Classifying and Recording Sponsorships for University-Hosted Events/Activities
Responsible University Officer(s):
- Associate Vice President and Controller
- Assistant Controller
When planning events/activities, units often provide sponsorship packages. Sponsorship packages are where the expectation of return benefits becomes an incentive for the entity to make a payment for an event/activity. Examples of return benefits include any item of value, such as: a booth or table at an event/activity; tickets to an event/activity; advertising; and name and logo recognition.
Planned events/activities or programs can have a variety of names: fundraiser, conference, symposium, academic competition, non-credit courses, program, lecture series, etc.
Sponsorships are beneficial to both the University community and the state of Minnesota when conducted in a manner consistent with the University’s mission of teaching, research and outreach. Units may solicit sponsorships for a variety of reasons that support their mission. The accounting for sponsorship payments differs by the nature of the sponsorship.
The university has the right to and will refuse sponsorship from unacceptable sources, or with an unacceptable message. Units must decline a sponsorship that (1) is in conflict with university policies; (2) adversely affects the university’s reputation; (3) appears to create an endorsement by the university of a particular company, product, political candidate or position regarding public policies; (4) is considered to contain obscene, indecent or profane material; or (5) ridicules, exploits or demeans persons on the basis of their ability; faith; race, ethnicity, and cultural identity/language; sexual orientation, gender identity and expression; and socio-economic status.
Units, on all campuses, that engage in planning events/activities or programs that involve soliciting sponsorships, paid registrations, and recognition activities must follow the classification requirements (see Appendix: Job Aid for Sponsorship for University-Hosted Events/Activities) and process set forth in this policy. Units must determine when a sponsorship is Gift Eligible and when it is Non-Gift Eligible.
- Revenue from Gift Eligible sponsorships are handled by the University of Minnesota Foundation (UMF).
- Revenue from Non-Gift Eligible sponsorships are handled by units of the University of Minnesota (University)
Units must review and reconcile the activity between the UMF fund and the University chartstring in accordance with Administrative Policy: Reconciling and Verifying General Ledger Accounts and Other Financial Information
REASON FOR POLICY
To support the Board of Regents Policy: Gift Solicitation and Acceptance, the Administrative Policy: Accepting and Managing Gifts and to ensure that sponsorship activity complies with federal Internal Revenue Service regulations. The policy assists units in identification and classification of sponsorships, streamlining the process for handling sponsorship revenue and accurately recording the revenue as either Gift Eligible or Non-Gift Eligible.
|Primary Contact||Sue Paulsonfirstname.lastname@example.org|
|Gift related||Roxanna Dreyeremail@example.com|
|Accounting related||Sherrie Kutzler Terri Hall||612-625-0126 firstname.lastname@example.org email@example.com|
|Tax related||Kirsten Mullerfirstname.lastname@example.org|
- Planned events/activities or programs can have a variety of names: fundraiser, conference, symposium, academic competition, non-credit courses, programs, lecture series, etc. This policy applies to all types of planned events/activities, except for Membership or Consortium type arrangements. Membership/Consortium arrangements are classified as External Sales.
- Gift Eligible Sponsorship
- A sponsorship where the financial or other support meets University guidelines for a sponsorship and the IRS guidelines for a charitable gift.
- Fair Market Value
- The value assigned to a benefit based on what the benefit would be reasonably sold for in today’s market; this is not actual costs incurred.
- Memberships (set fees) that provide access to faculty, students, labs, experts, committee involvement, or academic programming that is specific to the membership population or is individual in nature dependent on the need/discipline. The membership group typically is formed to undertake an enterprise beyond the resources of any one member.
- Non-Gift Eligible Sponsorship
- A sponsorship where the financial or other support does not meet University guidelines for processing through UMF. Some portion of the sponsorship may be Unrelated Business Income (UBI). For detailed information on UBI, contact the University's Tax Management Office.
- Return Benefit
- Is any item or service provided to a sponsor in return for the sponsor’s support, or sponsorship, of a university activity, event or program. Examples may include, but are not limited to, a booth or table at an event/activity; tickets to an event/activity; advertising; t-shirts/mugs; and name and logo recognition or access to university services.
- Sponsorship/Sponsorship Package
- A program where the expectation of return benefits becomes an incentive for the entity to make a payment for an event/activity. Examples of return benefits include any item of value, such as: a booth or table at an event/activity; tickets to an event/activity; advertising; and name and logo recognition.
- Unrelated Business Income
- Revenue generating activities not directly related to the University of Minnesota’s exempt purposes of research and discovery, teaching and learning, and outreach and public service. These revenues may be subject to federal unrelated business income tax (UBIT.) Determining whether an activity is considered unrelated for UBIT purposes is based on federal laws, regulations, Internal Revenue Service guidance and other opinions. For more information see the procedure called, Unrelated Business Income Tax Procedures, and Collecting and Remitting Minnesota Sales Tax on External Sales Transactions.
- Chief Financial Managers/Clusters
- Review and classify sponsorship programs appropriately. Ensure sponsorship packages are documented and any return benefits valued correctly. Ensure funds are deposited correctly, invoices are created timely (when appropriate) and accounts are reconciled at least twice a year.
- College and Campus Development Officers
- Work with the University of Minnesota Foundation to formulate programs that meet fund-raising objectives. Identify, cultivate and solicit prospective donors/sponsorships. Create and classify sponsorship packages appropriately.
- Controller’s Office
- Define and provide guidance to units on classifying and handling sponsorship packages, including chart of accounts guidance and proper recording of transactions in PeopleSoft. Provide oversight for sponsorships for building and/or internal spaces.
- Tax Management Office
- Define and provide guidance to units on classifying and handling sponsorship packages and special situations that may require an appropriate acknowledgment. Provide guidance in identifying unrelated business income as a component of sponsorship packages. Provide oversight for sponsorships for building and/or internal spaces.
- University of Minnesota Foundation
- Define and provide guidance to units on classifying and handling sponsorship packages. Accept gifts to the University using established procedures. Transfer available gift funds to University accounts. Coordinate fund-raising and maintain donor records. Provide oversight for sponsorships for building and/or internal spaces.
- Board of Regents Policy: Gift Solicitation and Acceptance
- Board of Regents Policy: Foundations at the University
- Board of Regents Policy: Namings
- Administrative Policy: Institutional Conflict of Interest
- Administrative Policy: Reconciling and Verifying General Ledger Accounts and Other Financial Information
- Administrative Policy: Hospitality and Other Special Expenses
- Administrative Policy: Use and Lease of Non-University Real Estate
- Administrative Policy: Alcoholic Beverage Sales and Service, and Venue Liquor Licensing
Other Related Information
- Defining Gifts, Sponsored Projects and External Sales (Job Aid)
- University of Minnesota Foundation
- Minnesota 4-H Foundation
- Minnesota Landscape Arboretum Foundation
- Unrelated Business Income - Advertising
- Unrelated Business Income - Corporate Sponsorships
- December 2017 - New Policy. 30 Day Review. 1. Provides the criteria to assist units in correctly classifying sponsorship revenue. 2. Specifies the correct process to follow, depending on the classification of the sponsorship revenue, which aligns with IRS guidance.