new purpose or program; or
• the Gift requires a name that is different from any existing Gift name.

All new Gift funds should specify, at a minimum, the following chart of accounts (“COA”) information, which should reflect where most activity is expected to take place:

• cost center;
• program;
• project; and
• assignee (if needed).

New Gift funds may use existing COA segments, if appropriate.  To establish a new Gift fund, or for assistance in determining if a new Gift fund is needed, contact Gift Administration.

D. Deposit Cash Gifts

Upon receipt of a cash Gift, including checks, departments are responsible for promptly depositing the Gift via the Workday Cash Sale Event business process, attaching the Gift documentation in the Cash Sale (preferred) or sending the Gift documentation to Contribution Processing (as described in subsection E, below), and delivering the cash/checks to Treasury Services.  (For information about Cash Sale Events, refer to Procedure 2801 PR.01 Recording and Depositing Cash Receipts and Record Cash Sale Training.)

• Use the “Gift” transaction type for contribution and fill out the COA and memo information.
• Enter the correct COA values (preferred Gift fund) for the credit, if it is known at the time of deposit.  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 necessary information has been processed.

For the following situations, apply the instructions described below:

• If a cash receipt includes both a Gift and a payment such as membership, event ticket, etc., contact the Director, Gift and Records Services before depositing the cash/check.
• If a cash receipt is a payment from an estate or trust, payment of an insurance premium, or related to a special investment, send the cash/check and documentation to the Office of Planned Giving (157 Church Street, 9^th Floor) for deposit.

E. Send Cash Gift Documentation to Contribution Processing

Contribution Processing records every Gift deposit in the Hopper system.  For every Gift deposit, departments are responsible for providing the following to Contribution Processing:

• a copy of the Cash Sale tracking slip;
• a copy of the front of each check, if applicable – one check per page (these are filed separately); and
• originals of envelopes, cover letters, memos, notes, matching Gift forms, and any other documentation that accompanied the Gift and helps to define the Gift.

Attach all supporting Gift documentation in the Cash Sale.  If not practicable, deliver all Gift documentation to Contribution Processing (157 Church Street, 8th Floor).  Contribution Processing is unable to complete the processing of the Cash Sale until they receive all required documentation.

F. Processing Matching Gifts

A matching Gift is a Gift made by a company in accordance with its own program designed to encourage employee contributions.  Note: 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; they are rejected for prior year donations.  Each matching Gift company has its own rules/criteria regarding the type of donations they will match.

Attach the original matching Gift form to the other donor documentation and send to Contribution Processing, as described in subsection E, above.  Contribution Processing completes Yale’s portion of the matching Gift form and forwards the form to the company for processing.  Contribution Processing deposits the company’s matching Gift check to the fund in which the check from the individual donor was deposited.

G. Legal Notices

Upon receipt of any legal notice from a probate court, government agency, lawyer for an estate, bankruptcy proceedings, etc., departments are responsible for delivering the notice immediately to the Office of Planned Giving (157 Church Street, 9^th Floor).  Such notices are often time-sensitive and, therefore, promptness is essential.

H. Processing Non-Cash Gifts and Wire Transfers

Upon receipt of a non-cash Gift or wire transfer, departments are responsible for providing the following:

• notification of the date of the Gift;
• donor’s name;
• description of the item and an estimate of its value (for University purposes only); and
• any accompanying documentation.

Upon receipt of a non-cash Gift or wire transfer, departments are responsible for contacting the appropriate office(s) below to process and record receipt of the Gift:

Gift Administration is responsible for the proper setup of new Gifts in Workday and the proper accounting of specific Gift transactions.  Gift Administration records donor restrictions of each Gift within the Workday Gift Event and attaches the official donor documentation to the Workday Gift.

Gift Administration contacts the department business office via email when the Gift is established.  Departments are responsible for reviewing the new Gift, accessing the donor agreement, and understanding the requirements of the Gift.

A. Purpose Codes

Upon setup of a new Gift in Workday, Gift Administration assigns a purpose code.  Purpose codes are a shorthand method to designate the general purpose of a Gift (e.g., purpose code 42 for scholarships; purpose code 65 for general support).

Purpose code categories may also carry further restrictions (e.g., the scholarship may be for a student majoring in English; the general support fund may be for a specific project within the Art School).  Each Gift agreement within each Gift fund documents these restrictions.  Departments are responsible for reviewing and understanding the terms and restrictions of each Gift in the department.

B. Gift Sources and Assessments

Gifts are categorized in the following source groups:

• endowment Gifts;
• spendable operating Gifts; or
• spendable Gifts designated for physical capital.

Gifts carry different assessments based on their source.  Those assessments are as follows:

• Endowment Gifts carry a charge that represents a pro rata portion of costs Yale incurs by 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 is calculated annually based on the prior fiscal year’s actual costs and typically ranges between 6% and 8% of annual endowment income.
• Spendable Gifts are subject to Yale’s indirect cost recovery policy, which allocates 12% of the Gift amount to offset a portion of the full costs associated with the Gift’s funded program.
• For a full explanation of Gift assessments, refer to the Gift Policies section of the Yale Giving website.

Contribution Processing is the official custodian for originals of cover letters, memos, notes, and any other documentation that accompanies a Gift, as well as original matching Gift forms.  Contribution Processing is also the official custodian for records regarding any donor benefits (e.g., complimentary admission to events, memberships, etc.). 

The Office of Planned Giving is the official custodian for original documentation related to trusts, estates, and special investments.

Departments, for reference purposes, may retain copies of such documents in their files.