1. 1 Oakland University Development Information Services Assistant Dean / Business Manager Training Understanding Gift Accounting

2. 2 Training Topics 1) Banner Advancement – Part of SunGardHE 2) Gift Accounting Department 3) Banner Advancement Definitions 4) Gift Designations a) Reporting Data b) Finance Data c) Endowment Fund Data d) Financial Aid Data 5) Gift Types 6) Feed-to-Finance Process 7) Monthly Reconciliation 8) The Link Back to Advancement 9) Detail Gift and Pledge Data 10) Summary Gift and Pledge Data

3. 3 Training Topics - continued 11) Viewing Constituent Information 12) Pledge Write-Offs 13) Quid Pro Quo Contributions 14) Games of Chance 15) Gifts-In-Kind 16) Corporate Sponsorships vs. Advertising 17) Contributions vs. Contracts (Exchange Transactions) 18) Scholarship Gifts 19) Endowments 20) Access to Banner Advancement / More Information

4. 4 We hope this training makes your job a little bit easier!

5. 5 STUDENT SYSTEM -Admissions -Registration -Courses -Grades -Majors -etc. FINANCE SYSTEM -GL -Purchasing -A/P -Budgets -etc. HR SYSTEM -Applicant -Compensation -Payroll -Benefits -etc. FINANCIAL AID SYSTEM -Funds Management -History and Transcripts -etc. ADVANCEMENT SYSTEM -Constituent / Organization -Gift and Pledge -Membership -Prospect -Event -etc. D Banner A-Tuition & fees B-Alumni data C-Pledges/gifts/membership fees D-Scholarship recipients/amounts E-Scholarship amounts F-Payroll deduction gifts G-Payroll and benefit costs A BC E F G

6. 6 Gift Accounting Department Structure –Reports to D.I.S. (Development Information Services) –2.75 Gift Accountants (Maria Cavallaro, Debbie Misztura, Dianne Brantley) –1 Manager (Theresa Allen) Responsibilities –Gift, pledge and pledge payment processing – approx. 14,000 transactions annually –OUAA membership processing - 2,000 transactions annually –Designation maintenance - over 600 active gift designations –Address changes –Name changes –Data maintenance

7. 7 Gift Accounting Department Policy –Gifts and pledges must be submitted to Gift Accounting the same day as received (Admin. policy 500). Deliver to cashier’s office - take the completed gift register, check and any supporting documentation in an inter-office envelope addressed to Gift Accounting to the Cashier’s Office. Or: Deliver to John Dodge House – take all of this information personally to Gift Accounting in the John Dodge House. –Supporting documents must accompany the gift used to determine if it is a gift how to properly code it in Banner helps alleviate calls from GA T

8. 8 Gift Entry / Receipt Form -Owner of the asset -Address OU employee contact info for possible questions If CC info is on backup docs, no need to enter here. -memo (soft) credit -in memory/honor of -extra data not in backup -X030 is for gifts -need gift fund T -Owner of the asset -Address -X030 is for gifts -need gift fund If CC info is on backup docs, no need to enter here. -memo (soft) credit -in memory/honor of -extra data not in backup

9. 9 Banner Advancement Definitions Person –Someone with no fundraising relationships with OU (not a donor, an alum, or a prospective donor). Non-Person –A company with no fundraising relationships with OU (not a donor or a prospect). Constituent (subset of “Person”) –Someone who has fundraising relationships with OU (a donor, an alum, or a prospect). Organization (subset of “Non-Person”) –A company with a fundraising relationships with OU (a donor or a prospect). Prospect –A person or organization that is being cultivated to make a gift.

10. 10 Advancement Definitions- continued Pledge –A donors promise to give (one time or in installments) Gift –A 100% transfer of assets from the donor to OU with “no strings attached” Pledge Payment –A 100% transfer of assets from the donor to OU with “no strings attached” applied to a previous pledge Soft Credit –Credit for gift recognition to another constituent. Third Party Payments (TPP’s) –A TPP is when someone makes a payment on another person/company’s pledge.

11. 11 Gift Designations / Funds Fund - Banner Finance term Designation - Banner Advancement term Designations feed to Funds in the GL –Gift Funds: The majority of all gift and endowment spending funds begin with “3”. (some “5” and “7” funds) OU Endowment corpus funds begin with “6” Contributions from donors can only go to gift or endowment funds. –Creation of Gift Funds: Create new funds for things that will be ongoing or large dollar amounts vs. one-time gifts for odd purposes. The “gift comment” feature in Banner, printed on your regular reports, is used to notify you of a gift for a special purpose that has been deposited into a general gift fund.

12. 12 Gift Designations / Funds Banner Designation Table (ADADESG) –University Designations –Foundation Designations –College / Unit Association –Type EN-Endowment RE-Restricted SC-Scholarship UN-Unrestricted

13. 13 Gift Designations / Funds Designation Table cont. (ADADESG) –VSE Association (Voluntary Support of Education Survey) –Group EN-Endowment OP-Operating PP-Physical Plant –Department within College / Unit –Finance Information for Automatic Feeds

14. 14 Gift Designations / Funds Designation Table cont. (ADADESG) –Designation ID’s Establishing Donor Annual Report Recipient –Designation Comments (ADACOMT) Fund Purpose Spending Criteria Spending Fund –Designation Attributes (ADADESG) A way to further “code” designations Query purposes – coding designations for stewarding –Fund to be stewarded (STEW) –Steward when partially funded (STE1) –Inadequate data to steward (STE2)

15. 15 Designations Attributes

16. 16 ADADESG – Donor Information Designation ID’s When each of the people types below have Banner ID’s, they are linked to the designation –Donors Establishing Donor (ESTA) Establishing Donor 2 (EST2) –Fund Report Recipients (donors may be deceased) Annual Report Recipient (ENDR) Annual Report Recipient c.c. (ENDC)

17. 17 Designation ID’s

18. 18 ADADESG – Endowment Info Designation Comments and Subject Comment Codes The way we describe detailed information about designations –GTVSUBJ – Subject Index Validation Table This is a “general” or “shared” validation table to which we add special subject comment codes, link them to designations for descriptive purposes. –Summary Information for Catalog (ENDCAT) to feed into the undergraduate catalog and scholarship website –Fund Purpose (ENDPUR) –Award/Spending Criteria (ENDCRI) –Full Name of Fund (ENDFNM) –Spending Fund 1 (ENDSPF) –Spending Fund 2 (ENDSP2) –Endowment Corpus Fund (ENDCPF) –Miscellaneous Notes (ENDNOT)

19. 19 Subject Comment Codes - GTVSUBJ

20. 20 Designation Comments - ADACOMT

21. 21 Subject Comment Codes for this Designation Clicking the “down arrow” gets you this box

22. 22 Fund Purpose Comment

23. 23 Award / Spending Criteria Comment

24. 24 Miscellaneous Notes Comment

25. 25 Spending Fund Comment

26. 26 ADADESG – Financial Aid Information Financial Aid Funds A link between the endowment funds in Advancement and the student receiving the award/scholarship Designation Financial Aid Query (ADIAWRD) A form showing by student, by term, based on the “link” above: –Award amount –Amount accepted –Amount paid Need to work closely with FA staff

27. 27 Financial Aid Fund Code We want a one-to-one relationship between spending/endowment funds and FA funds Reduces awarding from “general funds”

28. 28 Getting to Financial Aid Award Information

29. 29 Actual Financial Aid Award Information (ADIAWRD) An award could be offered and not accepted or could be offered, accepted and not paid (yet or ever).

30. 30 Gift Types T

31. 31 Feed to Finance Process Pledges, payments, and outright gifts are processed and fed to Banner finance nightly.

32. 32 Feed to Finance Process DESIGNATIONS –Donors can designate their gift/pledge to almost any area of the university. Designation Examples –30085-FD SEHS Gift Fund (no longer used) –30085-OU SEHS Gift Fund

33. 33 OU Designation

34. 34 Feed to Finance Process GIFTS –When the transaction is processed (automatic feed nightly) Credit Entry –Fund: 30085 (OU fund) –Acct: X030 (gift revenue) Debit Entry –Fund: 30085 (OU fund) –Acct: 1001 (cash)

35. 35 Feed to Finance Process PLEDGES –When the transaction is processed (automatic feed nightly) Credit Entry –Fund: 30085 (OU fund) –Acct: X028 (pledge revenue) Debit Entry –Fund: 30085 (OU fund) –Acct: 1576 (pledges receivable)

36. 36 Feed to Finance Process PAYMENTS ON PLEDGES –When the transaction is processed (automatic feed nightly) Credit Entry –Fund: 30085 (OU fund) –Acct: 1576 (pledges receivable) Debit Entry –Fund: 30085 (OU fund) –Acct: 1001 (cash)

37. 37 Monthly Reconciliation Gift Accounting Manager: –Generate MSAccess reports –Compare Advancement activity with Finance activity for the month. –Reconciliation is performed. –Reports by Unit/Dept/Fund distributed Outright Gifts Pledge Payments Pledges –Business Manager’s responsibility to share these reports with the appropriate areas in their unit. T

38. 38 Monthly Reconciliation TPP’s (Third Party Payments) –TPP’s are recorded as “gifts” in Banner Advancement on the record of the “hard credit” donor so they feed to finance as an X030, not 1576. –During monthly pledge reconciliation, we identify any TPP’s processed for the month and do a manual JV to reduce the pledge on the Finance side. T

39. 39 The Link Back to Advancement View data that was “fed” –Gift Report –In FGITBAL Get Document Reference # / Gift # –From gift report –FGIDOCR Find Gift in Advancement –ADAGIFT See Additional detail info if needed –AGCGIFT T

40. 40 Business Manager Report - Gifts T

41. 41 View of FGITBAL T

42. 42 View of FGIDOCR T

43. 43 View of ADAGIFT Use F7 to put form in query mode then enter gift #. F8 to execute. T

44. 44 View of AGCGIFT T

45. 45 Detailed Gift Data AGCGIFT – List of all gifts for donor –GIFTS FY Gift Date Amount Split (not used – does not mean split designation) –Campaign / Designations Campaign Designation Payment Gift Type Gift Type Description Vehicle T

46. 46 Detailed Gift Data AGCGIFT – continued –Gift Classes Gift Class Gift Class 2 Gift Class 3 Memo Amount College T

47. 47 Detailed Gift Data AGCGIFT – continued –Gift / Pledge Number Gift Number (same as document reference # in Finance) –To view document feed # and feed date Click on down arrow Select “Gift Detail” Select “Additional Gift Information” tab Receipt Adjusted Pledge Number Session Solicitation Match T

48. 48 Detailed Gift Data AGCGIFT – continued –Campaign / Designation Type Acknowledgement Campaign Type Designation Type Designation VSE Designation Department Auxiliary Amounts Associated ID’s T

49. 49 TPP Postings-AGCGIFT T

50. 50 TPP Postings-FGIDOCR This is the posting from the actual gift. T

51. 51 TPP Postings-FGIGLAC This is the JV reducing the pledges receivable. The other side of this entry reduces the pledge (X028) T - TPP

52. 52 Payroll Deductions Processed differently than most other pledge payments: –Payroll Deducts used to be processed manually requiring a JV to reduce pledge receivables –Automatic Banner process initiated January 2007 1)A pledge is created in Advancement with monthly installments (pledge code “PD”) 2)Pledge fed to the Payroll system for approval 3)At the month-end, Payroll process is run creating the GL postings below (a temporary holding spot): a.Credit fund 99603 (P/R AUFD Clearing), account 2074 (Employee Deduction Liability) b.Debit fund 99603 (P/R AUFD Clearing), account 1001 (Cash & Pooled Investment) T

53. 53 Payroll Deductions continued: 4)Advancement process is run creating the GL postings below (moving the posting from the temporary holding area to the fund designated by the donor): a.Credit “gift fund” (donor designated), account 1576 (Pledge Receivable) b.Debit “gift fund” (donor designated), account 1001 (Cash & Pooled Investment) c.Debit 99603 (P/R AUFD Clearing), account 2074 (Employee Deduction Liability) d.Credit 99603 (P/R AUFD Clearing), account 1001 (Cash & Pooled Investment) –Each pledge payment directly impacts the General Ledger and is processed with a rule class code of “ASDE” and a gift type of “PR”. T

54. 54 Payroll Deductions-FGIDOCR T

55. 55 Detailed Pledge Data AGCPLDG – list of all pledges for donor –Basically same data as AGCGIFT Exceptions –Shows amount of pledge actually paid –Feed date and document number in “Finance Feed” tab –Pledge Number (same as document reference # in Finance) T

56. 56 Summary Gift and Pledge Data Designation Gifts Form (ADAGIFT) Designation Pledges Form (ADAPLDG) T

57. 57 Viewing Constituent Information Constituent Summary (APASBIO) –Address –Employment –Cross References –Children –Academic Information –Biographic Information –Comments (locations where they exist) –Navigation to other information –Activities Information –Constituent/Solicitor Information –Prospect Information –Membership Information –Gift Society Information –Constituent Categories

58. 58 View of APASBIO

59. 59 Pledge Write-Offs Pledges feed to the GL Most but not all pledges get completely paid All older uncollectible pledges will be written off every between January and March. Pledge revenue and pledge receivables will be reduced. Allowances for doubtful pledges are recorded in a central fund however, if a pledge is written off, the departmental fund would see the entire write off in that year. Units should never spend from pledge receivable balances, only from actual cash.

60. 60 Quid Pro Quo Contributions Work with your Development Officer IRS Definition IRS Regulation Highlights Fair Market Value (FMV) at Fundraising Events Fundraising Auctions

61. 61 Quid Pro Quo Contributions

62. 62 Quid Pro Quo Contributions IRS Definition –A payment made to OU from a donor partly as a contribution and partly in consideration for goods or services (e.g. fundraising dinner). –The value of the benefits (premiums) the donor receives is a key factor in determining the amount of the actual gift. –The actual gift is only the amount of the contribution that exceeds the value of the benefits received by the donor.

63. 63 Quid Pro Quo Contributions IRS Regulation Highlights: –The items must have a “substantial” value to be considered as benefits and therefore, to be subtracted from the donors contribution. Items that have insubstantial (token) value need not be subtracted from the contribution.

64. 64 Quid Pro Quo Contributions Token Value Benefits –Small items of merchandise or other benefits (bookmarks, calendars, key chains, mugs, posters, tee shirts, etc.) offered when donors make a contribution. Token value in relation to the amount contributed Burdensome to inform each donor of the amount of the payment that is deductible. Inconsequential or insubstantial so that the full amount of the donor’s payment should be deductible as a contribution. IRS has provided rules under which a donor may disregard the value of token benefits and deduct the full amount of a payment.

65. 65 Quid Pro Quo Contributions Token Benefit Rules (2010) –A payment is fully deductible if: The fair market value of all the benefits received by the donor is not more than $96 or 2% of the payment, whichever is less, or The donor’s payment is $48 or more and the only benefits received are token items that bear OU’s name or logo and have an aggregate cost of no more than $9.60. (DON’T WORRY – WE HAVE EXAMPLES !)

66. 66 Quid Pro Quo Contributions

67. 67 Quid Pro Quo Contributions

68. 68 Quid Pro Quo Contributions

69. 69 Quid Pro Quo Contributions Notice the tickets did not cost OU anything but they did cost somebody something and are NOT a token item.

70. 70 Quid Pro Quo Contributions Fair Market Value (FMV): The value of benefits received by the donor must be based on the FMV of the benefits (except for token items), not necessarily the cost of the items. Raffles: No portion of a payment made resulting in an opportunity to win a prize (raffle tickets, door prizes, etc.) is a gift. Preferential Seating: If a donor receives the right to purchase preferred seating for an athletic event in return for their gift, only 80% of their contribution is tax deductible.

71. 71 Quid Pro Quo Contributions Fundraising Events: –The value of benefits received (round of golf, dinner, drinks, gifts, etc.) by the donor must be based on the FMV of the benefits determined through a “good faith” effort, not necessarily the cost of the item. –OU has a procedure for determining FMV for goods and services provided to donors at fundraising events where something of value is exchanged for a payment. –OU has an Excel template to help determine the FMV of the goods and services.

72. 72 Quid Pro Quo Contributions Fundraising Events: –The following steps should occur for all fundraising events where something of value is exchanged for a payment: The annual giving department is to be notified by the event organizer prior to event materials being created. The annual giving department will work in collaboration with the event organizers to complete the fair market value (FMV) excel worksheet which will determine: –An estimated per person cost for the event –The payment amount to attend the event –The FMV of any and all goods and/or services provided to the payee in return for their payment to attend the event. The annual giving department will provide the costs, payment amount and FMV to the director of development information services for review and approval. The vice president or associate vice president of university relations will receive the documents for final approval.

73. 73 Quid Pro Quo Contributions Fundraising Events: –The FMV Calculation: Determine all the costs (direct and indirect) associated with the goods and services received by the donor. Determine the average cost per person. The FMV is what the average person would pay for a “like” event at a “like” venue, not necessarily the cost. Therefore, if the calculated cost per person is $100, but the average person would pay $75 for a “like” event at a “like” venue, the FMV would be $75. The FMV must be communicated to the donor on marketing materials.

74. 74 Quid Pro Quo Contributions Donors Opting out of Receiving Goods and Services: –Needs to be communicated to OU prior to the event and prior to processing the payment. –We can’t give a donor an amended receipt with a higher gift amount because they told us after the event that they were not able to attend. –The IRS says even if a donor does not take advantage of the benefits, the benefits were still provided.

75. 75 Quid Pro Quo Contributions Fundraising Auctions: –The bidder must know the FMV of the item being auctioned prior to bidding in order to claim they had charitable intent by bidding in excess of FMV, if not: –No charitable donation was made by the winning bidder, because: –The winning bid becomes the basis for the FMV as the transaction became a “purchase”.

76. 76 Quid Pro Quo Contributions Impact on You: –Gift Registers: The amount received from the donor may not be entirely tax deductible. You will need to break out the gift amount vs. the quid pro quo amount on the gift register.

77. 77 and because it's always time to poke fun at the IRS...

78. 78 Games of Chance OU Policy 435 – Games of Chance –Types Bingo Millionaire parties Charity games Raffles –Authorizing Officer Vice President for UR –Application Form part of policy 435 on website Complete and return to VP’s office –State Licenses Very important Timing

79. 79 Games of Chance Raffles: –You are conducting a raffle if you are charging people or requiring them to donate or provide something of value to participate in a drawing where a prize will be awarded. University Approval Keep separate from gift solicitations Withholding and Reporting Requirements Record Retention House Rules Misconception from Michigan Charitable Gaming Commission Raffle Licenses

80. 80 Other Gifts Gifts-in-Kind –Admin. Policy 500 –Donated assets and property such as art, books, equipment, automobiles, inventory, personal property, other physical assets. –Donors must provide the value of the gift-in-kind. –Gifts-in-kind with an apparent value of $5,000 or more, a qualified appraisal must accompany the gift. –No value from donor, gift entered with a $1 value. –No values for gifts-in-kind shall appear in acknowledgment letters or receipts. The university does not act as an appraiser of gifts-in-kind. –Gift-in-Kind review form. Gifts of Services –Not a countable or deductible gift. –Pay the donor for their services and have them write you a check in return. Blood –Not a tax deductible gift.

81. 81 Gift-in-Kind Review Form (can be accessed from OU policy #500)

82. 82 Corporate Sponsorships vs. Advertising Corporations often give money to sponsor activities, events, or projects and in return receive recognition on campus or at the event. Most sponsorship dollars are gifts as long as the recognition received does not constitute advertising. The IRS defines advertising as competitive pricing or product information displayed because of the donation. The recognition for a sponsor should be limited to: –Sponsors location, telephone number, internet address –Value-neutral description of sponsor’s products or services –Sponsor’s brand/trade name or product/service listings

83. 83 Contributions vs. Contracts (Exchange Transactions) Some contracts may appear to be much like contributions therefore a careful assessment of the contract is needed to determine if OU has given up an asset or incurred a liability (of commensurate value).

84. 84 Contributions vs. Contracts (Exchange Transactions) Factors to aid in distinguishing between contributions and exchange transactions. No one factor will provide sufficient information for appropriate classification. From NACUBO (National Association of College / University Business Officers)

85. 85 Scholarship Gifts No gift if a donor chooses the recipient. Discourage donors involvement in the selection process (tax, FERPA, practical issues). OU will make final decision on all awards. If OU chooses the student, it is a gift but the donor still should not list the student’s name on gift documents. Need to keep track of recipients for stewardship purposes

86. 86 Endowments Endowment Fund –Quarterly distributions to spending fund –Gift / pledges usually designated to endowment Spending Fund –Receives income distributions from endowment –Expenses must be incurred out of spending fund vs. a general fund followed up by a transfer JV

87. 87 Endowments Underwater Endowments –When the market value falls below the amount donated (historical cost) –No distributions to spending

88. 88 Endowments Expense Explanation Report –A report template was developed –assistant deans and/or business managers to summarize spending fund financial activity –To be provided to university relations, along with deans, on a semi-annual basis –Reviewed by the accounting office and by the Assistant Dean in CAS

89. 89 Endowments Expense Explanation Report - Contents –Summary explanation for expenditures from an endowment’s spending fund –Summary explanation for transfers into and out of an endowment’s spending fund –Reasons why little or no expenses were incurred from an endowment’s spending fund –Verification that expenses incurred were in line with the fund’s purpose

90. 90 Endowments Expense Explanation Report - Results –Enhanced Stewardship - Spreading reporting and reconciliation responsibility to those with spending control over the funds –Increase the timeliness of annual endowment letters to donors. Since units have to provide this information anyway, a more logical and effective way, with deadlines has been developed (see sample report). –Allows units to stay on top of unspent funds - When done semi-anually (for December and June), this will allow the assistant deans and business managers to stay on top of unspent funds and to remember the need to transfer funds timely when dollars are spent from other funds on specific endowment purposes (although the best practice is to spend funds directly from the endowment’s spending fund and not do transfers)

91. 91 Expense Explanation Report

92. 92 Annual Endowment Report for Donor

93. 93 Where to Get More Information DIS Website - www.oakland.edu/dis

94. 94 Where to Get More Information ( can link to these, and more, from DIS website) Business Manager Training on Fundraising Issues Banner Advancement Procedure Manual OU Administrative Policy 500 – Gifts, Pledges, and Grants Contact Us Anytime –Rob Saunders, Director DIS ext-6120 –Theresa Allen, Manager Gift Accounting ext-6115 –Gift Accounting main phone line - 6110