18.20 – University Advancement – Gift Income, NMSU Endowment, NMSU Foundation, Inc.

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Scope: NMSU System

Source: ARP Chapter 18 | Community and Governmental Relations

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Last Updated: Not Available

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Revision History:

2017 Recompilation, formerly 2.75

All gifts of money, securities, and other funds can be invested to the greatest advantage of the university if said gifts are made to the NMSU Foundation, Inc. for the sole use and benefit of the university.  Therefore, to the fullest extent permitted by law and by any controlling documents, all gifts and donations to the university should be managed, invested, reinvested, and distributed by and through the NMSU Foundation.  The Board of Regents recommends to all persons or corporations desiring to make gifts or donations for the benefit of the university and its respective campuses that such gifts or donations are made to NMSU Foundation, Inc.  The return address furnished to donors and on all printed materials must be that of the NMSU Foundation, Inc., the Development Office, or the Office of the Vice President for University Advancement.  All gifts received by the university, including gifts to any college, department or division, should be reported directly and immediately to the Office of the Vice President for University Advancement.  Gifts in kind (noncash contributions) may be reported by memorandum or letter; gifts of cash or securities should be delivered promptly to the Development Office for receipting and deposit.  The Office of the Vice President for University Advancement will be responsible for providing an official receipt to the donor, for appropriate acknowledgment, and for informing the appropriate campus personnel. However, departments awarding restricted gifts for student aid are entirely responsible for ensuring that all donor criteria, financial and otherwise, have been met.  The board prefers that real estate and gifts-in-kind be given free of restrictions which would reduce the full range of educational benefits which could be realized from the gift.  If restrictions are imposed upon the gift, or if the gift is such as to require costs of care, maintenance or upkeep, such gift must be first approved by the board or its designees before acceptance by the board.  Gifts of real estate may be given through the NMSU Foundation, but are subject to the policies and the procedures of the NMSU Foundation.

 

A. Gift Income Spending Rules


The university recognizes the importance of private gift income in providing its colleges and departments the flexibility needed to achieve its goals and objectives. The university also recognizes that different colleges and departments will have varying needs and priorities for the use of the private gift income as they continue to develop and maintain quality programs.  This rule is designed to provide those areas receiving private gifts the maximum amount of latitude to address these differing goals and objectives while at the same time maintaining the fiduciary responsibility inherent in the acceptance of these funds.  Gift income received by the university from any external source, including the NMSU Foundation, will be expended in compliance with these rules and procedures.  In all cases, exceptions may be made if these types of expenditures are sanctioned by the Offices of the President or Executive Vice President and Provost for college or university-wide functions.  All expenditures must be for the enhancement or benefit of the university, in recognition of the university’s official mission statement.  In general, gift funds will be recorded in the current restricted fund, as they are externally restricted to purpose, even if internally unrestricted as to nature of expenditure.  Only those gift funds which are received by the university for any related university purpose, without restriction of any type, are to be recorded in the current unrestricted fund.  Within this rule, restricted fund income will be subdivided into restricted and unrestricted gifts based only on the level of donor specification attached to the gift, as explained below.

 

B. Restricted Gift Income


For the purpose of this rule, restricted gift income is defined as all gift income on which the donor has placed specific restrictions beyond the general purpose for which the income is to be used.  Thus, income designated for a specific college or department’s general use will be classified as unrestricted gift income, as long as that college or department is given full authority to decide how the funds are to be best spent in compliance with the general guidelines detailed above.  Any gift income which must be spent for a specific purpose, such as scholarships or travel reimbursement, or under any specific conditions, such as following a certain event or date, will be classified as restricted.  All restricted gift income, if accepted and expended, will be expended according to the written restrictions of the donor, without exception.  The Office of the Vice President for University Advancement will be responsible for accepting these restrictions before the gift is accepted on behalf of the university.  Following this approval, the documented restrictions will take precedence over the guidelines for disbursement of funds outlined below.

 

C. Unrestricted Gift Income


For the purpose of this rule, unrestricted gift income is defined as all gift income received by the university and not classified as restricted gift income.  Expenditures allowable from this category of gift income will be limited by applicable laws, statutes, and regulations, and by these administrative rules and procedures.  It will be the responsibility of the Business Office to identify gifts as unrestricted, and to verify that donor’s intent related to the department within the university in which the funds are to be spent is honored.

 

D. Authorization Structure


The standard approval structure in place for expenditure of non-gift funds will be followed for gift funds.  All non-payroll expenditures are to be approved by the department dead (where applicable), dean or director, and Office of the Senior Vice President for Administration and Finance.  All expenditures involving a payment for services rendered by a university employee will be processed through the Office of Human Resource Services, following all existing authorization requirements for the given transaction.  All requests for exception to these rules and procedures will be directed initially to the Office of the Senior Vice President for Administration and Finance.

 

E. Cash Disbursement Controls


All existing university internal controls will apply to disbursements made from gift funds.  All requests for expenditure will be submitted on the appropriate form; separate vouchers exist for requesting disbursements directly from the university and the NMSU Foundation.  All vouchers will be accompanied by invoice or receipt support, or the attestation of the individual claiming reimbursement if other documentation is not applicable.

 

F. Guidelines for Disbursements of Funds


All gift income funds will be used by or for the benefit of the university in fulfilling its mission of teaching, research, and public service, including expenses sanctioned for the improvement of employee morale.  All types of expenditures falling under these guidelines will be allowable, with the following exceptions:

  1. Any payment in conflict with existing law, statute, or regulation applicable to private gift funds
  2. Charitable contributions made to entities or individuals external to the university.  Where appropriate, expenses incurred by separate nonprofit organizations which could have legitimately been considered university expenses, such as those incurred by a separate student organization engaged in a university -related function, may be transferred with the approval of the Office of Senior Vice President for Administration and Finance to the university.
  3. Any duplicate payment for goods and services, or reimbursement of employee expense. Duplicate payments include the reimbursement of actual travel expense to employees who have already received per diem payment through other sources.
  4. Payment for university employee services outside the payroll system.
  5. Gifts made to university personnel except as recognition of service to the university.
  6. Loans to any individual, unless the gift was made for the specific purpose of establishing a loan fund.
  7. Payment of fines imposed for violations of local, state, or federal law, unless resulting from university negligence.
  8. Memberships in organizations, country clubs, or other expenditures for any individual, where it cannot be demonstrated that the expenditure is for the enhancement or benefit of the university.

 

G. Endowment Trust


The Board of Regents approved the revocable Endowment Trust Agreement to cover the establishment of endowments, making it possible to take money that has been privately contributed to the NMSU Foundation for endowed chairs, professorships, or lectureships and match it with monies from the State of New Mexico.  The monies may be placed together into a trust, managed by the NMSU Foundation in such a way that the NMSU Foundation retains title to the private money and the board retains title to the state money in a revocable trust.  The board may designate a change in trustee at its discretion at any time or may dissolve the agreement if it desires.  The assignment may allow the NMSU Foundation its usual management fee as trustee. It must, however, contain provisions (1) for termination of the placement of all or part of these endowments in the trust at any time at the board’s sole discretion; (2) for annual accountings; and (3) for absolute authority on the part of the board for the disposition of each of the endowments (consistent with the terms of each particular endowment).

 

H. NMSU Endowment Fund


This fund, managed by the NMSU Foundation, was established to enable faculty and friends to contribute to a permanent fund to strengthen the university’s academic programs.  Endowment funds are permanently invested and a portion of the annual earnings are made available to support the programs selected by donors as the beneficiaries.  Earnings over and above the amount available for expenditure are added to the principal.  Many contributions are received as memorials from those who wish to convey their sympathy upon the death of a relative, friend, or colleague.  The university provides an official receipt for all gifts, and, when contributions are made in memoriam, informs the family that a memorial gift has been made. Amounts of the contributions are not disclosed.  Faculty and staff may contribute through the Foundation via payroll deduction arranged through the Office of Human Resource Services.

 

I. NMSU Foundation, Inc.


The NMSU Foundation, Incorporated, is a private, nonprofit corporation whose only purpose is to accept and administer gifts in support of the university.  The NMSU Foundation is a tax-exempt corporation, registered with the appropriate state and federal agencies.  Contributions to the Foundation are exempt for federal income tax purposes.  The NMSU Foundation works closely with the university.  Its directors, who are committed to attracting private resources for the benefit of the university, serve without compensation. Contributions may be made for annual operating expenses or for the endowment.

 

J. University-Affiliated Organizations


Numerous organizations have been established to support the Board of Regents in a variety of ways and are separate, not-for-profit entities.  The focus of the following policy statement is on those organizations whose primary functions are to solicit, manage, and distribute funds and other assets that are given to these organizations for the support of the university in general or specific colleges or other program areas of the university.  The university recognizes advantages of these organizations, such as:

  1. Creating an opportunity for private individuals and organizations to invest in the enrichment of the programs with greater assurance that the benefits of their gifts supplement, not supplant, state appropriations to the institution.
  2. Providing a corporate structure for managing private gifts, including endowments and income-producing real property, that does not jeopardize the university’s tax-exempt status, create unnecessary unrelated business tax obligations, or create additional liabilities for the university.
  3. Creating an effective forum for alumni and community leaders to participate in and contribute to strengthening the university through their participation in the solicitation, management, and distribution of private gifts and donations to the university.

(Other separate entities have been established for purposes unrelated to soliciting or managing gifts and donations on behalf of the university; i.e., the NMSU Research Park Corporation and Arrowhead Center, Inc., which engage in the commercialization of research productivity.  However, these rules and procedures focus on those organizations created to actively engage in raising funds for the university.)

 

K. Recognition


Any organization formed to represent the university or any college, department, or program area of the institution will receive approval by the university to represent it to prospective donors.  A condition of any recognition of an organization will be that the organization agrees to conduct its business in concert with university policy, rules and procedures applicable to such organizations.  A written agreement will be executed between the university and each organization, consistent with these policies but recognizing the specific significantly performing fund-raising functions until after the date of adoption of this rule (former policy  adopted 10/90) will be established as an arm of the NMSU Foundation, unless otherwise approved by the Board of Regents upon the recommendation of the Chancellor (or designee).

 

L. Statement of Purpose


The purpose of the organization will be clearly defined as being for the sole benefit of the university, or one or more of its specific programs.  In order for the university to be able to support the organizations and not be in conflict with the state’s anti-donation laws, the benefits to the university from the organization will be spelled out in the agreement.

 

M. Structure of the Organization


Organizations may structure themselves in any manner they deem appropriate to fulfill their role and responsibilities to the university, with the following understandings:

  1. The Articles of Incorporation and Bylaws and any amendments should have the approval of the university.
  2. A regent, the Chancellor (or designee) may be included a s voting member of the governing board of the organization.
  3. Unless specifically agreed otherwise by the university and the organization, the composition of the organization’s governing board will be such as to assure continuation of the organization as an independent, legal entity separate from the university. Normally, more than 50 percent of the governing board membership of the organization must be non-university employees to assure continuation of the organization as an independent, legal entity separate from the university.
  4. When an organization has a beneficial affiliation with an organizational unit, the university organizational unit should be expected to provide the staff support for the organization. No such organization will use funds received by the organization for the benefit of the university to employ staff independently of the university.  The university and the organization may agree to allocate some of the income the organization earns to the university for the specific purpose of supplementing institutional staff support.  This provision does not preclude the affiliated organization from directly retaining professional services as is deemed necessary for the organization to fulfill its responsibilities to the donors and to the university, with the understanding that the retention of fund-raising and/or public relations consultants must be approved by the vice president for university advancement.
  5. The affiliated organization’s Articles of Incorporation and Bylaws should assure the retention of the organization’s legal status as a tax-exempt non-profit organization pursuant to Section 501(c)(3) of the Internal Revenue Code, or any successor statute, if applicable.

 

N. Solicitation of Gifts and Donations


Recognized affiliated organizations may organize and conduct fund-raising campaigns as they deem appropriate, except that major multi-year campaign solicitation of gifts and donations to support new academic programs or services, the major renovation of existing buildings, or the construction of new facilities may not be initiated without the prior approval of the NMSU system Chancellor.  The initiation of any fund-raising campaign by any organization must be coordinated with the overall fund-raising activities of the Office of the Vice President for University Advancement to assure proper contact with potential donors.  Each organization will, in concert with the Office of the Vice President for University Advancement, establish procedures for the review and acceptance of gifts and donations and for the coordination of solicitations and prospect contacts.  The acceptance of any gift or donation that contains restrictions as to its use requires a matching fiscal obligation of the university, creates a future obligation of the university, or involves real property must be approved by the Chancellor (or designee).  Although each organization would be expected to maintain records of gifts and donations received and to properly acknowledge such gifts, the university has designated the Office of the Vice President for University Advancement as the central record-keeping agency for all gifts and donations received on behalf of the university.  The receipt of all gifts and donations must be reported to the Office of the Vice President for University Advancement.  The Office of the Vice President for University Advancement is available to advise and/or assist any affiliated organization in designing and conducting fund-raising campaigns. No affiliated organizations will accept any funds intended for a university organizational unit which requires performance or service by the university.  Income generated by a university program or service is revenue of the university and must be directly deposited into a university account.

 

O. Management of Gifts and Donations


All gift monies, whether received directly by the university or indirectly through a university-affiliated organization, will be managed in accordance with investment policies approved by the Board of Regents.  Affiliated organizations are encouraged to deposit their gift receipts with the university for the specific organization. Oversight of the funds deposited in these agency accounts is the responsibility of the organization. The university will provide all accounting services related to the funds for the organization.  Short-term investment income earned by the university on funds in these accounts will be allocated to the accounts.  Gifts received in the form of endowments by any recognized affiliated organization should be assigned to the NMSU Foundation, for investment management purposes.  All endowments must be managed in accordance with investment policies approved by the board.  The identity of individual endowments will be maintained by the NMSU Foundation; however, endowment funds may be co-invested in a pooled funds approach.  Consolidation of the endowment investment management program provides the opportunity for cost-effective management of the endowments.  Endowments retained by the organizations or transferred to the NMSU Foundation through revocable trust agreements will be maintained on the organization’s books.  Gifts received in the form of real property will be managed in accordance with the donor’s request.  If the donor specifies that the property be used by the university in its gift form, such as art work, library books, real estate, etc., the property will be transferred to the university.  If the donor desires that the property be used to establish an endowment, or if the gift is real property or property interest, the gift will be assigned to the NMSU Foundation, for management purposes.  The NMSU Foundation may retain the real property and use the income earned to accomplish the donor’s gift objectives.  If the donor permits, and it is a better investment management decision to dispose of the real property, the NMSU Foundation will use the proceeds from these sales to establish the endowment.  The NMSU Foundation will obtain university approval before disposing of any real property.  No individual member, director, or officer of an affiliated organization should accept any gift or gratuity that is offered because of the individual’s position held with the organization.

 

P. Distribution of Funds


Affiliated organizations will not disburse directly any funds in the form of compensation to a university employee without the express written approval of the Chancellor of the university and/or Board of Regents.  Exceptions may be made for awards, recognition, etc.  Any funds intended for employee compensation will be transferred to a university account and subsequently disbursed in accordance with university policies and procedures. The affiliated organizations will receive interest income earned on funds in agency bank accounts held by the university in the name of the organizations, and may use such income to cover operating expenses directly incurred by the organizations. Organizations should establish policies for the review of any business transactions involving its members and the organization.  Members, directors, and officers of the organization should disqualify themselves from making, participating in, or in any way attempting to use their position to influence decisions in which they have or would have a financial interest.  Organizations will establish policies which preclude the use of any funds received or earned by the organization to support any political candidate.  Organization funds will be accounted for in the university agency’s fund, unless the university expressly approves the organization’s separate accounting system.  All separate systems will follow all university internal control policies where applicable.

 

Q. Reports


Each affiliated organization maintaining a separate accounting system will report monthly to the Office of the Vice President for University Advancement the receipt of all gifts and donations and expenditures related to these funds. Each affiliated organization will provide monthly a summary of cultivation and solicitation activities.  Organizations should prepare annual reports for the university and board that include standard financial statements required of non-profit organizations and any supplemental schedules requested by the university.  The organization’s auditor’s opinion of these statements and schedules should be included in these annual reports, if applicable.  Organizations should furnish to the university copies of all forms required to be filed by law, such as Form 990 and annual reports to the State Corporation Commission.

 

R. Audits


Organizations shall provide the university with the results of annual financial audits performed by an independent auditing firm selected by the organization. Any independent audit firm selected by an organization that is not the same firm selected by the university must provide the necessary audit confirmations and assistance to the university’s external auditor upon request.  Organizations not required to provide an independent audit report should furnish to the university an annual financial report signed by the organization’s president and treasurer.  Audit Services staff may review all items approved by the organization’s board for release to the university, with the understanding that such items and any reports related to them will fall under the organization’s internal audit policy.  This information will not become a part of the university’s public records.  The organization will not be used to provide any instructional, research, or public service activity sponsored or participated in by a university department or individual university employee in the name of university unless allowed by the university for specific purposes.  Under no circumstances should an affiliated organization offer an instructional program for university academic credit.  Nothing herein is intended to make any affiliated organization subject to the New Mexico Open Meetings or Public Records Acts; nor is it intended to violate any confidentiality of donor information.

 

S. Institutional Support


In recognition of the support and contributions that these university-affiliated organizations give to the university, the university may provide logistic support at no cost to these organizations, such as:

  1. Space for meetings and other needs that an organization may have in the conduct of its business.
  2. Staff support as described previously. In those regulations where university staff have a responsibility of significant support to the affiliated organization, the organization’s officers should be consulted in selection and evaluation of such staff.
  3. Use of university’s financial accounting systems for their fiscal management needs.
  4. Utilization of computer-based information management systems, such as donor record-keeping, etc.
  5. Use of the Procurement Services Office’s staff when assistance is required in arranging purchases. Under no circumstances will purchases be made for the organizations through the Procurement Services Office.
  6. Recognized affiliated organizations will be given a non-exclusive license to use the name New Mexico State University and any other appropriate trademarks or trade names of the university in connection with their fund-raising activities. The university may, from time to time, deem it appropriate to provide financial support to an organization’s major fund-raising campaign.

 

T. Termination/Dissolution of Organizations


Upon termination of any agreement between the university and an affiliated organization, or upon the dissolution of any such organization, all assets held by the affiliated organization on behalf of the university shall become the property of the university, or such other affiliated organization as the university shall designate.  This condition shall be included in the bylaws of any affiliated organization.