Policy Section 2
Policy - Section 2 - Revenue
Subject: Donations and Other Cash Receipts
Date: January 1, 1991
By mutual agreement between the Murray State University Board of Regents and the Murray
State University Foundation Board of Trustees, the Foundation administers all funds
donated to, for, or on behalf of the University or the Foundation. Funds, other than
donations, which are generated from the use of State resources (i.e., departmental
operating supplies, campus facilities, University employees during regular working
hours, etc.) are State funds and cannot be accepted by the Foundation.
Funds deposited by the Foundation are limited to donations, Foundation investment income, direct reimbursements of items paid with Foundation funds, repayment of Foundation loans, income from sale of Foundation assets, Miller Golf Course revenue, and other selective items approved by the Executive Director of the Foundation. The following procedures should be followed for processing Foundation cash receipts:
- Funds delivered to the Foundation for deposit should be accompanied by a memo indicating the source of funds and the Foundation account to be credited. In the case of donations, the name and address of the donor(s) should be provided.
- Gifts received by the Foundation will be processed daily. Donations are forwarded to the Alumni/Development Records Office for input into a donor database. A gift acknowledgement will be mailed to each donor listed on the transmittal memo.
- Gift notifications will be sent to appropriate deans, directors, and departmental chairmen on a semi-monthly basis. For gifts in excess of $1,000, the Office of Development and Alumni Affairs will notify the campus contact by telephone on the day of the gift.
- Daily and monthly gift reports will be provided to the Foundation Executive Director and to the Director of Development.
It should be noted that counsel will not review these transactions or give opinion as to their benefit or detriment from a business viewpoint. Such reviews and opinions and any subsequent decisions or transactions are the responsibility of the Foundation Board of Trustees. Counsel's opinion should be interpreted only as to legal suffiency.
All information concerning donors or prospective donors, including their names, names of beneficiaries, amounts of gifts, financial position, size of estate, etc., shall be kept strictly confidential by the MSU Foundation and its authorized personnel.
Revised October 17, 2003
Donors often wish to make a donation to the University or to the Foundation of equipment, supplies, securities, or other assets. The following policy is adopted to ensure that the acceptance of the donation is in the best interest of the Foundation or University and to ensure compliance with Internal Revenue Service Regulations:
- Donations of assets (other than money or publicly traded securities) in excess of $5,000 must be accompanied by an independent third party appraisal.
- The department to be benefited by the gift is responsible for submitting a Notification of Proposed Donation (Exhibit 1). The appraisal for gifts over $5,000 must accompany the Notification of Proposed Donation form. A letter or document from the donor stating the value of any gift valued at less than $5,000 must also accompany the form. The donor is responsible for determining the value of the donation in accordance with IRS guidelines.
- The Executive Committee of the MSU Foundation will determine whether the gift is for the benefit of the Foundation or the University.
- If it is determined that the asset is for the benefit of the University, the asset will not be recorded on the books of the Foundation. The Foundation will notify the University's Fixed Asset Accountant so that the gift can be recorded under Murray State University policies and procedures.
- If the Executive Committee determines that the asset is for the benefit of the Foundation,
the Foundation will make a formal entry to record the asset in its records. In the
case of securities, the Foundation cannot accept the gift unless the donor has transferred
title to the Foundation. The donor can accomplish this through one of three methods:
- Reissue the security in the name of the MSU Foundation, Inc.
- Endorse the back of the security and obtain a signature guarantee from a bank or stock broker registered with the New York Stock Exchange.
- Complete a stock or bond power and obtain a signature guarantee as in (B.) above.
The donor can transfer gifts of stock to the MSU Foundation through electronic transfer, delivery by mail, or delivery in person. These procedures are explained in Section 2.03.
- The Office of Development and Alumni Affairs will acknowledge all in-kind gifts to the Foundation and to the University. However, gifts of assets (other than cash and securities) in excess of $5,000 cannot be acknowledged until formally approved by the Board of Regents of Murray State University or the Board of Trustees of the MSU Foundation. The acknowledgement should provide the donor with documentation such as a description of the asset donated and the value assigned to the contribution. A completed IRS Form 8283 (Exhibit 2) should be presented by the donor to the MSU Foundation. The Executive Director of the Foundation will sign the completed Form 8283 to acknowledge receipt of the contribution.
Because it is frequently more advantageous for donors to make a gift of stock rather than a gift of cash, the Foundation welcomes such gifts. In order to ensure that these gifts are correctly valued for record-keeping and acknowledgment purposes, the following policy is established:
The donor can transfer gifts of stock to the MSU Foundation in one of three ways:
- Electronic Transfer of Stock
This presents the most secure and expedient delivery of a gift of stock. The MSU Foundation currently has accounts with the investment firms listed below, but we are not limited to these. (The University will establish an account with the firm of the donor's choosing.) For more information contact MSU Foundation.
Company Name: J.J.B. Hilliard, W.L. Lyons, Inc.
Contact: Hal N. Sullivan
Physical Address: 2929 Broadway
Paducah, KY 42002
Mailing Address: PO Box 9500, Paducah KY 42002
Company Name: Edward Jones Investments
Physical Address: 520 Main Street, Murray, KY 42071
Mailing Address: Same
- Transferring Stock by Mail
To safely transfer a gift of stock by mail, the following two steps should be taken:
- The donor should mail the stock certificate(s) via registered or overnight mail, as is, without endorsement to: MSU Office of Development, 106 Development Center, Murray, KY 42071. The donor should be instructed to include a letter which states that he or she is transferring the stock to the MSU Foundation; and
- The donor should execute the endorsement on a "stock power" transfer form. The donor
should then mail, in a separate envelope from the stock certificate(s), one "stock
power" transfer for each stock certificate to: MSU Office of Development, 106 Development
Center, Murray, KY 42071.
Whichever option the donor chooses, he or she should also be instructed to alert the Director of Development at (270) 809-3001 or the Executive Director of the MSU Foundation at (270) 809-6911 who will assure the transfer is facilitated and properly recorded and acknowledged.
Note: Donors who are interested in donating stock which has depreciated in value since it was purchased, should be advised that it may be better to sell the stock and then give the cash proceeds to MSU. This way the donor may be able to claim tax benefits for the capital loss as well as the charitable gift.
- Delivering in Person
To donate stock and other securities in person, the donor should deliver the gift to the Director of Development in the MSU Office of Development General Services Building, Chestnut Street, Murray, KY.
Determining Value of Stock:
Stock and other securities received by mail will be recorded at the fair market value (average price) on the date of the postmark.
Stock and other securities delivered in person will be recorded at the fair market value (average price) on the date of delivery to the MSU Office of Development.
Stock and other securities received by electronic transfer will be recorded at fair market value on date of receipt by the investment firm. If the firm already holds the stock in your account, then the date of receipt by the firm of instructions governs.
If market values are not available for the date of postmark or delivery, the value on the nearest date before postmark or delivery will be used.
Closely held stock which is donated to the Foundation will be recorded at the appraised value of the company's stock and in accordance with all regulations of the Internal Revenue Service.
Revised: April 28,2000, October 21, 2005
Because it is frequently more advantageous for donors to make a gift of real estate rather than a gift of cash, the Foundation welcomes such gifts. These gifts of property include both improved and unimproved property, residences, condominiums, apartment buildings, rental property, commercial property, farms, ranches, and other real estate. Gifts may be made outright, through wills, establishment of trusts, retained life estates, etc.
All gifts of real property are subject to the following policy:
- The Murray State University Foundation Board of Trustees must approve all gifts of
- The MSU Foundation must receive a current qualified appraisal of the fair market value of the property which includes a description of the property. The interest in the property that the Foundation or University would receive if the proposed gift is accepted by the Board of Trustees should be stated.
- Donors must be informed that it is the Foundation's policy to dispose of gifts of real estate (unless the property is to be retained by the University or Foundation) as quickly and efficiently as possible. The Foundation has a fiduciary responsibility to ensure that a fair price is received for the property. Regardless of the appraised value by the donor, the Foundation will attempt to sell the property at a reasonable price considering current market conditions. The donor will be informed that a sale of the property within two years of the date of the gift must be reported to the Internal Revenue Service on Form 8282 (Exhibit 1).
- A Phase I environmental audit must be performed on all gifts of real property. This cost is normally paid by the donor. In addition, the Foundation may require that the donor execute an environmental indemnity agreement.
- All mortgages, deeds of trust, restrictions, limitations, reservations, easements, liens and other encumbrances must be disclosed. Normally, all of these should be discharged by the donor before the Foundation accepts the gift of real property.
- All carrying costs including, but not limited to, taxes, insurance, association dues, membership fees, transfer charges, etc. must be disclosed.
- Title information such as the most recent survey of the property, a title insurance policy, and/or an attorney's title opinion must be furnished to the Foundation. These costs will normally be paid by the donor.
- The real property will be valued at the date of the gift based on the qualified appraisal submitted by the donor. The Executive Director of the MSU Foundation is authorized to execute IRS Form 8283 (as in Section 2.02, Exhibit 2) indicating the date the gift of real property is received.
Revised April 28, 2000
Because it is frequently more advantageous for donors to make a gift of tangible personal property rather than a gift of cash, the Foundation welcomes such gifts. These gifts are property other than real property and include automobiles, boats, clothing, personal papers, antiques, china, stamp or coin collections, works of art, jewelry, books, home furnishings, appliances, etc.
- The Murray State University Foundation Board of Trustees must approve all gifts of personal property.
- The IRS recognizes tangible personal property gifts as those that either relate to the mission of the university or those that are considered to be unrelated. For example, a gift of a painting that will become part of the university' s permanent collection is considered to be a related use gift. If the painting is to be sold to utilize the proceeds, the gift is considered to be of unrelated use. The donor is entitled to a charitable deduction at full fair market value if the gift is related to the mission of the university, but is only entitled to a deduction at the donor's cost or basis if the gift is unrelated.
- The MSU Foundation must receive a current qualified appraisal of the fair market value of the property (over $5,000) which includes a description of the property if the property is to be used related to the mission of the university. If the property is considered to be unrelated, the donor must furnish his tax basis to the Foundation for acknowledgment of the gift. The interest in the property that the Foundation or University would receive if the proposed gift is accepted by the Board of Trustees should be stated.
- Donors must be informed that it is the Foundation's policy to dispose of gifts of personal property (unless the property is to be retained by the University or Foundation for related use) as quickly and efficiently as possible. The Foundation has a fiduciary responsibility to ensure that a fair price is received for the property. Regardless of the value by the donor, the Foundation will attempt to sell the property at a reasonable price considering current market conditions. The donor will be informed that a sale of the property within three years of the date of gift must be reported to the Internal Revenue Service on Form 8282 (as in Section 2.04, Exhibit 1).
- The personal property will be valued at the date of the gift based on whether the use of the property is considered related or unrelated. The Executive Director of the MSU Foundation is authorized to execute IRS Form 8283 (as in Section 2.02, Exhibit 2) indicating the date the gift of personal property is received.
Revised April 28, 2000
Subject: Gifts Matched by Donor's Employer
Date: October 2, 1998
Many Murray State University alumni and friends are employed by companies which match employee gifts to educational institutions. The MSU Foundation encourages such giving programs and the company's contribution is acknowledged to be the same as if the employee had personally made the gift. The following procedures will be used in processing matching gifts.
- The matching gift will be deposited into the same account as the individual donor's gift, unless otherwise specified by the donor or the company.
- Matching gift forms sent by a donor with a pledge will not be sent to the company until the pledge is paid.
- The receipt for the matching gift will be sent to the employee whose gift is being matched and the match will be posted on the employee's record.
- When calculating membership in gift clubs, matching gifts will be credited toward the membership of the employee.
- Records shall be kept on companies providing matching gifts to the MSU Foundation. Any company making matching gifts which, in total equal or surpass the amount necessary to achieve membership in the Presidents Club, shall be granted all the benefits of Presidents Club membership. Companies making matching gifts below the Presidents Club level shall be recognized in the honor roll of donors.*
*Revised Gift Club Levels Attached as Exhibit 1
Occasionally individuals wish to make tax deductible contributions to the Murray State University Foundation to be used for the benefit of a faculty or staff member or their family. The reason for such contributions may be because of a fire, loss, death of the individual or a family member, natural disaster, etc.
- The Murray State University Foundation will establish an Emergency Relief Fund through tax deductible contributions by donors.
- However, because of IRS regulations, contributors may not designate individuals to be the recipient of their donations. The Murray State University Foundation will have complete control over the fund and determine the recipients and amount to be distributed.
- Requests for emergency funds to be distributed from the Foundation fund may be made to the Executive Director of the MSU Foundation. The Executive Director will determine the recipients and the amount of distributions to be made from the Emergency Relief Fund.
The Murray State University Foundation has received securities, land and other assets as contributions from donors. Many of these assets are contributed to the Foundation to earn a reasonable rate of return to provide for scholarships or other designated uses. The following policy will ensure that the intent of the donor is followed in providing a reasonable rate of return on donated assets:
- The Board of Trustees will be notified of all donated assets to the Foundation. After reviewing the intent and purpose of the contribution, the Executive Committee of the Murray State University Foundation will determine if the assets are to be retained by the Foundation or transferred to the University. If retained by the Foundation, the Investment Committee will be notified and will determine how the asset is to be invested to earn the best rate of return.
- After reviewing the intent and restrictions of the donor, the Investment Committee of the Foundation will determine if the asset should be sold or retained in its present form in order to earn the best rate of return.
- If the Investment Committee recommends the sale of a security, the Investment Committee will determine the price at which the security should be sold and select the broker to transact the sale.
- If the Investment Committee recommends the sale of a donated asset, the Investment Committee will direct the Executive Director of the Foundation to follow the normal procedures of advertising and receiving bids or to auction the asset in order to obtain the best possible price for the asset.
- The proceeds from the sale of the asset will be invested and used according to the purpose and intent of the donor.
- Form 8282, Donee Information Return (as in Section 2.04, Exhibit 1), will be filed by the Foundation accounting staff if gifts valued at $5,000 or more are sold within two years after date of receipt of the property.
The Murray State University Foundation encourages and solicits contributions through such deferred giving vehicles as life insurance, gift annuities, charitable remainder trusts, and remainder interests in real properties. Subject to reasonable protection of the Foundation's interests and reputation, the interests and concerns of the donor will take precedence. All donor information shall be kept in confidence and no public announcement will be released without permission from the donor.
- The director of planned giving or responsible individual in the Office of Development is responsible for marketing, soliciting, and developing planned gifts.
- The director of planned giving should encourage each prospective donor to seek the advice of his/her own legal counsel in reviewing the state and federal income tax consequences of the gift, the terms of any trust or annuity agreement, and the advisability of the gift in relation to the donor's estate and financial circumstances.
- The executive director of the Murray State University Foundation will obtain approval from the chairman of the investment committee before accepting any gift annuity, charitable remainder trust, or remainder interests in real properties on behalf of the Foundation.
- Gifts of life insurance may be accepted without investment committee approval. Except
for paid-up policies, gifts of life insurance are accepted with the condition that
the donor will continue to make the premium payments. Premiums can either be paid
directly to the insurance company by the donor, or a gift of the premium amount can
be made to the Foundation each year.
Upon acceptance of a gift of life insurance by the Foundation, the insurance agent must agree to send any notices of default to the Foundation, as owner of the policy. If a donor fails to continue the premium payments, the premiums may be paid by the Foundation or the policy may be cancelled, at the discretion of the chairman of the investment committee of the Foundation.
- Each deferred giving instrument must clearly state the donor's intent for the proceeds. If an agreement requires the expenditure of unrestricted funds before the assets are actually distributed to the Foundation, then the agreement must provide for reimbursement of these expenditures from the proceeds ultimately received.
Revised: April 28, 2000, October 21, 2005
The Murray State University Foundation, in order to serve as a responsible trustee of charitable remainder trusts (unitrusts and annuity trusts), has established a policy on the income payout rates that are appropriate for such trusts. To assure that the fund which remains at the end of the trust's operation can provide a meaningful gift for the recipient unit, this policy focuses in determining acceptable rates.
With a less robust economy and stock market than in years past, the most reasonable income rates for charitable remainder trusts are 5% to 6%, according to research information received from our financial advisors. Which rate is the best in a specific situation is also affected by the income recipient's age(s). The longer the trust will operate, the more benefit results from a lower payout rate because it allows a greater level of growth within the trust to occur. The larger value of the trust means that a larger gift for the unit will also be available.
While lifetime payouts are usually the donor's choice, an alternative option for a donor who wishes to receive a higher payout is to use a trust which will operate for a certain number of years only. The fewer number of years can justify a somewhat higher income rate.
This policy on payout rates applies to charitable remainder trusts only. Gift annuity rates are set by the American Council on Gift Annuities and are tied to the income recipient's age(s) at the time the gift annuity is created.
Note: Any exceptions to this policy must be approved in advance by the MSU Foundation Gift Committee.
MSU Foundation Gift Committee
Harold G. Doran Jr., Trustee
Sid Easley, Trustee
George E. Long II, Trustee
Thomas I. Miller, Executive Director
Robert L. Jackson, MSU Director of Planned Giving
The Murray State University Foundation established the following guidelines related to income-producing gifts. Income-producing gifts include Charitable Remainder Unitrusts, Charitable Remainder Annuity Trusts, Splitting Remainder Funds, and Charitable Gift Annuities. These guidelines are designed to establish minimum investment amounts, age requirements as well as pay out periods.
Charitable Remainder Unitrusts- Any charitable remainder unitrust issued by the MSU Foundation shall be for a minimum amount of $100,000 in cash or other property. The minimum age of any income recipient shall be 55 years.
Charitable Remainder Annuity Trusts- Any charitable remainder annuity trust issued by the MSU Foundation shall be for a minimum amount of $100,000 in cash or other property. The minimum age of any income recipient shall be 55 years.
Splitting Remainder Funds- If two or more charitable organizations are participating through a unitrust or an annuity trust, the Foundation must receive 50% or more of the remainder and the Foundation's share must equal at least $100,000 of the original gift amount.
Charitable Gift Annuities- Any charitable gift annuity (with immediate payout or deferred payout) issued by the MSU Foundation shall be for a minimum amount of $10,000 in cash or other property. The minimum age of any income recipient shall be 55 years.
Annuity rates recommended by the American Council on Gift Annuities shall be used as guidelines in determining payout rates.
Note: Any exceptions to this policy must be approved in advance by the MSU Foundation Gift Committee.