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Business and Financial Policies and Procedures

Section 11.13 - Sponsorship Gifts

Overview

The University receives donations (cash or non-cash) from individuals and corporations to sponsor programs and activities within its units/departments. Donations of this nature are important to the University's programmatic and operational life. These donations must be handled appropriately to meet the criteria of a qualified sponsorship and be recorded as a gift. If a sponsorship payment is determined to constitute advertising, it is considered a non-qualified sponsorship, which may create unrelated business income (UBI).

A qualified sponsorship payment, as defined by the IRS, is any payment:

  • made by a person engaged in a trade or business; and
  • for which the person will receive no substantial benefit other than the use or acknowledgement of the business name, logo, or product lines in connection with the organization's activities. "Use or acknowledgement" does not include advertising the sponsor's products or services.

A qualified sponsorship payment does not include advertising or any payment contingent upon attendance level, broadcast ratings, or other factors indicating the degree of public exposure to one or more events.

If a qualified sponsorship is received, the campus unit/department should record it as a gift or gift-in-kind, less any goods or services provided to the donor, in accordance with Section 11.3, Campus Processing of Gifts.

If the payment is deemed a non-qualified sponsorship, it may create UBI. Therefore, the campus unit/department must ensure that the required financial information is maintained in order for the University to report such UBI on its annual business income tax return. The activity's financial information (i.e., revenue less direct and indirect expenses) must be reported to the OBFS, University Accounting Services on a fiscal year-end basis. See Section 18.13, Unrelated Business Income Tax, for additional information on UBI reporting.

Additional Resources

Additional information is available in IRS Publication 598, Tax on Unrelated Business Income of Exempt Organizations , and in the University's Brief Guide to Final IRS Regulations: Corporate Sponsorships Payments.

Contacts

For questions related to this policy, contact University of Illinois Foundation Gift Administration at: 217-333-0909.

 

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

Last Updated: October 22, 2008 | Approved: Senior Associate Vice President for Business and Finance | Effective: October 2008

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