FREQUENTLY ASKED QUESTIONS
Accepting and Managing Gifts FAQ
- Can a faculty member make a donation to a recognized foundation assuming department head approval and have it returned to the department for use by that faculty member?
Yes, but the faculty member cannot claim it as a charitable deduction because they have retained right of control over how the money is spent. This is true even if the faculty member does not personally benefit from the expenditure and uses the money for paying a graduate assistant or purchased supplies.It may however qualify as a trade or business deduction and be subject to the 2% floor on miscellaneous itemized deductions.
- What if the faculty member does not have the right of control?
It would then qualify as a charitable deduction. If the money was available to be used for the general purposes of the college or department rather than the donor, it may be considered a gift. The gifts have to be a part of an established process for making allocation decisions.
- Can a faculty member direct honorarium or consulting payments to the University as a gift?
Yes, but certain conditions must be met related to constructive receipt of income and following the established "accountable plan". To avoid constructive receipt of the income the faculty member must never have the right to receive the income directly. The lack of the right to receive the income must be established before the faculty member renders the service.
Once the money has been received by the University it must follow the same rules the University uses to avoid imputation of income to a faculty member when the University either pays expenses on behalf of the faculty member or reimburses the faculty member for business expenses.
- We receive money for student scholarships from several companies and private family foundations to pay for tuition, fees, books etc. The group wants to donate the exact amount for the expenses incurred and we normally bill these groups each quarter. These groups also select the student for this financial help.
Should the revenue received from the billings go directly to the foundation? Do I need to notify Student Financial Aid?
If the individual is an employee of the company the answer is no to both questions. It is not a gift.
If the student is not an employee, but the company identifies the individual who will receive the money, it is not a gift. The money should be credited to the students account. If the money is paid in a way other that BA Form 25, Student Financial Aid should be notified.
If the student is selected from a pool of names supplied by the University, it is a gift and the money should be forwarded to one of the recognized foundations. Using this method, money should be given using a BA Form 25 and there is no need to contact Student Financial Aid.
- We get $500 each quarter from a corporation to get their name mention on our radio station and included each year in our list of donors. Does this money need to go through the Foundation first?
If the unit receiving the money is a part of the University, the money should go to one of the recognized Foundations. Any benefits other than those of a nominal value should be reported to the foundation at the time of the gift since it may decrease the tax deductible amount of the gift.
- The University is sponsoring a conference on Leadership for Students with Disabilities. It is funded through registration fees/funding from University departments and grants from outside companies. Are the grants from outside companies' gifts? Do they need to be reported to a recognized foundation?
Yes, assuming the company does not get something in exchange for the grant such as free registration, advertising of products or services or share in the profit of the event. Any benefits other than those of a nominal value should be reported to the foundation at the time of the gift since it may decrease the tax deductible amount of the gift.
- Each year we get $20,000 from several corporations to belong to our corporate affiliates program. It allows them to interview graduate students first, send three people to our annual conference and get advance releases of articles and theses. Do these contributions need to be sent to a recognized foundation?
Yes. These transactions are gifts. If the funds are subsequently used as a source of matching or cost sharing for a sponsored project, the foundation should then provide SPA with a specific award of the necessary amount to be set up as cost sharing in an SPA established account. Any benefits other than those of a nominal value should be reported to the foundation at the time of the gift since it may decrease the tax deductible amount of the gift.
- Each year we get $5,000 to pay for a summer internship for a graduate student. The student works at the corporation and earns $4,000 over the summer. Should any part of this $5,000 be considered a gift?
No. The money should be deposited to a University restricted account and the person should be paid on the University payroll unless approved otherwise by Payroll Services.
- Our Department head received $10,000 from a corporation to have 3 faculty members review a proposal for the development of a new product. A four page written report was produced? Should SPA be notified in this instance?
This is not a gift. Before any agreement is signed, contact SPA to determine if this is a sponsored project or is a fee for services.
- Do all federal grants regardless of size need to be reported to SPA?
All sponsored projects (grants, projects, sponsored agreements) except directly awarded fellowships, should be processed by SPA regardless of size. However, there are times when University personnel consult to the federal government, and should do so as private individuals, not as agents of the University of Minnesota. Such personal transactions should be between the individual and the federal department or agency.
- The U policy says that the University of Minnesota Foundation, the Minnesota Medical Foundation, the Arboretum Foundation and the 4H Foundation are the receiving points for gifts made to the University. Where should I deposit gifts related to an existing endowment account established within the University accounting system?
Gifts received related to an existing University endowment account should be deposited to that account. In most cases, those old endowments will stay within the U accounting system. All new gifts that do not have an existing U endowment should be deposited with the appropriate foundation. The foundations deposit gifts to existing University endowment when directed by the donor or, when appropriate, by the department. In cases where there is no designation for the gift the foundations review donors' records and where previous gifts were directed to an existing University endowment accounts they are forwarded to the University.