Processing Endowment and Current Use Gifts

Processing Endowment and Current Use Gifts

Procedures for Creating New Gift/Endowed/Construction Accounts

First step is to determine if it’s a gift for a new purpose or donor, or towards an existing account. And to make sure that it’s not related to a sponsored project (see section on sponsored vs gift). If it’s a new gift or new purpose, please contact the Gift/Endowment Manger in the FAS Finance Office. if a new fund needs to be established, FAS Development will need to draft new terms. If the donation is for an existing gift account, please see instructions related to processing to existing gifts.

All gift/endowed funds must have terms before they can be created. Terms must be drafted by the FAS Development Office/Academic & Development Coordination area. These terms are then reviewed and approved by the Alumni and Donor Services area (ADS). Funds can be created (within the GL) upon receiving a signed pledge or the first gift from the donor.

FAS Gift Management, within the Alumni Affairs Development Office, forwards the terms and all the gift information/donation documentation to the Endowment and Gift Administrator within the FAS Finance Office. This is done through database called Work Front.

The Endowment and Gift Administrator creates the new fund in Oracle’s Chart Security Maintenance Application (CMSA) based on the Tub and Org of the Managing Department, Center, or School. ADS is tasked with approving all new account requests submitted through CSMA. Once an account is approved, it becomes an active entity within the University’s general ledger and can be transacted against. Recommended best practice is to wait until a gift is deposited into an account before applying any expenses.

The university no longer allows faculty members to give gifts to support their own research. The faculty member can give donations to support their department, which will used to at the discretion of the department chair.

Also, the University no longer accept new requests or gifts establishing prize funds.

Checks can be sent directly to:

Harvard University Alumni and Development Services

P.O Box 419209

Boston, MA 02241-9209

 

Donors can also wire gifts to the University:

Bank wire instructions for charitable gifts only to President and Fellows of Harvard College.

 

Receiving Bank Name: Bank of America, N.A.

Receiving Bank Address: 100 Federal Street, Boston, MA 02110

Beneficiary Legal Account Name: President & Fellows of Harvard College - RSO Account

Account #: 009429263621

Receiving Bank ACH ABA: 011000138

Receiving Bank Wire ABA: 026009593

Receiving Bank SWIFT Code: BOFAUS3N

Memo/Reference: Fundraiser 5-Digit Phone # (e.g. X-XXXX), Donor Last Name, Gift Designation

 

Important

To ensure accurate handling, donors should send a confirmation email to ADS@harvard.edu with the following details:

•Donor Name

•Contact Phone Number

•Date the wire was sent

•Name of the originating bank

•Amount of the bank wire

•Was a wiring fee deducted from the wire amount?

 

Notification Procedures for New Gifts

When a new gift or endowed fund is established, the Endowment and Gift Administrator will send an email notification to the applicable area managing the fund. The email will include the new account coding (Tub, Org, Fund…sometimes activity, sub activity or root if applicable), the terms, the gift or pledge amount, the pledge schedule (if applicable), and the Administrative Expense Assessment (AEA) information (rate and timing of assessment). The Budget Analyst of the applicable area is copied on the email for general reference.

The notification email includes the following:

Attached are the terms, we ask that you read through them carefully and let us know if you have any questions. These terms will also be available through the FAS Finance Reporting Hub/FINREPORT. You can access the report by signing in with your HarvardKey, select the Reports tab, top left side of the home page, then select the Fund Terms Report.

Please acknowledge via a reply to this email message that:

• You have read and understand the attached donor terms

• Spending will occur in accordance with these terms

• The terms will be communicated to others in your department who transact against this restricted fund

• The terms are understood by the Department Chair, Center Director, or responsible faculty member.

The managing department is responsible for acknowledging/replying in the affirmative that they understand the terms and will use the fund accordingly.

The notification email and the applicable area’s response are stored in the FAS Finance Office electronic file by account number. The University has a stewardship obligation to ensure that restricted funds are spent in accordance with donor terms. Please refer the attached University Policy regarding Restricted Fund Spending Compliance. Appendix A

 

Reviews

The FAS Finance Office performs quarterly audits of spending in gift/endowed funds as per the University Restricted Fund Spending Compliance Policy. “Tub financial offices are required to perform periodic analytical reviews of restricted funds to ensure compliance with this policy and to identify charges that may require further investigation. This analytical review may include the following:

  1. Review of unusual charges, i.e., large entertainment expenses, first class travel, or any other charges that appear to be inconsistent with university policy

2. Review of activity in transfer object codes for inter-fund transfers of income or expense

3. Review of funds with net credit amounts posted to expense object codes.

The FAS Finance Office also reviews/audits (quarterly) funds carrying a deficit balance during the current Fiscal Year. It is the fiduciary responsibility of the unit to transfer expenses out of the fund. Income should not be transferred in to cover a deficit. It’s important to note that funds with a deficit balance at the close of a fiscal year are charged an interest fee in July of the following year.

Units should make every effort to clear fund deficits by the applicable Fiscal Year End.

Miscellaneous Receipts

Financial managers have a fiduciary responsibility to ensure that spending from gift funds is done in accordance with the donor's terms. In FY01, the University established the Miscellaneous Receipt Policy which allows for up to $1,000 per year to be deposited to a restricted fund.

  1. policy was established to allow for easy management of small dollar funds. Bear in mind that other income deposited to a gift fund (e.g., fee income, membership dues, etc.) is subject to the restrictions of the fund where the money is being deposited. Any receipts over $1k should be added to a UD account.

Gifts to Existing Funds

Gifts checks received (by departments) that need to be deposited to an existing fund should be forwarded directly to ADS along with any correspondence included by the donor(s) using the gift transmittal form. Checks, any donor documentation, plus the completed gift transmittal form should be forwarded to:

 

Harvard University Alumni and Development Services

PO Box 419209

Boston, MA 02241-9209

 

Donors can also wire gifts to existing funds. See instructions under processing gifts section

 

Best practice – all gift and endowed checks should be sent directly (upon receipt) to ADS for processing.

NEVER DEPOSIT A GIFT USING A CREDIT VOUCHER FORM.

Donors receive a tax credit for gifts given to the University. If the check or wire is not processed through the ADS system (Advance) the donor will not receive this credit. Gifts should never be sent to Cash Management for processing.

If somehow the gift gets processed via Cash Management, please follow the following steps to correct:

  1. Submit a request through Buy to Pay, to get the check back from Cash Management. The check should be made payable to the President and Fellows of Harvard College and should be delivered to the requesting department. Use the deposit coding for this request.
  2. A copy of the original check is needed as well as any donor correspondence.
  3. When the check is received, send it, the copy of the original check, the donor correspondence, and a completed gift transmittal form to ADS for processing.

 

Transferring Funds

In general, funds deposited to a restricted fund must stay in the restricted fund for compliance and stewardship purposes. Funds deposited into a restricted fund should never be transferred to another fund via journal entry. Transferring of funds makes it difficult to adequately report to donors on the use of the fund. It also leaves an inadequate audit trail and raises questions as to whether the funds were used according to the donor terms. If a gift is deposited into an incorrect account, it can only be corrected by ADS. Please contact the Gift and Endowment Manager if a correction is needed.

On occasion it is necessary to allow spending by another department; in these cases, funds may be transferred to a department’s coding within the same restricted fund. This is accomplished by loosening the security rule (cross val) to allow another department to charge directly to the fund. In this case, you would also need to transfer the amount of funding you are authorizing to the other department using object code 5910 or 5921 (please see the internal transfer policy for determination of object code under Accounting for Internal Transfers). Please contact the FAS APPSEC group when a cross val is needed. If a gift or endowment fund is involved, a brief description of how the fund will be used is required. This is to ensure that the transfer and use of the fund will comply with the terms of the account.