• Purpose 1.0
• Definitions 2.0
• Distribution of Endowment Funds 3.0
• Endowment Levels and Minimum Requirements 4.0
• Responsibility 5.0
• Gift Acceptance Guidelines for Outright Gifts 6.0
• Gift Accouting Procedures for Outright Gifts 7.0
• Gift Accounting Procedures for Deferred and Life Income Gifts 8.0
• Matching Gifts 9.0

 

1.0 Purpose
This policy defines types of endowments and outlines the minimum requirements needed for establishment within the Foundation.

2.0 Definitions

1. Endowment Fund. An endowment fund is a fund whose donor has stipulated that the fund principal must remain inviolate and that only income may be expended.
2. Fund functioning as an Endowment. This is a fund in which the principal has been set aside by administrative action to be invested in the manner of an endowment fund.
3. Distinguished Professorships. This is defined as an academic position supported by either endowments or funds functioning as endowments. A portion of the income from the fund may be used to support the base salary of the individual appointed to be the distinguished professor.
4. Endowed Chairs. An endowed chair is an academic chair supported by endowments or funds functioning as endowments. A portion of the income may be used by the appointed chair in support of teaching, salary, and research activities.

3.0 Distribution of Endowment Funds
The Foundation will distribute 5% of the value of the individual endowment account (based on June 30 value) each year. The distribution will be based on the designation of the individual endowment account.

4.0 Endowment Levels and Minimum Requirements
Terms and conditions, as well as minimum levels, must be agreed upon before an endowment is established, therefore, contact with the Development Office or the Foundation Office, whichever appropriate, is required.

These funds may be established with a single gift or gifts received over a period of time.

5.0 Responsibility

1. Endowed Chairs. Responsibility for final approval of endowed chairs resides with the Foundation, upon the concurrence and recommendation of the President and Vice President for Academic Affairs.
2. Distinguished Professorships. Responsibility for final approval of distinguished professorships is at the campus level and resides with the President and Vice President for Academic Affairs.
3. Endowments and Funds Functioning as Endowments. Although a donor designates endowments as such, with approval from the college and foundation, the college and effected departments should be consulted.

6.0 Gift Acceptance Guidelines for Outright Gifts

1. Purpose of Guidelines. It is the policy of the Foundation to accept gifts of cash, security and property to be used for the greatest good of the College. The designated entity for acceptance of such gifts is the Development Office. All gifts solicited or unsolicited of money, gifts-in-kind, and/or services of any description to the College shall be immediately reported to, and when appropriate, receipted by the Foundation/Development Office. Gifts received by any College personnel should be delivered immediately (the same day), if possible, to the Foundation/Development Office.
2. Gifts of Cash. Checks and cash will be receipted to the proper fund and are deposited daily. Receipts will be mailed to the donor within one week of receiving the gift. Matching gifts from employers are credited to the donor for giving club recognition but receipts are sent to the company. Checks should be made payable to the College.
3. Gifts of Securities. Stocks, bonds, notes or other instruments for which value can be determined in the financial market place should be made payable to the Foundation or College. Donors are encouraged to have a conversation with the CEO or the Director of Development to determine the most advantageous method of giving donations of securities. Internal Revenue Service guidelines are followed in establishing the value of donated securities. It is the responsibility of the CEO or the Stewardship Director to determine, based on information from the donor and/or security market sources, whether or not it is advantageous to sell the donated securities immediately. Regardless of whether or not the securities are sold, it is the responsibility of the Stewardship Director to account for the securities and, when appropriate, contact brokers regarding the disposition of such securities. If the securities are not listed with a broker, the unendorsed certificates should be mailed to the CEO or the Director of Development. The signed signature guaranteed stock power should be mailed in a separate envelope by registered mail, if possible.
4. Gifts of Real Estate. The College welcomes gifts of real estate. It is the donor's responsibility for obtaining appraisals, EPA studies, etc., for gifts of property except in such cases where the Foundation will assume that responsibility. Gifts must be reviewed by at least three Gift Acceptance Committee members. Two of these members should represent the college and the remaining member(s) should be independent. The review should be conducted with the awareness of environmental and economic impact, and other issues put forth in a standard property checklist to be used by the committee in their review. The Gift Acceptance Committee of the Foundation has final approval for all gifts of real estate.
5. Gifts of Personal Property. Gifts of personal property (i.e. antiques, works of art, collections, etc.) are all welcomed by the College with approval from the CEO. The donor is responsible for securing appraisals on such property according to Internal Revenue Service guidelines. The Gift Acceptance Committee of the Foundation has final approval of all gifts.
6. Gifts of Equipment. Gifts of equipment are encouraged by the Foundation. However, when such equipment requires additional and/or ongoing maintenance that is not budgeted, prior approval must be received from the President of the College.
7. Challenge Gifts or Pledges. Challenge gifts or pledges requiring matching funds by the College are welcome but the gifts must receive prior approval from the College. The Foundation and College reserves the right to treat each gift on an individual basis, and thereby reserves the right to accept, reject, or modify any agreement and or gift.

7.0 Gift Accounting Procedures for Outright Gifts

1. Cash and Cash Pledges. Current gifts in the form of cash and pledges will be counted at actual gift and pledge levels when accompanied by a copy of the appropriate gift documentation.
2. Securities. Stocks, bonds, and other negotiable securities will be counted at the mean between the high and low on the date of the gift. The value of the gift is not altered by losses or gains at the time of actual sale of the securities nor by brokerage or other expenses.
3. Real and Personal Property. Gifts of real and personal property with a value of above $5,000 will be recorded at the fair market value as determined by an appraisal (obtained by the donor) which qualifies under the current Internal Revenue Service guidelines. Otherwise, the gift will be recorded as a gift-in-kind without a dollar amount. Donors are encouraged to obtain an appraisal for their tax purposes.
4. Gifts of Equipment. Gifts of equipment will be receipted as outlined in gifts of real and personal property.
5. Challenge Gifts. Challenge gifts will be receipted as outlined in gifts of cash.

8.0 Gift Accounting Procedures for Deferred and Life Income Gifts
The Free Methodist Foundation/King Trust Company manages deferred and income gifts for the Foundation. The procedures for accounting for them is as follows:

1. Irrevocable Deferred Gifts. Charitable remainder gifts, including pooled income funds, charitable remainder trusts, and gift annuities, will be valued at the fair market value of the assets on the date of the gift.
2. Charitable Lead Trusts. Trusts which pay an annual income to the College, but which make no commitments regarding the future distribution of principal, should be valued by the following method:
   • If the trust pays a fixed annual yield, the gift value is determined by multiplying the annual return by the actual number of years that the trust is setup to run.
   • If the trust pays a variable rate, the gift value will be determined on the basis of a 5 percent rate of return on the principal, for the number of years of the trust. In the case of a trust, the term of which is based on the life of an individual, the term remaining shall be the life expectancy of such a person.
3. Trusts Administered by Others. Charitable Remainder Trusts administered by others on behalf of the College will be credited for the value of the remainder interest as determined for tax deduction purposes.
4. Wills and Living Trusts. Provisions in wills and living trusts will be recorded at the discounted dollar value of the Pledge Note according to the following standard. If the donor is under 40 years of age, no gift credit will be recorded; over the age of 60 years, full value will be credited; between the ages of 40 and 60, 5 percent per year will be recorded. Thus an individual who is 55 years old, will have 75 percent (55-40 = 15 x 5% - 75%) of the Pledge Note.
5. Life Insurance. The College may be named either irrevocable or revocable beneficiary in life insurance policies depending upon ownership. When we are not the owners of a policy--when the gift is revocable--it will be recorded as a future Revocable Deferred Gift. Irrevocable beneficiary designations in life insurance policies will be recorded as follows:
   • Paid-Up Policies: When no further premiums are due on policies, death benefit value will be recorded according to the same discounted formula presented in Wills and Living Trusts.
   • Premiums Remaining to be Paid: When premiums remain to be paid on life insurance policies, the gift of a policy will be recorded as a Revocable Deferred Gift. The exception is when a donor presents a policy and a Pledge Note, or other pledge documentation, committing the donor to pay the premiums in full. The gift then will be recorded according to the standards of Paid-Up Policies.
6. Fair Market Values.
   • Paid-Up Policies: If a policy is a paid-up policy, its fair market value is its replacement cost. That value is the amount that the insurer would charge for a single-premium contract of the face amount on the life of a person the same age as the insured.
   • Premiums Remaining to be Paid: If premium remains to be paid, its fair market value is the "interpolated terminal reserve" value of the policy, plus the part of the last premium payment that covers any period beyond the date of the gift. (Interpolated terminal reserve is usually an amount slightly higher than the cash surrender value.)

The College reserves the right to treat each gift on an individual basis, and thereby reserves the right to accept, reject, or modify any agreement and or gift.

9.0 Matching Gifts
All corporation matching gifts forms are to be sent to the matching corporation's chief financial officer for execution according to rules set by the corporation or foundation for the employee match. Guidelines for the administration of matching gift programs have been provided by a national steering committee and contain general and specific guidelines for the matching gifts program. Institutional administrators should satisfy themselves on the following points:

1. That the gift was received.
2. That the gift was made in accordance with guidelines of the corporation requested to match the gift.
3. That the donor is eligible for a matching gift according to the corporation's policies (for example, a spouse's gift, gifts from other members of the family, gifts in kind, etc.).
4. That the use for which the match is intended is legitimate under the corporation's guidelines.

Generally gifts from corporations are unrestricted and are given to the institution to apply in any way desired.