Soliciting, Accepting and Processing Gifts and UPPS No. 03.05.01

Grants from Private Sources Issue No. 9

Effective Date: 11/30/11

Review: June 1 E5Y

Attachments I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII, XIII, XIV, XV, XVI

01. POLICY STATEMENTS

01.01 This UPPS sets forth university policies related to soliciting, accepting and processing gifts from private sources.

01.02 The Office of Sponsored Programs (OSP) will process proposals for funding external grants. Refer to UPPS No. 02.02.01, Applying for Sponsored Programs.

01.03 Solicitations (including Web pages) must clearly identify the entity (the university or affiliated organization) to which the donors will make gifts.

01.04 Solicitors may not use Educational and General (E & G) funds for solicitation expenses such as printing and postage unless the gifts solicited are designated directly to the university, rather than to an affiliated organization.

01.05 The Texas State University-San Marcos Development Foundation and the McCoy College of Business Administration Foundation are separate 501(c) (3) organizations. In collaboration with university administration, each of these foundations will establish their own policies and procedures for soliciting, accepting and processing gifts and grants from private sources.

02. DEFINITIONS AND ABBREVIATIONS

02.01 In this UPPS, the term "gift" means a voluntary non-reciprocal transfer of real or personal property for which the university is not required to make payment or provide any deliverables. Gifts may originate from individuals, partnerships, associations, foundations, or corporations. A grant from a governmental entity is not included in this term.

02.02 The term "restricted gift" refers to gifts, the use of which is subject to restrictions imposed by the donor.

02.03 The abbreviations below have the meanings indicated:

a. VPUA: Vice President for University Advancement

b. Provost: Provost and Vice President for Academic Affairs

c. VPFSS: Vice President for Finance and Support Services

d. OSP: Office of Sponsored Programs

e. Foundation: Texas State University-San Marcos Development Foundation

f. Library: Albert B. Alkek Library

g. OGP: Online Giving Program

h. GIK: Gifts-in-Kind

i. University: Texas State University-San Marcos

j. UA: University Advancement

k. MOU: Memoranda of Understanding

03. GENERAL DIVISIONAL RESPONSIBILITIES

03.01 University Advancement Division:

a. The UA Division is responsible for soliciting, coordinating and reporting all gifts, including those initiated elsewhere in the university. Therefore, the UA Division must know who is giving how much and for what purposes. The UA Division will reconcile its records with university records maintained by the Finance and Support Services Division in order to prepare monthly reports of gift income to the university.

b. The university and the UA Division will also provide support functions for the Foundation. An agreement was approved at the Board of Regents’ Meeting, November 4, 2003. The agreement states that the university will provide the Foundation with support staff to receive gifts, receipt, acknowledge, account for and report gifts of the Foundation. And, as outlined in Chapter IX of the Rules and Regulations of the Texas State University System, “university personnel may solicit and manage funds that are directed toward Foundation accounts.”

c. The donor and the Board of Regents must approve in writing the transfer of all gifts from the university to the Foundation.

03.02 All Divisions

a. All divisions will coordinate fundraising from private sources with the UA Division and will submit grant contract requests to the OSP.

b. Additionally, all divisions and affiliated organizations are responsible for forwarding cash gifts received to Donor Services. See UA Division PPS 01.02 (Section 05.01 b) for policies related to gifts of property other than money.

03.03 Role of the Texas State University-San Marcos Development Foundation

a. The role of the Foundation is as established in Chapter IX of Rules and Regulations of the Texas State University System, Private Support Organizations.

b. The Foundation’s sole purpose is the support of Texas State. All conditions and understandings are outlined in an agreement dated November 4, 2003.

c. The Foundation will accept gifts that establish endowments, capital improvements and scholarships donated in the form of cash, legacies, gifts-in-kind, capital gifts, securities, gift annuities and real estate as outlined in the Foundation’s Policies of Acceptance of Gifts per the agreement with the Board of Regents.

d. The Foundation can accept and hold real estate donations if it intends to sell the property and deposit the proceeds into a Foundation endowment or to generate income for an endowed account.

e. The Foundation also accepts gifts directed toward the president’s unrestricted funds and general or non-specific scholarship funds.

f. The Foundation may direct donations given for operating, short-term purposes (i. e., wages, travel, rent, utilities) or special projects to the university or pass them into the university.

03.04 Role of the McCoy College of Business Administration Development Foundation

a. The role of the McCoy College of Business Administration Development Foundation is as established in Chapter IX of the Rules and Regulations of the Texas State University System, Private Support Organizations.

b. The Foundation’s sole purpose is the support for the McCoy College of Business Administration at Texas State. All conditions and understandings are outlined in an agreement dated May 7, 2004.

04. PROCEDURES FOR SOLICITATION OF GIFTS

04.01 University faculty and staff members will coordinate solicitation of gifts with the VPUA and the appropriate chair, dean, or director. The VPUA or a designee will work with the faculty or staff member on the project.

04.02 A faculty or staff member who receives unsolicited gift inquiries from a prospective donor will notify their appropriate chair, dean, the provost and the VPUA, as soon as possible after the contact.

04.03 University employees may participate in fundraising for certain programs, such as the Alumni Association, Bobcat Athletic Foundation and Family Association.

University personnel can raise funds and support the Foundation as specified in an agreement between the Foundation and the Board of Regents.

04.04 University Advancement Online Giving Program

a. Purpose – The purpose of the UA Online Giving Program (OGP) is to increase giving to the university by providing constituents with the ability to make quick, secure, and convenient contributions via the internet. The OGP is an electronic payment method for accepting donations to the university and is subject to all applicable university policies and procedures including those for accepting cash donations and electronic security concerns.

b. Electronic Payments – The OGP allows donations via credit card and electronic check transactions. Donors may only use those credit cards accepted by the university on the OGP.

c. Security – A secured secure sockets layer (SSL) Web page which captures information required to process the donation transaction will protect OGP transactions. Donors’ credit card information will pass to and from online processing gateways via a secure SSL connection. Credit card or electronic information will not reside on university-maintained software or hardware.

d. Recipient Accounts – Only university endowments, designated-fund scholarships, or approved operating accounts will receive credit for gifts made through OGP.

e. Convenience Fee – The university will not charge donors an e-payment convenience fee for credit card donations via OGP.

f. Credit Card Processing Fees – The university will charge the credit card processing fees to the university account that receives the donation via OGP.

g. Card Returns and Refunds – The university will deduct charges the donor disputes or the credit card processing vendor rejects from the university account that originally received the donation. The General Accounting Office has the responsibility to enter correcting transactions into the university’s financial system for returns or refunds.

h. Donor Data Base – The UA Division has responsibility for data entry and reconciliation of gifts made via the OGP into the donor database.

i. Financial System Entry and Reconciliations – Student Business Services has responsibility for data entry into the financial system and reconciliation of gifts made via the OGP with the financial system.

j. Affiliated Support Organizations – Donors wishing to give to university- affiliated support organizations (such as the Alumni Association, Development Foundation, and others) should contact those organizations directly or visit their respective Web sites. Refer to UPPS No. 03.06.01, Off-Campus Solicitation by Registered Student Organizations.

05. PROCEDURES FOR ACCEPTANCE OF GIFTS

A completed Donations Processing Form (Attachment XVI) must accompany each donation submitted by the university department reporting the gift within 24 hours of receiving the donation as per UPPS No. 03.01.05, University Income Recognition and Associated Cash-Handling Procedures.

05.01 Definitions

a. Cash: The university may accept cash gifts in U.S. dollars, personal or corporate checks, credit card transactions, payroll deductions through the University Fund Drive, and cashier’s checks.

b. Outright Gifts: Outright gifts fall into five broad categories – gifts of personal property (tangible and intangible), gifts of real property (real estate), gifts-in-kind (including non-monetary corporate sponsorships), gifts of securities, and gifts of life insurance. Refer to UA Division PPS 01.02 for the specifics of reporting and for forms associated with these gifts.

05.02 Gifts of Cash

a. Report cash gifts as of the date the university receives or processes them.

b. Credit card or electronic check donations are not a gift until the university has received authorization for the charge from the banking institution.

c. In rare instances, the president and Board of Regents may decline cash gifts if the gift’s donor or its origin does not reflect the university’s moral and ethical standards.

06. PROCEDURE FOR ACCEPTING ENDOWMENT GIFTS

06.01 The following section provides information on regulations, policies and procedures regarding endowments and describes the files and records on endowments. In addition to standard processing for deposit, record keeping, and acknowledgement, many gifts to the university require specific approval of the president, VPUA and VPFSS. The recognition of an endowment donor may include the naming of a campus facility. Regulatory and procedural information on this process is included in UPPS No. 08.03.01, Criteria for Namings.

With guidance and oversight by an Endowment Compliance Committee appointed by the provost, the Donor Services office and the assistant director will work with administrative officers and appropriate staff in the colleges and schools to:

a. assess Texas State’s risks regarding endowment compliance,

b. provide the required reports, and

c. create procedures to bring Texas State into a desirable position with regard to proper expenditure and accountability of endowed funds.

06.02 Endowment Funding Levels

Periodically the VPUA, the provost and the president will review the current lists of endowment types and minimum funding levels for each category. This review will include minimum endowment funding levels for chairs, professorships, faculty fellowships, graduate fellowships, presidential scholarships, program support and scholarships, and any other categories deemed appropriate. A current list of endowment funding levels may be found in Attachment XV.

06.03 Endowment Types

The university may use gifts (there is a minimum amount for the creation of each endowment, reference Attachment XV) from private individuals, corporations, foundations, associations, and other organizations to establish endowments. A donor may establish an endowment by a one-time gift, a series of gifts, a pledge paid over a period of years, wills, trusts, gifts of appreciated assets, or by a combination of these. The principal of endowment funds remains intact (nonexpendable) in perpetuity. The university will invest and distribute the funds to support the donor’s designated purpose.

The donor may designate that the endowment benefit a specific academic or non-academic department, or request that the university president designate an area of need at the institution. The university will usually name the endowment after its donor or a person the donor wishes to honor.

Certain terms are used with endowments and it is important for personnel to understand them. The following definitions come from the National Association of College and University Business Officers (NACUBO):

a. Permanent or True Endowment: Endowment funds received from a donor with the restriction that the principal is non-expendable. Only Board of Regents regulations may allow modifications to these endowments.

b. Quasi-Endowments: A quasi-endowment fund is established by a governing board to function like an endowment fund; however, the governing board may totally expend the fund at any time at its discretion. These funds may originate as gift funds that the donor did not specifically direct for use as an endowment, or funds available to the university from other sources that permit their use as an endowment. This means that the donor of the gift funds did not specifically direct the creation of an endowment. The governing board invests the funds in the same manner as a true endowment with the same payout provisions. When creating a quasi-endowment a governing board should have the intention of retaining the fund in perpetuity or at a minimum of five years prior to the endowment principal being claimed. Should a department wish to combine permanent and quasi-endowment funds for a single purpose, the VPUA and VPFSS should be consulted.

Essentially:

1) For an endowment created with a combination of gifts, the source of the majority of funds dictates the type of endowment (permanent or quasi). If dedicating at least $10,000 of each, dividing the funds by their source (endowed or non-endowed) will create both a permanent endowment and a quasi-endowment.

2) An existing permanent endowment may receive a transfer of unrestricted gifts or other funds if the gift instrument originally creating the permanent endowment so indicated, with the funds subject to the endowment’s provisions. The fund source can never reclaim the funds.

3) A department may create a quasi-endowment if they wish to dedicate $10,000 or more of unrestricted funds to the same purpose as a permanent endowment, yet retain the privilege of reclaiming those funds. It must use identical language to describe the purpose of the permanent endowment and the quasi-endowment if they are to serve the same purpose. The department may direct the payout from the two endowments to the same expenditure account and should submit the request to create the quasi-endowment following the procedures outlined under Section 06.05, Endowment Approval Procedures.

c. Term Endowment: Term endowment funds initially function exactly like true endowment funds. However, after a specific period or event, as defined by the donor, the nature of the principal of the term endowment changes. For example, the donor restricts the gift funds to an endowment benefiting a particular program for 20 years and, after that, the university is free to use the funds to purchase general library materials for the campus. The benefiting program would use the annual distributions, invested with as with a standard endowment. At the end of 20 years, the university would dissolve the endowment and transfer the principal to an expenditure account to purchase library materials.

d. Following are brief descriptions of endowment categories and minimum amounts required for the creation of each.

1) Faculty Support Endowments

a) Chair

(1) For outstanding, distinguished, tenured faculty members and visiting scholars.

(2) Supplements state-funded base salary.

(3) Rewards and enhances research and scholarly efforts.

(4) Minimum funding: $1,500,000 to $2,000,000 (depending on college) pending president’s approval.

b) Professorship

(1) For outstanding, tenured faculty members.

(2) Supplements state-funded base salary.

(3) Rewards and enhances research and scholarly efforts.

(4) Minimum funding: $500,000 to $600,000 (depending on college).

c) Faculty Fellowship

(1) For any rank of faculty member.

(2) Supplements state-funded base salary.

(3) For research and teaching efforts, and for visiting scholars while in residence at the university.

(4) Minimum funding: $200,000.

2) Student Support Endowments

a) Graduate Fellowship

(1) Supports graduate student awards.

(2) Academic merit may be a consideration.

(3) Financial need may be a consideration.

(4) Other allowable criteria may be suggested by the donor.

(5) Minimum funding: $100,000.

b) Endowed Presidential Scholarships

(1) Renewable support to undergraduate students beginning in the sophomore year for the following two years.

(2) Maintain a GPA of 3.25 or higher.

(3) Financial need may be a consideration.

(4) Other allowable criteria may be suggested by the donor.

(5) Minimum funding: $50,000.

c) Undergraduate Scholarships

(1) To support undergraduate student awards.

(2) Academic merit may be a consideration.

(3) Financial need may be a consideration.

(4) Other allowable criteria may be suggested by the donor.

(5) Minimum funding: $25,000.

3) Other Endowment Types

a) Lectureships

(1) A select position filled by a top scholar who is in residence temporarily, but who typically does not accept a permanent faculty position.

(2) A series that will bring Texas State a variety of outstanding individuals with broad experience and expertise whose presentations will have university-wide and interdisciplinary appeal or special interests relevant to a particular school or college.

(3) Often designated for use at the discretion of a college or school dean, department chair, or unit director.

(4) Minimum funding: $100,000.

b) Libraries, Teaching, Staff

(1) Recognize outstanding performance in the classroom, in service to the university and in research by faculty.

(2) Minimum funding: $25,000.

c) Book

(1) Provide funds for purchasing publications to support students and faculty.

(2) Minimum funding: $10,000.

06.04 Public Announcement of New Endowment

Public announcement of a new endowment will not occur until the president and the donor officially approve.

06.05 Endowment Approval Procedures

The following is an explanation of the documents that are required and the procedures used to obtain official acceptance of any item listed:

a. Approval Items

b. Memorandum of Understanding (forms and sample letters attached)

1) Full, Outright Gift (Attachment I)

2) Pledge (Attachment II)

3) Pledge with Corporate Matching (Attachment III)

4) Memorial/Honorific Fundraising (Attachment IV)

5) Gift of Property (Attachment V)

6) Dean’s Letter (Attachment VI)

7) Estate Intention (Attachment VII)

8) Anonymous Estate Intention Letter (Attachment VIII)

9) Will Language for a Non-Endowed Gift (Attachment IX)

1) Will Language to Create an Endowment (Attachment X)

2) Qualified Retirement Plan Beneficiary Designation Language (Attachment XI)

3) Sample Insurance Owner or Beneficiary Designation Language (Attachment XII)

4) Trust Language to Create an Endowment (Attachment XIII)

5) Trust Language for a Non-Endowed Gift (Attachment XIV)

06.06 Gift and Memoranda of Understanding (MOU) Received from the Donor

a. A donor may make a gift outright or a combination gift and pledge. If made as pledge, the university should receive at least 20% before presenting it for approval. The donor should pay the pledge fully within five years of the pledge date. If the donor does not fulfill the pledge within the agreed upon time as stated in the MOU, a university representative may contact the donor to determine the pledge’s legitimacy and then to develop a revised MOU for the donor’s signature. If the university cannot make contact with the donor or the donor’s family members, the university will write off the pledge.

b. It is strongly recommended that the donor provide a signed MOU including proscribed language that serves to preserve and protect the gift as a permanent endowment and allows the gift to follow the university’s standard investment policies. The MOU will outline the gift or pledge (including payment schedule) and the endowment’s type, name, and purpose. The donor should seek independent tax or legal counsel before executing a legal document such as an MOU. See samples mentioned above in Section 06.05, Endowment Approval Procedures.

c. Never prepare the MOU on university letterhead.

d. The VPUA should review all drafted endowment MOUs prior to signature by the donor to ensure the instrument’s acceptability under the university policies and procedures.

e. If the university cannot obtain a signed MOU, a letter from the donor, the dean, or the appropriate department chair to the donor outlining the understanding of the donor’s wishes in establishing the endowment will suffice. Such a letter should contain the following two paragraphs of the sample MOU as an explanation of Texas State’s method of administering endowed funds.

“The university’s standard endowment policies are intended to apply to all gifts for endowment. Therefore, the contributed funds may be merged or comingled with other funds held by Texas State for investment purposes, in accordance with the university’s policies and procedures. Funds distributed from the endowment in a year may be retained and expended for the purposes of the endowment, in subsequent years, and a portion may be designated, at the discretion of the Texas State president, provost, VPUA and VPFSS as a permanent addition to the principal of the endowment.

Such endowment shall never become a part of the General Fund of the State of Texas, and shall never be subject to appropriation by the legislature of the State of Texas. All future additions to the endowment, made by any party, shall be subject to these provisions and shall be considered permanent endowment funds. If, in the opinion of the president, provost, VPUA and VPFSS, future circumstances change so that the purposes for which the endowment is established become illegal, impractical, or can no longer be carried out to meet the needs of Texas State, said parties may designate an alternative use for the endowment payout to further the objective of the university, in the spirit of its original purpose.”

07. PROCEDURES FOR PROCESSING ACKNOWLEDGMENT LETTERS

07.01 The VPUA will generate the following acknowledgment letters and receipts to donors upon the university’s receipt of gifts:

a. A letter from the president if the gift’s value equals or exceeds $1,000, and a letter from the VPUA including a receipt for income tax purposes.

b. A letter from the VPUA or appropriate staff if the gift’s value equals or exceeds $500, including a receipt for income tax purposes.

c. All donors will receive a receipt for income tax purposes.

07.02 In addition to the above, an appropriate person (program director, chair, dean, etc.) may acknowledge in writing gifts restricted to a given department or program, with a copy forwarded to the VPUA.

08. PUBLICITY

08.01 The VPUA, in coordination with the faculty or staff contact person, the donor, and University News Service, will coordinate all publicity related to gifts. In all cases the university will follow the donor’s special desires to the extent possible.

09. REVIEWERS OF THIS UPPS

09.01 Reviewers of this UPPS include the following:

Position Date

Director, Donor Services June 1 E5Y

Assistant Vice President for June 1 E5Y

Development

10. CERTIFICATION STATEMENT

This UPPS has been approved by the following individuals in their official capacities and represents Texas State policy and procedure from the date of this document until superseded.

Director, Donor Services; senior reviewer of this UPPS

Vice President for University Advancement

President