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Business and Financial Policies and Procedures

Section 11.12 - Current and Non-Endowed Term Funds Administration

OVERVIEW

The University (UI) and the University of Illinois Foundation (UIF and Foundation) have the responsibility to properly manage and use gifts as intended by the donors and to report to donors or designated contacts on the impact of their gifts within the University. Current funds are gifts made to be used in the current fiscal period; non-endowed term funds provide an annual funding stream in lieu of an endowment gift.

This policy pertains to all campuses and the Foundation. Donors should be instructed to direct their gifts to the University of Illinois Foundation (see Section 11.1, University Gifts.) Exceptions to these policies are allowed only upon review and recommendation by the Vice Chancellor or Associate Chancellor for Development on each campus and the approval of the UIF President, or designee(s).

Current and Non-Endowed Term Fund Guidelines

 

    Current Funds Non-Endowed Term Funds
1. Definition: A current fund results from a non-endowed outright gift with the expectation that the funds are to be expended on an annual basis. A non-endowed term fund shall be funded for a minimum of five years with the minimum annual support specified in section 3 below. The schedule of annual support shall be contained in a formal governing document or fund agreement negotiated with the donor(s).
2. Source of Funds: Donor Gift(s) Donor Gift(s); units may also supplement the gift with internal sources of unrestricted gift funds to supplement a term funding program.
3. Minimum Gift Required:
    No minimum required

The University has established the following minimums for "term" support which are subject to periodic review:

Named Fund ($1,200 per year for 5 years) $6,000
Named Scholarship ($1,200 per year for 5 years) $6,000
Named Lecture Series ($4,750 per year for 5 years $23,750
Named Fellowship or Assistantship ($7,125 per year for 5 years) $35,625
Named Research Fund ($9,500 per year for 5 years) $47,500
Named College Professorship ($23,750 per year for 5 years) $118,750

Named Chair ($95,000 per year for 5 years)

*see approval process below

$475,000
4 Pledges/Installments: Allowable, but requires a formal plan (e.g., a pledge or fund agreement) with the donor. Minimum pledge is $1,000 and should be a five year term or less. Allowable, but requires a formal plan (e.g. a pledge or fund agreement) with the donor. Minimum pledge is $1,000 and should be a five year term or less.
  *Annual gifts leading to an endowment Donors sometimes seek to create a permanent endowment by providing annual gifts that will simultaneously : 1) provide the level of spendable income generated by a fully funded endowment, and 2) build the permanent fund. The annual gifts required shall equal three times the established target payout (annual budget income) for the category of endowment funds. At least one-third will be used on an annual basis and two-thirds will be designated for the principal of the endowment fund. The schedule of annual support shall be contained in a formal gift agreement and shall be pledged for a maximum of ten years. For example, the funding of a named college professorship will require an annual gift of $75,000 for 10 years, of which $25,000 will be expended annually and $50,000 will be designated for the permanent endowment. Income from the endowment will reinvest to principal until the pledge is fulfilled.
5. Fund approval: All named current funds should be reviewed and approved at the college and/or unit levels. All named term funds must be reviewed and approved at the college and/or unit and by the appropriate Associate Chancellor for Development.
  *Term Chairs/ Professorships Not allowed. Since funding for term chairs/professorships relies on support in the form of annual gifts or internal allocations, they must be sent to the appropriate campus Associate Chancellor for Development for approval by the Vice Chancellor for Academic Affairs/Provost and Chancellor, as necessary.
6. Governing Documents: Gift agreements with the donor(s) are optional for a current fund unless a pledge is involved. Any correspondence from the donor as to use of the funds shall serve as the governing document. Fund/pledge agreements with the donor(s) are required for all levels of term funds.
  *Document Preparation Drafts may be prepared by a unit, however, the draft may not be shared with a donor until reviewed by UIF and the college/unit; final documents must be prepared by UIF. Drafts may be prepared by a unit, however, the draft may not be shared with a donor until reviewed by UIF and the college/unit; final documents must be prepared by UIF.
  *Review and Approval Process Must be reviewed and agreed to by the donor and UIF; Department Head and/or Dean must review and approve content; University officials must review as appropriate. Must be reviewed and agreed to by the donor and UIF; Department Head and/or Dean must review and approve content; University officials must review as appropriate
  *Signatories Donor, Department Head, Dean and/or other appropriate University officials in addition to the Foundation President and Foundation Secretary. Donor, Department Head, Dean and/or other appropriate University officials in addition to the Foundation President and Foundation Secretary.
  *Donor Biographical Information Biographical information may be added to the gift agreement. Biographical information may be added to the gift agreement.
  "Purpose of Fund" Section Purpose section must be flexible enough to be useful according to the terms in the gift agreement or other governing document. Purpose section must be flexible enough to be useful during the term specified in the fund/pledge agreement, alternate application clause must be utilized.
  *Alternate Application If at such a time gifts can no longer be administered as originally intended and it is not possible to seek approval from the donor, an alternate application may be invoked. To invoke an alternate application, (a) the unit must write a letter of justification including the current guidelines for use, why the intent cannot be adhered to, and a suggested alternate use; (b) the proposed alternate use must then be submitted for review by the appropriate campus Associate Chancellor for Development; (c) If deemed appropriate, the Associate Chancellor for Development will seek approval from the Vice Chancellor for Academic Affairs/Provost and the Chancellor. If granted, the Associate Chancellor for Development will forward the approved request to the Foundation Vice President for Administration who will, if necessary, confer with University Counsel to provide guidance as to whether it would be prudent to pursue legal action to alter the gift restrictions; (d) if deemed acceptable, the Vice President will seek approval from the President of the Foundation; (e) the Stewardship Committee of the Foundation Board of Directors will review all approved alternate applications invoked at its next regularly scheduled meeting. If a governing document does not contain the alternate application clause, a Cy Pres proceeding may be required upon legal review. If at such a time gifts can no longer be administered as originally intended and it is not possible to seek approval from the donor, an alternate application may be invoked. To invoke an alternate application, (a) the unit must write a letter of justification including the current guidelines for use, why the intent cannot be adhered to, and a suggested alternate use; (b) the proposed alternate use must then be submitted for review by the appropriate campus Associate Chancellor for Development; (c) If deemed appropriate, the Associate Chancellor for Development will seek approval from the Vice Chancellor for Academic Affairs/Provost and the Chancellor. If granted, the Associate Chancellor for Development will forward the approved request to the Foundation Vice President for Administration who will, if necessary, confer with University Counsel to provide guidance as to whether it would be prudent to pursue legal action to alter the gift restrictions; (d) if deemed acceptable, the Vice President will seek approval from the President of the Foundation; (e) the Stewardship Committee of the Foundation Board of Directors will review all approved alternate applications invoked at its next regularly scheduled meeting. If a governing document does not contain the alternate application clause, a Cy Pres proceeding may be required upon legal review.
  *Amended Fund Agreements Any changes to the fund purpose or designation should initiate an amendment to the original governing document, refer to document preparation and approval process above. Any changes to the fund purpose or designation should initiate an amendment to the original governing document; refer to document preparation and approval process above.
7. *Named Programs/Units (includes Centers, Colleges, Programs, Institutes, and Buildings) Only allowed for construction projects at this time; a commitment for donor funding is typically in place before a project can begin and requires approval by the Provost, Chancellor, and in some cases the Board of Trustees. To name a position or program, discussions must be held among the Chancellor, Associate Chancellor for Development, Provost/VC for Academic Affairs and the dean or director before any commitment to the donor is made. The name would be in effect only during the period in which gift money is available to support the position or program. Naming centers, colleges, institutes and buildings is not currently allowed with term funding.
  *Naming Funds May be named in honor or in memory of individual(s) as determined by the donor, in consultation with the proper unit/university officials. May be named in honor or in memory of individual(s) as determined by the donor, in consultation with the proper unit/university officials.
8. Spending Policies:
  *Interest Income No interest income is paid to these funds, due to the nature of the gifts (to be spend each fiscal year). An exception is made for construction funds, upon appropriate University review and approval, which receive any income in excess of the first 2% earned. No interest income is paid to these funds, due to the nature of the gifts (to be spent each fiscal year).
  *Administrative Fee The current administrative fee is the first 2% of the income earned by the average balances of the short term investment pool, assessed quarterly. The current administrative fee is the first 2% of the income earned by the average balances of the short term investment pool, assessed quarterly.
  *Gift fees assessed by units Under review by the University Under review by the University.
  *Responsibility The CEO of the unit (Deans, directors, department or unit heads) is responsible for administering and expending current funds in accordance with University spending policies and procedures; spending must be consistent with donor intent. The University and Foundation have a fiduciary duty to the donor to insure donor intent compliance. The CEO of the unit (Deans, directors, department or unit heads) is responsible for administering and expending current funds in accordance with University spending policies and procedures; spending must be consistent with donor intent. The University and Foundation have a fiduciary duty to the donor to insure donor intent compliance.
9. Stewardship:
  *Acknowledgment All gifts are acknowledged and receipted by the Foundation as part of the gift processing function; benefiting units are also required to communicate with the donor to acknowledge the gift in a timely fashion, in accordance with internal unit policy All gifts are acknowledged and receipted by the Foundation as part of the gift processing function; benefiting units are also required to communicate with the donor to acknowledge the gift in a timely fashion, in accordance with internal unit policy
  *Proper and Timely Spending Current fund gifts must be spent in accordance with the donor's intentions and University spending policy; excessive accumulations of unspent funds is a violation of donor intent; units are encouraged to have one Foundation gift account for every one University spending account. Term fund gifts must be spent in accordance with the donor's intentions and University spending policy; excessive accumulations of unspent funds is a violation of donor intent; units are encouraged to have one Foundation gift fund for every one University spending fund.
  *Direct Donor Communication It is imperative that the donor(s) receive communication from the units as to use and impact of the gift funds. It is imperative that the donor(s) receive direct communication from the units as to use and impact of the gift funds.

Contacts

Questions or comments regarding the administration of a particular endowment fund should be directed to:

Senior Vice President for Administration
University of Illinois Foundation
400 Harker Hall, MC-386
1305 W. Green Street
Urbana, IL, 61801
(217) 333-8665

Questions or comments regarding the endowment fund or current fund policies should be directed to the appropriate campus office:

Urbana Campus Vice Chancellor for Institutional Advancement/Senior Vice President of the University of Illinois Foundation
Office of Campus Development
506 Swanlund Administration Building, MC-304
601 East John Street
Champaign, IL, 61920
(217) 244-1206

Chicago Campus Vice Chancellor for Development/Senior Vice President of the University of Illinois Foundation
Office of Campus Development
2503 University Hall, MC-102
601 South Morgan
Chicago, IL, 60607
(312) 413-3390

Springfield Campus Associate Chancellor for Development/Senior Vice President of the University of Illinois Foundation
One University Plaza, SPH 100
Springfield, IL, 62703-5407
(217) 206-6058

 

Please send questions regarding this policy manual to OBFSPolicies@uillinois.edu.

Last Updated: March 17, 2008 | Approved: Senior Associate Vice President for Business and Finance | Effective: April 2007

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