Session 5 - Gifts and Pledge Accounting Columbia University Medical Center Training Certification...

Session 5 - Gifts and Pledge Accounting

Columbia University Medical CenterTraining Certification Program For Senior Financial Administrators - Session 5


Session 5: Gifts and EndowmentsPart 1: Gifts

Part 2: Endowments

April 2005Session 5 - Gifts and Pledge Accounting

AgendaIntroduction 10 Mins

Goals and Objectives 5 Mins

Part 1a: Gifts 60 Mins

Break 15 Mins

Part 1b: Gifts 60 Mins

Break 15 Mins

Part 2: Endowments 60 Mins

Summary and Conclusion 15 Mins

TOTAL 240 Mins


SESSION OBJECTIVES– To understand the philanthropy cycle

– To determine the difference between a gift and a grant

– To understand the accounting for gifts and endowments

– To understand the role of the department administrators for the gift processing and stewardship of gifts and endowments

– To understand the role of central officers in the development and stewardship of gifts and endowments


Part I Gifts


PHILANTHROPY CYCLE

Donor’s Gift

Gift agreement (if necessary – see guidelines)

Check/Cash received Securities/Wire Transfer Received

Gift transmittal preparedWithin 48 hrs

Sent to CUMC Office of Financial Services Sent to UDAR

Tax receipt sent to donor

Gift deposited into FAS and gift account

CUMC Office of Development notifiedDepartment notified

Copies of gift transmittal and documentation sent to CUMC Office of Development

If gift over $10,000 an acknowledgement letter is prepared by CUMC Development for GDF signature

If gift over $10,000 an acknowledgement letter is prepared by UDAR for Bollinger signature

Physician contactAnnual Fund mailingProposal submission

Estate notification

EVP President


PRIVATE PHILANTHROPY

– Private philanthropy has played a crucial role in propelling Columbia University into the front ranks of the world's great centers of higher education

– Development efforts are supported by both the University and CUMC offices:• Office of University Development and Alumni Relations (UDAR)

• Medical Center Development Office– School-based development offices


CUMC DEVELOPMENT

– Raise $ for:• Student financial aid

• Faculty support - Education

• Faculty support - Research

• Facilities

• Basic science departments

• Clinical departments

• Centers and Institutes

• Schools

• Capital projects

– Raise $ from:• Individuals

• Alumni

• Grateful patients

• Corporations

• Foundations

• Associations

• Estates


CUMC DEVELOPMENT

How does Development raise $ ??

– Networking with faculty, academic administration and trustees

– Identify potential donors

– Cultivate relationship with donor

– Solicit

– Assist with gift planning

– Draft agreements

– Steward for gift


CUMC CAPITAL CAMPAIGN

– July 2003 – December 2010

– $1 billion working goal- CUMC strategic plan

– Priorities:• Education

• Research

• Clinical

• Capital


WAYS OF GIVING

– Cash

– Securities: stocks, bonds, mutual funds

– Real Estate: residence, farm, summer home, commercial property, vacant land

– Retirement Assets: IRA, pension plans

– Planned gifts

– Matching gifts

– Gifts-in-kind• Antiques, jewelry, books, artwork, equipment, planes, automobiles

• Gifts-in-kind should further the mission of the University and be convertible to cash.

• The University provides an official receipt for gifts valued at $250 or more. The receipt describes the property but does not reflect its monetary value. Donor’s responsibility to secure a qualified appraisal.


DEFINITION of a GIFT vs. GRANT

Gift

Definition (per FAS 116) - Something that is bestowed voluntarily and without compensation: Unilateral nonexchange transaction.

• May be made by individuals either during their lifetimes or by testamentary disposition; by corporations; by foundations and other legal entities.

• May be designated for unrestricted or restricted

• Must be accepted by Trustees

• May be used for current use or for endowment, in which case the gift principal is permanently invested and only a portion of the annual earnings of that endowed fund are used.


DEFINITION OF A GIFT vs. GRANT

Grant

Definition (per FAS 116) - Funding for a nonprofit organization, usually for a specific project, with reciprocal benefit to the donor.

A grant will have one or more of the following items: – Specified time period

– Unused funds should be returned

– Statement of Work to define a line of scholarly or scientific inquiry

– Formal deliverables such as periodic progress reports, financial report or performance objectives

– Specified terms regarding fiduciary responsibility or payment contingencies

– Specified terms regarding disposition for property upon conclusion of the project

– Proposal (typically) submitted in a sponsor-required format

– Provides Facilities & Administrative cost reimbursement to the University


IN-KIND GIFTS AND VALUATIONDefinition - Non-cash gifts of tangible or intangible property are generally known

as gifts-in-kind. Tangible property can fall into two distinct categories, and its value is derived from its physical existence: (1) objects, such as equipment, software, automobiles, printed materials, etc.; (2) services, such as providing photography services. Intangible personal property is property whose value stems from intangible elements. Examples include patents and copyrights.

Issues Related to Gifts-in-Kind– Valuation

– Deductibility

– Liquidity

– Acceptance policy: IRS form 8283

– Donor expectations

– Holding period


PREMIUM / QUID PRO QUO GIFTS

– Donor contribution includes a payment for goods or services. • Fund raising event such as a theater party or dinner

• Giving donors a gift if they make a contribution

• Payment for goods and services is not tax deductible

– Best fund raising practices • Inform the donor of the tax deductible and non-deductible portions of their payment in

the printed solicitation

• Give the donor an opportunity to refuse the premium (thus allowing the entire amount to be tax deductible)

• Use insubstantial benefits that allow maximum deductibility for the donor


PLANNED GIFTS

– Bequests

– Charitable gift annuities

– Charitable remainder trusts

– Pooled income funds

– Life income plans


CLASSIFICATION OF GIFTS

– Unrestricted Contributions – Current: Contributions that can be used to meet the current expenses of the organization.

– Endowed: Contributions that are not restricted by donors for endowment.

– Restricted Contributions– Current: Contributions that can be used to meet the current expenses of the organization,

although restricted to use for some specific purpose, or during or after some specified time.

– Endowed: Contributions that are restricted by donors for endowment and the income is restricted for some specific purpose.



– Pledges (promise to give) - “…a written or oral agreement to contribute cash or other assets to another entity; however, to be recognized in financial statements there must be sufficient evidence in the form of verifiable documentation that a promise was made and received.”

• Must be recognized as revenue in the period received

• Classified as temporarily or permanently restricted in the period in which the promise was made

• Temporarily restricted unconditional promises to give would be reclassified to unrestricted in the period in which the unconditional promise was received or the restriction lapses



– Donor-imposed condition (on a transfer of assets or a promise to give) - “…specifies a future and uncertain event whose occurrence or failure to occur gives the promisor a right of return of the assets transferred or releases the promisor from its obligation to transfer assets promised.”

– Donor-imposed restriction - “…limits the use of contributed assets; it specifies a use that is more specific than broad limits resulting from the nature of the organization, the environment in which it operates, and the purposes specified in its articles of incorporation or bylaws or comparable documents for an unincorporated association.”

– Expiration of Restrictions - The expiration of donor-imposed restrictions must be recognized in the period in which the restriction expires. The expiration of a restriction may be based on the lapse of time or the fulfillment of a stipulated purpose, or both.

Session 2 - Fundamentals of Budgeting

BREAK


CU: GIFT AGREEMENTS

– You must always use a gift agreement for

• all gifts and pledges of $50,000 or more

• all gifts and pledges creating true endowment funds - permanent

• all gifts and pledges that require the establishment of new fund accounts

• any on-going, multi-year obligation between a donor and the University

• any project which requires the commitment of funds by the University

• any significant, capital project not previously approved by senior Columbia administration

– You need not use a gift agreement for gifts/pledges less the $50,000 which are • gifts to an annual fund current use

• gifts being deposited to an existing fund account - called fund addition

– Prepared by CUMC development staff


CU: GIFT AGREEMENTS (cont.)

– Types of agreements (see handout of pro forma draft)• General

– Binding

– Non-binding

• Endowed professorship

• Endowed scholarship / fellowship

• Awards

• New current use / capital – Binding

– Non-binding

• Additions to existing funds

– Terms and Conditions

– Program Requirements


ENDOWMENT LEVELSEndowment Type Minimum Levels

Education, Research, or Project Fund $50,000

Lectureship, Prize, Award $50,000

Student Aid:

MD (tuition and fees) $750,000

PhD (tuition, fees and stipend) $1,000,000

MD/PhD (tuition, fees and stipend) $1,000,000

Scholars $200,000 - 500,000

Fellowships (post-graduate) $250,000 - 1,000,000

Visiting Professorship – one semester $1,000,000

Visiting Professorship – academic year $2,000,000

Assistant & Associate Professorship $1,500,000

Full Professorship – current faculty $2,000,000

Full Professorship – recruitment $3,000,000

University Professorship $5,000,000

Laboratory and Intradepartmental Programs $1,000,000 - 5,000,000

Intradepartmental Centers* $5,000,000

Interdepartmental Centers* $10,000,000

Institutes, Departments, and Schools*

*Funding level determined individually; refer to naming policy document for specific processes and required Board of Trustee approval for Centers, Institutes, Departments, Schools


NAMING OPPORTUNITY GUIDELINES

– School

– Academic Department

– Institute

– Center

– Buildings:• Constructed

• Renovated

• Previously unnamed

– Lectureships

– Labs

– See handout


CU PLEDGES > $24,999

– Financial Accounting Standards Board SFAS 116 requires the University to report unconditional promises to give as revenue in it's financial statements

– Documentation includes: • Pledge letter / agreement

• Donor's name, address and signature

• Purpose of pledge

• Account number

• Whether there are conditions the University must meet or perform before the donor is required to fulfill his/her pledge

• Total amount of pledge and payment schedule

• Written notice of any pledge change or revision

– Pledge records are maintained by UDAR


SETTING UP ACCOUNTS– Gifts

• General purpose gift accounts are recommended to segregate unrestricted gift funds from restricted gift funds

• Departments set up a restricted gift account in FFE and forward documentation and the check(s) to the Office of Financial Services (OFS)

• OFS releases the account and forwards the gift check and attachments to the Office of Development (UDAR)

• UDAR reviews and “approves” the gift account in FFE, deposits the check and issues the tax receipt to the donor

– Endowments • A cover memo requesting an account, with all related donor documentation and

check(s), is sent to the Office of Financial Services

• OFS forwards the memo, attachments and check(s) to the University Office of Management & Budget

• The Office of Management and Budget sets up the accounts, including the related endowment income/spending account in ledger 6 C.


GIFT TRANSMITTALS AND ACKNOWLEDGEMENTS

– Transmittal (see handout)• Used to designate an account for gift crediting, identify the donor's name and address,

and provide other information such as “soft credit,” matching gift, and premium information.

• At CUMC, send to Office of Financial Services, along with the gift checks, three copies of gift documentation and checks.

• Gifts are not to be deposited with the Bursar

– Acknowledgements• Letters are prepared by each individual school, department or development office.

• Gifts of $10K also acknowledged by President and CUMC EVP

• UDAR sends an official receipt to each donor for tax purposes.


REVENUE RECOGNITION FOR GIFTS

– Not-For-Profit organizations must recognize contributions received as revenue, including unconditional promises to give, in the period received at their fair value.

• NFPs must distinguish between contributions received that increase unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. These three classes of net assets are concerned only with the external donor restrictions, not restrictions that may be imposed on contributions by the organization itself.


NET ASSET CLASSIFICATIONPermanently Restricted

– Resources subject to donor-imposed restrictions requiring that the original contribution be retained inviolate and in perpetuity but permit the use of investments earnings for general or specific purposes. The primary component of these assets is true endowments whose appreciation is either restricted to specific uses, such as support for financial aid or a faculty chair, or else is available for general university purposes.

– Example: Endowment Principal accounted in: • General Ledger 0-60000 through 0-69999

• L 6C (Ledger 6C) No sub ledger


Temporarily Restricted

– Resources subject to donor-imposed restrictions that will be met by actions of the University or the passage of time. These net assets are primarily comprised of gifts in the form of cash or pledges for specific purposes, such as financial aid, capital construction or research activities, and the unspent net realized and unrealized gains and net reinvested income generated by permanently restricted assets.

– Example: Gift Accounts accounted in:• General Ledger 0-42000 through 0-44999

• Once expired, moved to Unrestricted Net Assets

• The donor’s restriction is met– Donor’s requirements may include specific purpose

or time frame

NET ASSET CLASSIFICATION


Unrestricted

– Resources which are not subject to donor-imposed restrictions.

– Example:• Ledger 2 - Unrestricted budget

• Ledger 4 - Internally restricted

• Administration decides how to spend through budget process

NET ASSET CLASSIFICATION


“ADVANCE” SYSTEM

– Donor and prospect database for Columbia University

– Replaced CUADS (Columbia University Alumni Development System)

– Used by CUMC development office, school-based alumni and finance offices

– Subsystem of the University's Financial Accounting System (FAS)• Detailed historical records of gifts and donative grants

• Biographical data on donors and prospective donors

• Financial data transferred to FAS weekly

• Records only tax-deductible gifts

• Does not track subsequent transfers or expenditures


CURRENT UDAR INITIATIVES

– Developing web-based data base which will allow university community to verify restrictions on endowment funds and gifts under their control (will be available via Advance)

– Gifts-in-kind policies under development with Treasurer / Controller


WHERE TO FIND MORE INFORMATION

– CUMC Development

P&S 2-421 100 Haven Ave., #29D

342-0099 304-7200

• http://www.cumc.columbia.edu/dept/develop/

– UDAR• www.columbia.edu/cu/alumni/

– UDARnet• wwwb.ais.columbia.edu/udarnet/index2.jsp

Session 2 - Fundamentals of Budgeting

BREAK


Part II Endowments


INVESTMENT INCOME

– Endowments are critical to the operation of a college or university.

– Funds are provided to the organization with the intent that the principal will remain in perpetuity and that the income from invested funds will be used for a purpose specified by the donor

– Classified as either• True

• Quasi


ENDOWMENTS– True endowment

• Can only be created by donors

• Specify that the income earned on the gift can be used for specific purposes but the principal must remain intact in perpetuity

• These gifts are typically of a higher dollar value and are extremely important to the long-term strength of the University

– Quasi endowments • Principal not required to remain intact. Established by the institution to function like

an endowment but may be released for expenditure by the Trustees

• Generally created by the institution


ACCOUNTING AND REPORTING CONSIDERATIONS

4 Key Questions:

1. Can we legally use our restricted endowment fund corpus?

2. Can we spend/distribute from individual endowment funds whose market value has fallen below original cost?

3. What are the legal, gift policy, accounting, and reporting ramifications of actions 1 and 2 above?

4. What are the donor implications of actions 1 & 2 above?


ACCOUNTING AND REPORTING CONSIDERATIONS

Question: What is an “underwater endowment fund?”

Answer: An individual true-endowment (permanently restricted) fund that has a market value that has decreased below its original historical cost value.

Question: Are any particular endowment funds at greater risk to underwater-related issues?

Answer: Yes. “Newer” funds (true endowment funds created in the past 3+ years) would be at greater risk due to their lack of accumulated gains.

– Key Point: Underwater funds are addressed on a “fund by fund basis”, not in the aggregate (portfolio approach).


ACCOUNTING AND REPORTINGUniform Management of Institutional Funds Act (UMIFA)

– Act which establishes guidelines on the management and use of institutional funds

Question: Must an underwater fund be restored to its original value?

Answer: Depends on individual state UMIFA requirements.

Question: Can an institution spend from an underwater fund as part of its endowment distribution?

Answer: Generally, no. However, a determination must be made as individual state UMIFA interpretation.

• An institution, under UMIFA, is generally only able to spend from an endowment fund that has income or accumulated appreciation available for expenditure.

• Spending cannot occur out of an endowment fund if income and / or gains do not exist in the fund at the time of distribution.


ACCOUNTING AND REPORTING

Question: What if my institution has overspent funds that are in an underwater position- what is the impact?

Answer: The specific endowment funds may be required to be “made whole” and an analysis should be performed to determine the extent for which unrestricted and temporarily restricted funds have been misstated. However, UMIFA regulations should be analyzed and interpreted before a final decision is made.


“LESSONS LEARNED” - ENDOWMENT ACCOUNTING AND REPORTING

– Detailed documentation supporting gifts and endowment funds is critical

– Development, Controller, Budget, and Investment offices must be involved to ensure accurate accounting and reporting

– Detailed gift acceptance, gift accounting and spending policies can mitigate legal and accounting issues

– When significant uncertainty exists related to new gifts, consult with office of financial services, legal counsel and auditors to avoid surprises.


ENDOWMENTS: TOP 20 SCHOOLSInstitution State 2003 Endowment Funds ($000) 2002 Endowment Funds ($000) Percent Change

Harvard University MA 18,849,491 17,169,757 9.8%

Yale University CT 11,034,600 10,523,600 4.9%

Princeton University NJ 8,730,100 8,319,600 4.9%

University of Texas System TX 8,708,818 8,630,679 0.9%

Stanford University CA 8,614,000 7,613,000 13.1%

Massachusetts Institute of Technology MA 5,133,613 5,359,423 -4.2%

University of California CA 4,368,911 4,199,067 4.0%

Columbia University NY 4,350,000 4,238,162 2.6%

Emory University GA 4,019,766 4,551,873 -11.7%

The Texas A&M University System and Foundations TX 3,802,712 3,743,442 1.6%

University of Pennsylvania PA 3,547,473 3,393,297 4.5%

University of Michigan MI 3,464,515 3,375,689 2.6%

Washington University MO 3,454,704 3,517,104 -1.8%

University of Chicago IL 3,221,833 3,255,368 -1.0%

Northwestern University IL 3,051,167 3,022,733 0.9%

Duke University NC 3,017,261 2,927,478 3.1%

Rice University TX 2,937,649 2,939,804 -0.1%

Cornell University NY 2,854,771 2,853,742 0.0%

University of Notre Dame IN 2,573,346 2,554,004 0.8%

Dartmouth College NH 2,121,183 2,186,610 -3.0%


COLUMBIA’S ENDOWMENT

– At June 30, 2004 Columbia’s endowment stood at $4.8 billion

– Dual investment objectives of the University’s endowment are:• Maintaining the real purchasing power of the endowment over the long-term

• Providing a reasonable and predictable level of funding for current University programs

– Individual Columbia endowment funds (except those required by law or donor restriction to be maintained separately) are invested by unit share in one aggregated pool of funds

• The large pool of funds enables the University to take advantage of different investment styles and vehicles that provide a higher total return over time while maintaining an acceptable level of risk.


COLUMBIA INVESTMENT MANAGEMENT COMPANY (IMC)

– Columbia manages almost 100% of its endowment assets in a single, co-mingled pool, subject to investment polices approved by the board of the Columbia Investment Management Company (IMC)

• Formed in October, 2002 as a wholly-owned subsidiary of Columbia University.

• Governed by a board consisting of the University trustees, the president of the university, the executive vice-president for finance, non-trustee members, and the president of the IMC.

• Does not manage University’s real estate holdings, certain charitable giving vehicles, or a variety of gifts which have investment restrictions.


ENDOWMENT INVESTMENTS

– The investments managed by IMC total $4.5 billion at June 30, 2004.

– Assets are highly diversified, with significant overseas and private equity investments.

– The endowment’s asset allocation as of June 30, 2004, was:• US Equities 11%

• Foreign Equities 11%

• Private Assets 22%

• Hedge Funds 36%

• Fixed Income 14%


ENDOWMENT -- REFLECTED IN FAS– The endowment fund is held using a series of three accounts

– Original gift is held in a GL Principal Account, 0-6xxxx, with separate codes for original gift (true corpus), fund additions, capital gains/losses, and transfers in/out.

– A related GL Income Account, 0-4xxxx, receives income distributed for spending and funds the related SL spending account.

– Spending that qualifies under the terms of the endowment is booked to a SL Spending Account, 6-4xxxx, using appropriate subcodes.

– All three accounts are created at the same time and, typically, the last four digits are identical for the three accounts.

– It is possible to add additional SL spending accounts that map to an individual GL Income Account.


ENDOWMENT SHARES– Individual endowment funds hold “shares” in Columbia’s single, co-mingled

investment pool

– Endowment investments are accounted for in a manner similar to mutual fund accounts

– Additions to a fund “buy” new shares at the current price per share, which is calculated on a monthly basis according to market value of the pool’s assets

– The income distribution and market value of an individual endowment is calculated by multiplying the number of shares times the annual spending rate or price per share, respectively

– Income is distributed in the third month of each quarter based upon the number of shares in the principal account at the end of the second month in each quarter


SAMPLE ENDOWMENT FUND– Donor provides $3,000,000 for an incremental professorship. The endowment is

created on October 15, 2004

– Endowment principal account 0-61111 is established. In October FAS, the gift purchases 377,500 shares in Pool 2 at the September month-end price of $7.947027 per share.

– The Trustees establish the chair and name an incumbent in November 2004

– In December 2004, the endowment income account 0-41111 receives $34,275 of income, one quarter of the annual amount [377,500 shares times $0.363178/share = $137,500, divided by 4]

– Beginning in November 2004, the School charges the SL spending account 6-41111 with the professor’s expenses up to the level of income distributed


ENDOWMENT SPENDING RULE

– Endowment spending is calculated under a rule approved by the Board of Trustees.

– Objectives of the rule are:• Provide units with stable distribution streams for programmatic planning

• Cushion spending growth against market volatility

• Provide spending projections based on future explicit investment assumptions

– The calculation takes into consideration (a) the past market performance of the endowment and (b) inflation:

• Market value (weighted 40%)– Market value of the endowment twelve months prior to the beginning of the year, multiplied

by a 5% target spending rate, multiplied by 40%

• Prior year’s spending plus inflation (weighted 60%)– Endowment spending in the previous year, grown or reduced by inflation, multiplied by 60%.

Inflation is defined by the Higher Education Price Index (HEPI)


ENDOWMENT SPENDING RULE

– For budgeting purposes, the income distributed for programmatic spending from an individual endowment is usually expressed as a percent growth over the prior year’s income distribution. The 2004-05 growth was 2.63%.

• The 2004-05 income distributed will be $0.363178 per share, or 4.6% of the June 30, 2004 market value

– To fund the spending rate, the Trustees first use cash income that has been allocated to the shares in a fund. If that income is not enough to meet the full payout within a year, the difference is funded with capital gains (selling assets that have appreciated over time).

– The spending rule cannot use the original gift of a true endowment

– In fiscal 2004, budgeted spending from the endowment pursuant to the Trustees’ spending rule was $199.8 million.

– Under certain conditions the Board of Trustees can conduct a special review of the derived spending rule


SPENDING RESTRICTIONS

‒ All Gift Agreements must be reviewed and countersigned by the Executive VP of University Development and Alumni Relations

‒ Terms of the original gift agreement (not the endowment extract) limit the types of expenses that can be funded with the income available from any individual endowment

‒ Income cannot be spent on expenses that are similar to but not included in the terms of the gift agreement

‒ Terms of an endowment cannot be altered without‒ Subsequent written correspondence from the donor, or‒ Successful solicitation of New York State court for a change to the terms


SPECIAL CONDITIONS

Underwater Endowments

– Original corpus of a true endowment fund can not be decreased due to the application of the spending rule

– A gift received in or shortly before a period of both (a) low cash income rates and (b) low or negative endowment returns, may not have sufficient unrealized gain to fully fund the spending rule. Such an endowment is deemed to be Underwater.

– The University is committed to maintaining support for spending of all underwater endowments and will temporarily loan shares of the University’s unrestricted, general purpose endowment to the Underwater fund in order to fund the spending rule

– At a point in the future when the market value of the shares for the original gift have risen to a level of 120% of the true corpus, the endowment is deemed to no longer be Underwater, and the loaned shares will be returned to the University’s unrestricted endowment


SPECIAL CONDITIONS

Endowment Principal Decapitalizations

– Over time, the market value of the shares of an endowment appreciate above the dollar value of the original gift (true corpus)

– The accumulated appreciation above 120% of the dollar value of the true corpus can be withdrawn from the principal account (decapitalized) and spent for the same purposes defined by the gift agreement, only with the approval of the dean of the school and the Executive VP for Finance.

– As a true endowment is intended for long term support of a school, decapitalizations will only be considered under unusual or harsh economic circumstances. Last resort, when all else fails.

– Quasi endowments allow for decapitalization of the principal within the terms of the gift agreement or departmental direction


SPECIAL CONDITIONSQuasi Endowment Fund – withdrawal limits

In order to guard against market loss in the endowment pool, the principal invested in a quasi endowment must be sequestered for a minimum of three years before release for the purposes of a quasi endowment


ENDOWMENT LEVELSEndowment Type Minimum Levels

Education, Research, or Project Fund $50,000

Lectureship, Prize, Award $50,000

Student Aid:

MD (tuition and fees) $750,000

PhD (tuition, fees and stipend) $1,000,000

MD/PhD (tuition, fees and stipend) $1,000,000

Scholars $200,000 - 500,000

Fellowships (post-graduate) $250,000 - 1,000,000

Visiting Professorship – one semester $1,000,000

Visiting Professorship – academic year $2,000,000

Assistant & Associate Professorship $1,500,000

Full Professorship – current faculty $2,000,000

Full Professorship – recruitment $3,000,000

University Professorship $5,000,000

Laboratory and Intradepartmental Programs $1,000,000 - 5,000,000

Intradepartmental Centers* $5,000,000

Interdepartmental Centers* $10,000,000

Institutes, Departments, and Schools*

*Funding level determined individually; refer to naming policy document for specific processes and required Board of Trustee approval for Centers, Institutes, Departments, Schools


NAMING OPPORTUNITY GUIDELINES

– School

– Academic Department

– Institute

– Center

– Buildings:• Constructed

• Renovated

• Previously unnamed

– Lectureships

– Labs

– See handout


ENDOWED PROFESSORSHIPS

– CUMC has 135 named professorships

– Require Board of Trustee approval for establishment

– Can be established when 50% of the gift has been received

– Only non-active faculty members may be honored through named professorships

– Incumbent• Recommended by Dean to the Trustees

• First incumbent is named at the time at when the endowment is fully funded

• Unless specifically provided in gift agreement, spending cannot occur when professorship is vacant


ENDOWMENT FLEXIBILITY

– There could come a time when a fund cannot be used for its restricted purpose

– In the absence of flexible language, the University must cease spending and seek a change in the restriction from the donor or through the courts

– To ensure that a fund will always be useful and useable, it is important to state the purpose in very broad terms or to provide alternative uses

– The standard UDAR language for all gift agreements is:• In the future, should the fulfillment of the purpose of this gift … become impracticable,

inappropriate, or impossible, as recommended by [head of benefiting school/center/institute] or the Provost, and then determined so in the discretion of Columbia’s Trustees, then this gift may be used by Columbia University for such purposes most in keeping with the purpose described ….., as recommended by [head of benefiting school/center/institute] or the Provost and approved in the discretion of Columbia’s Trustees.


ENDOWMENT FLEXIBILITY

– Handout of recent New York Times article regarding improper use of endowment funds


DISCERNING RESTRICTIONS

– University sources to locate original gift documentation• Departmental files

• CUMC Development / Business Office files

• CUMC archives (located in Library)

• UDAR files

• Trustee minutes (University Secretary)

– Rules of Interpretation • Follow the “clear” intent of the donor

• Look for flexible language clause

• Any doubts, seek assistance from General Counsel via CUMC VP for Budget & Finance


ADMINISTRATIVE ASSESSMENT

– The direct costs of the instruction, research, community service, medical practice missions are funded with a combination of tuition, gifts, endowment income, grants and other revenues that are closely tied to each activity. But these endeavors also require support services that are provided from the central University or by an individual school’s administrative staff.

– The largest, and most expensive, component of indirect support is the maintenance of physical space. Secondly, the provision of day-to-day business functions such as accounting, human resources management, and oversight functions are also provided.

– Most, if not all of Columbia’s peer institutions use a portion of available income from restricted-use funds to underwrite indirect support service costs.

– Beginning in 1994, the Trustees authorized schools to charge restricted activities a fee to help recover a portion of these support costs. The proceeds of the restricted funds assessment flow to the schools’ budgets, not to the central University budget.


– Beginning 7/04 endowment spending is assessed 5% for administrative overhead

– Example of an $1,000,000 endowment:– $50,000 estimated annual spending

– $2,500 annual administrative assessment

– $47,500 available for program expenses

P&S ENDOWMENT ASSESSMENT POLICY


QUESTIONS?

Session 65- Gifts and Pledge Accounting

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Session 5

Session 5 - Gifts and Pledge Accounting Columbia University Medical Center Training Certification...

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Transcript of Session 5 - Gifts and Pledge Accounting Columbia University Medical Center Training Certification...