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Business and Financial Policies and Procedures

Section 11.6 - Coding of Fundraising Costs

Responsible administration of fundraising and development activity includes capturing and evaluating costs required to solicit and obtain gifts from donors, which enables management to effectively assess the efficiency and effectiveness of its fundraising efforts. This policy provides a mechanism to collect data needed to track and analyze fundraising and development costs incurred by colleges and departments.

Definition and Examples of Fundraising and Development Expenses

Fundraising and development expenses are defined as the expenses incurred in cultivating and soliciting gifts from donors of all types, including individuals, corporations, foundations, or other private organizations. The following list includes examples of charges that are required to be classified as fundraising and development expenses:

  1. Expenses incurred by development offices, such as salaries for development office personnel and development office operating expenses, including (but not limited to): staff development; staff travel; staff equipment; staff supplies; development office stationery; gift club brochures; and print materials used in fundraising efforts.
  2. Expenses incurred in publicizing and conducting fundraising campaigns.
  3. Expenses incurred in cultivating and soliciting gifts from individuals, corporations, foundations, and other private organizations (for example, the cost of meals used to cultivate donors and prospective donors).
  4. Expenses incurred in conducting special events primarily intended to cultivate donor relations in support of development goals (for example, the cost of development campaign meetings, development committee events and major donor cultivation events).
  5. Expenses incurred in acknowledging gifts and providing stewardship to donors and prospective donors.

However, while the above expenses are examples of costs that are required to be classified as fundraising and development expenses, there are also other advancement costs related to areas such as alumni relations and public affairs which should not be classified as fundraising and development costs. For example, a unit may issue a monthly alumni magazine to keep its alumni informed of recent activity within the unit. If the purpose of this publication is primarily for alumni relations (as opposed to fundraising and development purposes), the cost of this publication should not be classified as a fundraising and development expense. However, if the purpose of this publication is partially for alumni relations and fundraising/development purposes, the unit should use its best estimate as to what percentage of this cost is related to fundraising and development purposes, and should classify that amount as a fundraising and development expense.

Other examples of expenses which should not be classified as fundraising and development expenses are:

  • Standard stationery used by non-development office staff;
  • Alumni publications and/or departmental newsletters which are primarily for alumni relations purposes as opposed to fundraising and development purposes (see example above);
  • Alumni board meetings (unless the primary purpose of the board meeting is to discuss fundraising and development issues);
  • General alumni events;
  • Alumni and/or staff reunions; and
  • Raffles/bake sales (see example below).

As for raffles/bake sales, costs and revenues related to these types of fundraising events that have a sole purpose of generating proceeds in direct support of specific University programs are recorded separately and should not be included in Banner fundraising accounting strings (C-FOAPAL). For example, if a unit holds a fundraising event where t-shirts purchased at a cost of $5.00 are sold for $10.00 with the sole purpose of using the income from this fundraising event to support a specific scholarship program, the expenses and related revenues for the t-shirt sales would not be included in a Banner fundraising accounting string. Instead, they would be recorded in the C-FOAPAL related to the specific scholarship program they are supporting. Also, it is important to be aware of tax issues, including sales tax, that apply to these types of situations. See Section 18.6, Sales and Use Tax/Goods and Services Tax for further guidance on sales tax issues relating to these bake sales and raffles.

Coding of Fundraising and Development Costs

Fundraising and development costs are charged to either state, institutional, or gift funds. Generally, self-supporting funds should not be used to pay for fundraising and development expenses. Exceptions may be granted by the Office of Business and Financial Services (OBFS), University Accounting and Financial Reporting (UAFR). In order to enable UAFR to properly identify all fundraising and development costs, departments are required to use a separate University accounting string designated exclusively for fundraising and development purposes to record its fundraising and development costs. The accounting string must be used for all full and part-time development office personnel appointments including support personnel, as well as non-personnel fundraising and development expenses. The accounting string used for fundraising and development costs is designated for fundraising as follows:

  • Depending upon the source of funds used for fundraising activities, a separate fund or program code is established to collect fundraising costs:
    • If state or institutional funds are used to pay for fundraising and development costs, then a distinct program code is established and the subsequent fundraising and development costs are charged to this distinct fundraising program code.
    • If gift funds are used to pay for fundraising and development costs, then a distinct fund code is established and the subsequent fundraising and development costs are charged to this distinct fundraising fund code.
  • The fund or program code title must contain the word "Fundraising".
  • The last two positions of the National Association of College and University Business Officers (NACUBO) function, which is designated in the level 2 program code, must be coded 99. The following NACUBO functions are used to designate fundraising activities:
    • 1299 - Public Service – Unallowable for F&A
    • 1399 - Academic Support - Unallowable for F&A
    • 1499 – Student Services – Unallowable for F&A
    • 1599 - Institutional Support - Unallowable for F&A
  • The "A-21" attribute code on the fund or program code must be coded as "UFR" by appropriate OBFS staff.

UAFR monitors the coding of all C-FOAPALs used for fundraising and development costs.

Source of Funding for Fundraising and Development C-FOAPALS

Once these fundraising and development expenses are posted to the applicable fundraising and development C-FOAPAL, units must provide funding into these accounting strings to cover the costs. See below for guidance on how this is accomplished:

  • Fundraising and Development Gift Funds - the University of Illinois Foundation (UIF) is not able to sweep gift revenue into these fundraising and development gift funds. Instead, to cover the fundraising and development costs that have posted to a fundraising and development gift fund, the unit must complete a funds transfer from one of its unrestricted gift funds into a fundraising gift fund. See UAFR Web site (FAQ section) for guidance on how to complete a gift funds transfer.
  • Fundraising and Development Program Codes - in order to cover the fundraising and development costs that are posted to a state or institutional fund using a fundraising program code, the unit will need to work with the appropriate campus budget office to allocate budget to this specific C-FOAPAL string.

For any other questions or issues related to fundraising and development costs, contact UAFR at (217) 333-4568 or the UIF at (217) 333-0675.

 

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

Last Updated: October19, 2017 | Approved: Senior Associate Vice President for Business and Finance | Effective: January 2008

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