Philanthropy, Gift Acceptance, and Valuation

Purpose

The Philanthropy, Gift Acceptance, and Valuation Guidelines provide guidance and counsel to individuals within the Research Foundation (RF) concerned with planning, promotion, solicitation, receipt, acceptance, application, and disposition of gifts, grants, trusts, and other contributions and donations (collectively "gifts").

The Philanthropy, Gift Acceptance, and Valuation Guidelines are subject to the RF's Policy on Acceptance of Gifts as adopted by the RF's Board of Directors in BD 2004-07 (January 28, 2004); BD94-11 (October 19, 1997); EX94-14 (November 7, 1994); BD93-03 (January 27, 1993); BD65-32 (June 16, 1965); BD 64-15a and BD64-15b (June 17, 1964); BD52-12 (April 28, 1952); and BD51-12 (August 15, 1951).

The current Policy on Acceptance of Gifts is available at /PAGE/PHILANTHROPY_AND_ALUMNI_AFFAIRS/POLICIES%20AND%20PROCEDURES/MUPOL008.HTM.

Roles and Responsibilities

RF Role in Gift Administration

The RF offers a gift administration service that SUNY campuses or campus related organizations such as campus foundations can use to administer gifts, including gift annuities, pooled income funds, and charitable trusts. Community colleges and campus related organizations must enter into a contractual arrangement with the RF in order to take advantage of this service and will be assessed a fee for the services.

Role of Campus-Related Foundations

The SUNY Board of Trustees adopted new guidelines for its campus-related foundations at their meeting in April 2003. The campus-related foundations are the primary entity to support the fundraising efforts of each associated campus. Accordingly, each campus-related foundation is responsible for receiving and managing its gifts in support of campus programs. In the exercise of this responsibility, campus-related foundations should ensure that the proceeds of campus fundraising are appropriately recorded, credited, acknowledged, and administered based on legal requirements and donor stewardship parameters and develop, administer, and communicate their own policy on endowment funds management, including asset allocation, the selection of investment managers and the spending formula.

Gifts given directly to the RF should be coordinated with the respective campus-related foundation, and accepted if they meet the requirements of a sponsored program, are related to a sponsored program, or if the campus-related foundation or SUNY is unable to accept such gifts because of either donor requirement or other reasons. As necessary, the Office of Philanthropy and Alumni Affairs is responsible for working with the appropriate SUNY or campus-based administrator to avoid conflicts with gift acceptance.

Any instance of "naming" or providing naming rights to any SUNY or RF property (room, building, center) or resource (endowment) must comply with applicable policies.

Role of RF Management

RF Management is responsible for the gift guidelines of the RF, subject to the Policy on Acceptance of Gifts.

The Philanthropy, Gift Acceptance, and Valuation Guidelines may be reviewed by the Finance Committee of the Board of Directors of the RF on an as needed basis.

Role of RF Office of Philanthropy and Alumni Affairs

The Office of Philanthropy and Alumni Affairs at the RF is responsible for supporting the acquisition of philanthropy on the SUNY campuses and to ensure that the RF and the SUNY campus or related organization that utilize the RF to receive or administer gifts, comply with these guidelines. The Office of Philanthropy and Alumni Affairs is responsible for reporting to the Finance Committee philanthropic activity on an annual basis and for reporting significant gifts (greater than $500,000) at the next committee meeting.

All of the Above

The RF recommends that all parties follow the Association of Fundraising Professionals' Code of Ethical Principles and Standards of Professional Practice.

Guidelines on Acceptance and Valuation of Outright Gifts

The following are standards for the acceptance and administration of gifts to the RF in accordance with the RF's Policy on Acceptance of Gifts.

Cash and Checks

Cash and checks will be accepted regardless of amount. Checks must be made payable to "The Research Foundation of State University of New York". The value of any cash gift is the face value of the check or cash.

Publicly Traded Securities

Securities that are traded on the New York and American Stock Exchange as well as other major U.S. Exchanges and the NASDAQ will be accepted by the RF. Such securities will normally be sold on the next business day by the RF.

No employee or volunteer working on behalf of the RF may commit to a donor that a particular security will be held by the RF, sold through a specific broker, or traded on instruction of the donor without the express written approval of the RF. This will generally be approved by the Vice President of Finance.

The value of a gift of securities in this category will be the mean (average) of the high and low of the stock(s) or bond(s) on the day the transfer is made by the donor to the RF.

Regularly traded securities on the exchanges or NASDAQ are easy to value. Less actively traded securities, rarely traded securities, or securities that do not trade on the gift date may provide various options for valuation. Each specific gift will dictate the method of valuation.

Closely Held Securities

Closely held or non-publicly traded securities may be accepted only after approval of the RF, through the Vice President of Finance. Such securities may be subsequently sold only with the approval of the Vice President of Finance.

The value of non-publicly traded, closely-held securities may be determined by the last sale or negotiated trade of the security if it occurred recently. In the absence of a recent sale, a fair market value should be determined by an acceptable authority (see guidelines on appraisal below). Regardless, if the value of the gift is estimated to be $5,000 or a more qualified appraisal is required.

Restricted Securities

Restricted securities (also known as unregistered securities, investment-letter stock, control stock, or private placement stock) are infrequently received as gifts because of the difficulty in transferring ownership and determining fair market value. If there are potential situations when restricted securities may be given as a gift to the RF, there is an IRS ruling to be consulted to determine the value of such restricted securities. Restricted securities may be accepted only after approval of the Vice President of Finance and such securities may be subsequently sold with the approval of the Vice President of Finance.

Mutual Fund Shares

Mutual fund shares will be accepted by the RF. The fair market value of mutual fund shares can be determined by the shares' public redemption price on the valuation date of the gift.

Real Estate

Gifts of real estate (residential or commercial) will be accepted only upon the prior approval of the RF Office of General Counsel and Secretary.

No gift of real estate will be accepted without a current appraisal by a qualified appraiser as required by the Internal Revenue Service and acceptable to the RF (see guidelines on appraisal below).

The RF will not accept any gifts of real estate without:

Tangible Personal Property

Tangible personal property will only be accepted upon approval by the campus operations manager or designated administrator.

In general, jewelry, artwork, collections and other personal property are acceptable gifts providing the property has a value of $500 or more.

Book collections will be accepted upon additional approval of the appropriate administrator in a campus library. Books may or may not be held at the discretion of the library administrator.

Property believed to have a value of $5,000 or more will not be accepted unless an appraisal, qualified under the terms of the Internal Revenue Code governing gifts of this type, has been made and the campus operations manager or designated administrator has received and reviewed the appraisal. (See guidelines on appraisals below.)

Other Personal Property

Other property of any description, including but not limited to: mortgages, notes, copyrights, royalties, easements, whether real or personal, may be accepted only upon approval of the RF Office of General Counsel and Secretary.

Guidelines on Appraisals

All property requiring valuation for tax purposes will be made by a "qualified appraiser" who shall furnish to the taxpayer a "qualified appraisal" as defined by the Internal Revenue Code.

Qualified Appraiser: A qualified appraiser is an individual who includes in an appraisal summary a declaration that:

Guidelines on Acceptance of Endowments

Endowed funds are like investment accounts; the principal is invested and income is distributed from fund earnings. A minimum of $10,000 is necessary to establish an endowed fund. The fund may be restricted (designated usage) or unrestricted. Frequently, a family name is attached to the endowed fund. Most endowed funds are managed in perpetuity and distributions are based on an annually determined percentage of the principal value. All new endowments will be invested in instruments conducive to appreciation of capital guided by the RF's Investment Policy and Guidelines.

The Vice President of Finance will set the payout rate of all endowed funds on an annual basis in compliance with the RF's Investment Policy and Guidelines. This rate will be established in June of each year to be effective as of July 1 for that fiscal year.

Three types of endowments are:

  1. True Endowments: A fund established through a gift or bequest with provisions that prohibit the spending of principal. These are to continue in perpetuity and
    the principal is never to be invaded.
  2. Quasi-endowments: A fund established by the RF Board of Directors rather than by an external donor that is treated as an endowment but is not subject to
    any legal prohibitions against spending. Therefore, it is the discretion of the Board to expend the principal of a quasi-endowment or to continue the existence
    of a quasi-endowment.
  3. Term Endowments: A fund established through a gift or bequest with provisions that state that the principal may be spent on or after a predetermined date or
    period of time, or the occurrence of a specified event. The Vice President of Finance will determine whether the RF will accept endowments of this type on a
    case-by-case basis.

Guidelines on Acceptance of Deferred or Planned Gifts

A deferred gift, also referred to as a planned gift or "planned giving," is most commonly given during a donor's lifetime, but the principal benefits do not accrue to the institution until some future time such as the death of the donor and/or his or her income beneficiary. These guidelines will refer to all deferred or planned gifts as "planned gifts." Planned gifts can be funded by bequests, or established as life income gift plans including charitable gift annuities, deferred gift annuities, pooled income funds, charitable remainder trusts, or charitable lead trusts. Life insurance policies are also accepted.

Bequests

A bequest is a clause in a donor's Last Will and Testament that bequeaths a specific portion - or all - of his/her estate to the RF. Through a bequest, a donor can make a substantial future gift without depleting current assets. Unless pre-determined as an irrevocable gift, a donor can change his/her mind and revoke the bequest. Intended bequests of property, other than cash or marketable securities, should be brought to the attention of the designated administrator so that the donor can be advised how to conform his or her plans to the RF's policies and guidelines.

Bequests can be established as:

Life Income Plans

Life income plans offer mutual benefits to both the donor and the RF by providing an income stream to the donor and the remaining funds to the RF after the donor's death. Life income plans will include Charitable Gift Annuities, Deferred Gift Annuities, and Charitable Remainder Trusts. Life income plans entered into will comply with state and federal regulations for these types of charitable gifts.

In general, the RF will not accept any gift that names an income beneficiary less than 60 years of age without prior approval of the Vice President of Finance.

Charitable Gift Annuities

A charitable gift annuity is an arrangement by contract between the RF and the donor whose irrevocable gift to the RF will fund a guaranteed lifetime income for the donor as an annuitant and, if requested, his or her beneficiary as a co-annuitant. A charitable gift annuity can be funded with cash or securities with a minimum value of $5,000.

Two basic types of charitable gift annuities are issued by the Research Foundation:

Pooled Income Fund

The Pooled Income Fund (PIF) operates as the charitable equivalent of a mutual fund. Donors who contribute to the fund effectively purchase shares, or units, in the pooled income fund in exchange for their irrevocable gift. Income earned by the pooled income fund is paid to the donor pro rata by share ownership at the end of each calendar quarter. Share value and income per share fluctuate as related to the investment performance of the fund. The minimum initial contribution to the RF's PIF is $5,000; additional gifts can be made at $1,000 intervals. The Pooled Income Fund will be invested in a well diversified portfolio of stocks and bonds.

The RF will accept only one income recipient (beneficiary) although federal law permits more, (i.e., the income recipients (beneficiaries) can be the donor and one heir). No income recipient (beneficiary) in the Pooled Income Fund may be less than 60 years old without prior approval by the Vice President of Finance. Upon the death of the income recipient (beneficiary), the shares revert to or become the property of the RF.

By law, pooled income fund agreements must be written to pay income to recipients (beneficiaries) for their lifetime(s). A pooled income fund trust may not be written to operate for a term of years.

Charitable Remainder Trusts

A charitable remainder trust (or CRT) is an irrevocable gift vehicle that provides an income stream to the donor/grantor and/or beneficiary(ies) for life, or for a period of years not to exceed 20 years. At the end of the term the RF (the remainderman) receives all remaining assets of the trust. The donor receives an income tax deduction at the time the trust is created based upon the projected value of the charitable remainder interest from the trust. No beneficiary of the trust may be less than 60 years old without prior approval of the Vice President of Finance.

There are two types of charitable remainder trusts: the Charitable Remainder Unitrust and the Charitable Remainder Annuity Trust.

Charitable Remainder Unitrust (CRUT)

A charitable remainder unitrust pays beneficiaries an income based upon a percentage of the annual valuation of trust assets, not less than 5%. The minimum gift to establish a charitable remainder unitrust is $100,000; additional gifts can be made at $5,000 intervals. The RF must serve as sole trustee of a unitrust. If the trust is to be funded with property, the donor must provide a qualified appraisal of the property within six weeks prior to the gift. The fees for management of a unitrust will not be paid by the RF unless approved by the Vice President of Finance.

There are four essential forms of Charitable Remainder Unitrusts:

  1. Straight Fixed Percentage Charitable Remainder Unitrust (CRUT): Amount paid is determined by multiplying the pre-determined percentage payout
    rate by the fair market value of the trust's assets, which is determined annually. Payments are variable. This plan allows the trustee to invade the
    principal if income is insufficient to meet the required payment.
  2. Net Income Charitable Remainder Unitrust (NICRUT): donor receives the lesser of stated percentage payment or the net income earned. No principal
    invasion allowed.
  3. Net Income Charitable Remainder Unitrust with Makeup Provisions (NIMCRUT): same as Net Income Unitrust except if the trust earns less than the
    set percentage of payment in one year, only that net income is paid. However, if in a subsequent year the trust earns more than the stated percentage,
    it will pay the lesser amount of either as much income as necessary to bring all prior payments up to the maximum amount that should have been paid
    in prior years had there been sufficient income or the amount for which the trust's net income for the current year exceeds the percentage amount.
  4. Flip Charitable Remainder Unitrust (FLIP-CRUT): A "flip" unitrust is initially either a net income unitrust or a net income with makeup. The unitrust
    agreement can provide that the unitrust can become a Straight Fixed Percentage Unitrust upon the occurrence of a triggering event. Allowable triggering
    events include:

Charitable Lead Trusts

A charitable lead trust is the mirror image of a charitable remainder trust as it provides an income payment to the RF at a designated rate for the donor's life, or over a pre-established number of years (at least five years). At the conclusion of the payment period, the trust assets are returned either to the donor or to someone designated by the donor. A charitable lead trust requires a $100,000 minimum gift of cash or securities. There are two types of charitable lead trusts: Grantor and Non-Grantor Lead Trusts.

A charitable lead trust may be established by the donor to move assets out of his/her taxable estate, and provide a possible tax advantaged distribution of assets to family.

Grantor Lead Trusts

Grantor lead trusts designate the donor to eventually receive the trust assets. Therefore, under grantor trust rules, the donor must pay income taxes on income earned by the trust, and paid to the RF. This makes grantor trusts unattractive to most donors.

Non-Grantor Lead Trusts

Non-grantor lead trusts have some beneficiary other than the donor named to receive the trust assets when the trust ends; non-grantor lead trusts do not generate any income tax to the donor (or anyone else) for income earned by the trust and paid to the RF.

Life Insurance

The RF will accept fully paid-up permanent life insurance policies in which the donor has named the RF to receive all or a portion of the benefits of the insurance policy. Such policies must be unencumbered (e.g., no pledge or loans).

Upon receiving a paid-up policy, the RF, as owner, can surrender it to the insuring company, and obtain the cash surrender value, or keep the policy until the death of the insured/donor.

If the donor takes out a new policy with the RF as the irrevocable owner and beneficiary, the donor may pay the premium or give the premium money to the RF ("pass through") with the RF paying the premiums.

The RF will not accept gifts of cash from donors for the purpose of purchasing life insurance on the donor's life.

Guidelines on Determining the Date of a Gift

The date of any contribution may be simply defined as that date on which the donor irrevocably relinquishes control of the gift to the RF. Determining the date of a gift may be impossible in the absence of relevant physical evidence; it is critically important to save all envelopes (with postmarks intact) and other evidence to document gift dates, without exception.

Certificate Delivery

If the donor has the certificate(s) in his/her possession, ownership transfers to the RF when:

New Certificate(s) Registered to the Research Foundation:

If the donor has the certificate(s) in his/her possession or safe deposit box, or in an account with a bank or brokerage office, or held by an agent, and the certificate(s) are registered in the donor's name and the donor has the option to deliver the currently registered certificate(s), it is in his/her interest to do so. To have the name changed on the certificate(s) from the donor's to the RF's can take from a month or two up to three or four months to effect the change. Ownership does not change until the securities clear through the transfer agent/registrar showing the effected date stamped on the new certificate(s). Therefore, a gift presumed given at one point in time will not be effective until sometime later. This can have a dramatic effect if the "gift date" and change in ownership straddle a fiscal year end.

Certificate(s) Held in Brokerage Accounts:

When the donor wishes to give securities held in a brokerage account (securities held in "street name") to the RF, the donor should instruct the broker to transfer the specific shares into an account owned and controlled by the RF. The determining factor affecting the timing and completion of the transfer is based on whether the RF has an account with the same broker as the donor or, if not, whether the broker will establish an account for the RF to effect the transfer. Whether a broker will open a new account for what may be potentially a single transaction varies from firm to firm. If the RF has an account or the broker will establish one, the transfer of the gift is effected when the shares are actually transferred on the books of the brokerage firm. Thus the date a donor makes his/her request for the transfer and the actual date of transfer will most likely be two different dates. All of these instructions will be evidenced in writing. If the RF does not have an account with the donor's broker and the broker will not establish an account for the RF to receive the gift, then the donor must use other options to transfer the certificate(s).

The donor can request his/her broker to "deliver" the street name securities to the RF's broker. This process can take anywhere from a few days to a few weeks. Thus the actual gift date will be sometime in the future. The date of the gift will be the date the RF's broker receives the wire transfer for the securities.

If for some reason the broker will not "deliver" the donor's street name securities to the RF broker, the donor has two remaining options:

Guidelines on Unacceptable Gifts

The RF reserves the right to refuse any gift that is not consistent with the RF Charter, the 1977 Agreement with the State University of New York, the resolutions of the RF Board of Directors, or where a gift contains donor conditions that would be, in the opinion of the RF, inconsistent with prudent philanthropic, educational, or charitable intent. In addition to, and without limiting the generality of the foregoing, gifts will not be accepted by the RF that:

  1. violate any federal, state or local statute or ordinance.
  2. create a fund to provide for scholarships, fellowships, professorships or lecture series with restrictive clauses that could cause embarrassment to the
    State University of New York, the RF, or that reserve to the donor or his/her representative the right to designate the recipient.
  3. as a condition thereof, require any action on the part of the RF that is unacceptable to the RF Board of Directors.
  4. commit the RF to name a faculty, program, or endowment fund that is revocable in any way.
  5. require/stipulate to the RF and its management the future employment of any specified person.
  6. contain unreasonable conditions (e.g., a lien or other encumbrance) on gifts of partial interest and property.
  7. are intended to be tuition payments for a family member or acquaintance of the donor; or that are financially unsound or could expose the RF to liability.

Change History

 

 

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