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Unrestricted Versus Restricted- How do others "count certain gifts"

  • 1.  Unrestricted Versus Restricted- How do others "count certain gifts"

    Posted 01-14-2019 11:27 AM
    When I was at Duke University, every College and major division (Libraries, Gardens, and Chapel, e.g.) had their own annual fund. Meaning a gift could be restricted to that unit but be used for truly unrestricted purposes by that unit. Those gifts were considered "Unrestricted." A gift that was restricted beyond that (as in a department) would have been considered a "Restricted" gift. John John H. Taylor Principal, John H. Taylor Consulting 2604 Sevier St. Durham, NC 27705 johntaylorconsulting@gmail.com 919.816.5903 (cell/text) Serving the Advancement Community Since 1987 On Mon, Jan 14, 2019 at 12:01 PM Anna Wilk < 0000000db8c39c8e-dmarc-request@listserv.fundsvcs.org> wrote: > Hi all, > > We have had some questions raised at our Institution in regards to how we > should record gifts and wondering what do other institutions do? If a > donor states " I want this to go to a certain School within the University > or a specific department" would you consider that a restricted gift or > unrestricted? > > I have heard since the University supports every School/departments by a > University budget then this would be considered Unrestricted and be put > towards the Annual Fund? This way would be treating things such as budget > relief versus budget enhancement. > > I have also heard since the donor is restricting this for a specific > school/department then this is considered restricted dollars. If we > consider this as restricted dollars then this is treated more as budget > enhancement versus budget relief. > > My current example is we received a larger donation to do improvements to > a Chapel, but the University had it in the budget to do these improvements > anyways. Do you record as unrestricted toward Annual Fund or Restricted? > > > Any advice or comments is greatly appreciated. > > Thanks, > Anna Simons > Saint Xavier University >


  • 2.  Re: Unrestricted Versus Restricted- How do others "count certain gifts"

    Posted 01-14-2019 12:46 PM
    Are you suggesting that if something is Restricted that is is therefor budget enhancement? I think a gift could be Restricted but still be budget relief, unless the donor specifically states that it must be enhancement. Perhaps I'm misreading your third paragraph. Victor On Mon, Jan 14, 2019 at 12:01 PM Anna Wilk < 0000000db8c39c8e-dmarc-request@listserv.fundsvcs.org> wrote: > Hi all, > > We have had some questions raised at our Institution in regards to how we > should record gifts and wondering what do other institutions do? If a > donor states " I want this to go to a certain School within the University > or a specific department" would you consider that a restricted gift or > unrestricted? > > I have heard since the University supports every School/departments by a > University budget then this would be considered Unrestricted and be put > towards the Annual Fund? This way would be treating things such as budget > relief versus budget enhancement. > > I have also heard since the donor is restricting this for a specific > school/department then this is considered restricted dollars. If we > consider this as restricted dollars then this is treated more as budget > enhancement versus budget relief. > > My current example is we received a larger donation to do improvements to > a Chapel, but the University had it in the budget to do these improvements > anyways. Do you record as unrestricted toward Annual Fund or Restricted? > > > Any advice or comments is greatly appreciated. > > Thanks, > Anna Simons > Saint Xavier University > -- *Victor Nuovo '77 P'19* | Senior Director of Advancement Northfield Mount Hermon p: 413-498-3671 vnuovo@nmhschool.org Join me and support


  • 3.  Re: Unrestricted Versus Restricted- How do others "count certain gifts"

    Posted 01-14-2019 03:19 PM
    Correct - temporarily restricted went away last year (from an accounting perspective). John H. Taylor Principal, John H. Taylor Consulting 2604 Sevier St. Durham, NC 27705 johntaylorconsulting@gmail.com 919.816.5903 (cell/text) Serving the Advancement Community Since 1987 On Mon, Jan 14, 2019 at 4:17 PM Michael Wyland < michael@sumptionandwyland.com> wrote: > Marianne: > > > > As I understand the changes to GAAP, no gifts should be carried as > "temporarily restricted" anymore - they either are or are not restricted. > > > > Michael > > > > [image: S&W_clr-small] > > Michael L. Wyland > > Sumption & Wyland > > 818 South Hawthorne Avenue > > Sioux Falls, South Dakota 57104-4537 > > (605) 336-0244 or (888) 4-SUMPTION > > > > Web site: http://www.sumptionandwyland.com > > LinkedIn Profile: http://www.linkedin.com/in/michaelwyland > > > > *"I never considered a difference of opinion in politics, in religion, in > philosophy, as cause for withdrawing from a friend." - Thomas Jefferson to > William Hamilton, April 22, 1800* > > > > *From:* Advancement Services Discussion List < > FUNDSVCS@LISTSERV.FUNDSVCS.ORG> *On Behalf Of *Marianne Pelletier > *Sent:* Monday, January 14, 2019 3:12 PM > *To:* FUNDSVCS@LISTSERV.FUNDSVCS.ORG > *Subject:* Re: [FUNDSVCS] Unrestricted Versus Restricted- How do others > "count certain gifts" > > > > I know that John has weighed in, but I think of this kind of gift as > temporarily restricted. The department or college must get the funds. > > > > Is this an accounting question or a question on who can spend the funds? > > > > --Marianne > > > > > > ________________________________________ > > Marianne M. Pelletier > > Staupell Analytics Group > > 607-592-3797 > > marianne@staupell.com > > http://www.staupell.com > > > > >


  • 4.  Unrestricted Versus Restricted- How do others "count certain gifts"

    Posted 01-14-2019 04:01 PM
    Hi all, We have had some questions raised at our Institution in regards to how we should record gifts and wondering what do other institutions do?  If a donor states " I want this to go to a certain School within the  University or a specific department"  would you consider that a restricted gift or unrestricted?   I have heard since the University supports every School/departments by a University budget then this would be considered Unrestricted and be put towards the Annual Fund? This way would be treating things such as budget relief versus budget enhancement.    I have also heard since the donor is restricting this for a specific school/department then this is considered restricted dollars.  If we consider this as restricted dollars then this is treated more as budget enhancement versus budget relief. My current example is we received a larger donation to do improvements to a Chapel, but the University had it in the budget to do these improvements anyways.  Do you record as unrestricted toward Annual Fund or Restricted? Any advice or comments is greatly appreciated. Thanks,Anna SimonsSaint Xavier University


  • 5.  Re: Unrestricted Versus Restricted- How do others "count certain gifts"

    Posted 01-14-2019 05:47 PM
    Ah, yes. In my experience, how gifts made to schools and departments are solicited and recorded varies from institution to institution. It gets involved in the way that “restricted” is viewed in fundraising versus how it is viewed under accounting standards, and also depends on how solicitations are made. From an accounting point of view, restricted funds are supposed to be spent before restricted funds. Why is that? Well, restrictions (which arise from outside the institution) limit the institution’s ability to spend funds in the way that the institution deems the best way to support its mission, so it is advantageous for an institution’s funds to have as few restrictions as possible. Accordingly, when funds are expended, the institution is supposed to expend any restricted funds that match that restriction before it spends dollar one of general/unrestricted revenue. So if I give $1,000 and restrict it to the math department, as soon as the institution spends $1,000 on anything in the math department, they’re supposed to release the restriction on my $1,000 and spend it, before they use any general tuition revenue, etc. Given salaries, etc., that’s going to be pretty quick. It is also the case that managing restricted gifts involves a fairly high overhead on the finance side. Even assuming that the account already exists, the money has to be put into the restricted account. Then someone has to track the restricted purpose to determine when a qualifying expenditure has been made. Then the restriction has to be released, and the funds reclassified as unrestricted, at which point they can be used to support the expenditure. So take my $1,000 gift to the math department. Did the institution do anything different because I restricted that gift to the math department? No, when they made the first payroll, just as they always planned to do, they met the restriction and released the funds. That’s the reasoning behind the accounting principle that gifts subject to “restrictions of a general nature” can be considered, from the perspective of accounting, to be unrestricted. If funds are restricted for a purpose that you’re already going to spend funds on anyway (and, in most cases, spend much more on besides), it doesn’t make sense to put the funds through the whole restrict-release-expend cycle, because there was no meaningful restriction that had any material impact on the management of the organization. So nonprofit organizations have the option of treating gifts with restrictions of a general nature to be unrestricted. Now, on the advancement side, we tend to consider any gift for which a donor specifies any sort of purpose to be restricted, for reporting on the Voluntary Support of Education survey and so on. So, in my experience, it is common to consider these gifts as, for example, “unrestricted, designated” on the advancement side, and feed them into an unrestricted account on the finance side. So, in advancement we can keep track of donor intent, and finance can treat them appropriately as unrestricted. Solicitations can make a difference. You might have a general annual fund solicitation raising budget-supporting funds for the institution, and then let the donor write in the name of the school of department that they want to support, so that they feel more connected to the department where they earned their degree. That’s a classic “restriction of a general nature,” and the funds would feed into an unrestricted account on the ledger. On the other hand, you might solicit a gift appealing to the donor to increase the money available to the math department to allow the math program to take advantage of additional opportunities. Even if you don’t spell out those additional opportunities, that might be genuinely restricted. Now, when you make that first payroll, that doesn’t release those funds, because the gift was made to support something that you didn’t intend to do with budgeted funds, so it’s a real restriction. Of course, that’s a fairly subtle distinction, and one of the challenges is that we may be raising funds of the first type, but the donor may be thinking that they’re making a gift of the second type, and that confusion can have an impact on the relationship with donors (if they become aware of it, anyway), or on the relationship between the schools and departments and the central administration. I was at one institution where the annual fund followed the “unrestricted, designated” approach but, as the result of negotiations between advancement and finance and the deans, decided to switch to the second approach, making clear that money designated to a school or department would provide that school or department with additional funds, which were then considered restricted. Now, of course, the institution had to find an alternate source to meet the budget, but the thinking was that the deans, chairs, and faculty, who were held in high esteem by the alumni, would be more willing/motivated to be supportive of/engaged in fundraising, and the school would be able to raise more money. And it relieved a source of friction between the units and the central administration. Not sure how well any of that worked out, but that was the thinking. It sounds like Duke considered support at the school level to be of the unrestricted, designated type, but at the department level to be f the restricted type, and presumably their representations to the donors were consistent with that. “Annual Fund” and advancement’s fundraising goals add yet one more dimension to the issue (or two?). If advancement is expected to raise a certain amount of money to support the institution’s budgeted expenses, then money raised as unrestricted, designated would meet that standard and could be counted, but truly restricted support might not. On the other hand, advancement may have a goal for restricted support and other goals for restricted purposes (which might or might not be considered part of the “Annual Fund”). The important thing is to know in advance what the advancement team is on the hook for, for what purposes, and what they get to count for toward that goal. A goal is pretty meaningless if it doesn’t come packaged with clear rules about what counts toward the goal. (I was at one school where the advancement office had a number to hit for unrestricted support, and they got to count revenue from the affinity credit card program, because they managed that effort, even though that wasn’t gift revenue. That probably wouldn’t have been my first choice, but those funds did provided unrestricted support of the organization, and everybody was clear up front about what advancement could count toward their goal.) My US$0.02 worth; the usual disclaimers apply. Good luck! Alan Alan S. Hejnal Data Quality Manager Smithsonian Institution - Office of Advancement 600 Maryland Avenue SW, Suite 600E P.O. Box 37012, MRC 527 Washington, DC 20013-7012 •: 202-633-8754 | •: HejnalA@si.edu


  • 6.  RE: Re: Unrestricted Versus Restricted- How do others "count certain gifts"

    Posted 25 days ago
    This is such a great explanation, thank you Alan.
    We'd like to get a sense of which method other Higher Ed institutions use for "Restricted for general purpose" donations. I'd love to take a poll; if you'd be so kind to respond to the poll below, I will anonymously assemble the responses and re-distribute to the list serve.
    Example: the College has budgeted $100,000 for the Biology department this fiscal year.  Donors have directed their gifts to the Biology department for a total of $2,500.  Does your institution:
    A -  Recognize the first $2,500 spent by the Biology department as a release of the restriction; ie the Biology department still has a total of $100,000 available to spend this budget year
    or
    B - The Biology department now has a total of $102,500 they can spend this year.
    If your answer is B: Now, if the Biology department only spends $101,000 during the budget year, does your institution:
    B1 -  Roll the additional $1,500 forward as restricted funds to the next budget year for the Biology department 
    B2 - Consider the unspent extra "restricted but general" funds are swept into the College's overall spending for Biology, ie, no additional restricted funds are rolled forward for the Biology department

    Thanks,
    Gwen


    ------------------------------
    Gwen Donev
    gwendonev@GUSTAVUS.EDU
    ------------------------------



  • 7.  RE: Re: Unrestricted Versus Restricted- How do others "count certain gifts"

    Posted 25 days ago
    Institutions may manage this differently based on the amount. A $2,500 gift is not likely to be treated as budget-increasing. But a $250k gift is almost certainly going to be materially restricted and budget-defining. Some gift acceptance policies will define a minimum donation that will be accepted with material restrictions. 






  • 8.  Re: Unrestricted Versus Restricted- How do others "count certain gifts"

    Posted 01-14-2019 08:12 PM
    I know that John has weighed in, but I think of this kind of gift as temporarily restricted. The department or college must get the funds. Is this an accounting question or a question on who can spend the funds? --Marianne ________________________________________ Marianne M. Pelletier Staupell Analytics Group 607-592-3797 marianne@staupell.com


  • 9.  Re: Unrestricted Versus Restricted- How do others "count certain gifts"

    Posted 01-14-2019 08:17 PM
    Marianne: As I understand the changes to GAAP, no gifts should be carried as "temporarily restricted" anymore - they either are or are not restricted. Michael [S&W_clr-small] Michael L. Wyland Sumption & Wyland 818 South Hawthorne Avenue Sioux Falls, South Dakota 57104-4537 (605) 336-0244 or (888) 4-SUMPTION Web site: http://www.sumptionandwyland.com LinkedIn Profile: http://www.linkedin.com/in/michaelwyland "I never considered a difference of opinion in politics, in religion, in philosophy, as cause for withdrawing from a friend." - Thomas Jefferson to William Hamilton, April 22, 1800 From: Advancement Services Discussion List


  • 10.  Re: Unrestricted Versus Restricted- How do others "count certain gifts"

    Posted 01-14-2019 08:24 PM
    Oh, dang. I am a dinosaur. I guess I’ll stick to analytics… --Marianne ________________________________________ Marianne M. Pelletier Staupell Analytics Group 607-592-3797 marianne@staupell.com


  • 11.  Re: Unrestricted Versus Restricted- How do others "count certain gifts"

    Posted 01-15-2019 10:17 AM
    They simply decided to change their accounting rules - for simplification purposes I guess. John John H. Taylor Principal, John H. Taylor Consulting 2604 Sevier St. Durham, NC 27705 johntaylorconsulting@gmail.com 919.816.5903 (cell/text) Serving the Advancement Community Since 1987 On Tue, Jan 15, 2019 at 10:56 AM Gregory Duke


  • 12.  Re: Unrestricted Versus Restricted- How do others "count certain gifts"

    Posted 01-15-2019 02:56 PM
    John: That's interesting--although in my experience in Advancement Services "temporarily restricted" gifts were rare occurrences, I do recall registering at least two of them during my time. What, if any, was the rationale behind this change to the GAAP--was the designation too nebulous from an accounting perspective? Thanks, Greg Gregory Duke, D.Phil, bCRE-PRO Staupell Analytics greg@staupell.com http://www.staupell.com Ph. (716) 946-1870 Twitter: GregoryEDuke [cid:3476a023-fd75-4cb2-a3e5-7035ff32c3a4] ________________________________ From: Advancement Services Discussion List


  • 13.  Re: Unrestricted Versus Restricted- How do others "count certain gifts"

    Posted 01-15-2019 03:59 PM
    Interesting. When I worked with gift processing, we saw rather many temporarily restricted gifts, any gifts that could be spent (e.g. non-endowment) that weren't unrestricted: expendable scholarships, capital gifts, funds to support research, athletics seat licenses, just lots of things, almost any funds that we raised that weren't annual fund or endowment. As John said, simplification of presentation was a big part of the reason, along with clarifying what restrictions were all about. The "Temporarily Restricted Funds" asset class and the "Permanently Restricted Funds" asset class became "Funds with Donor Restrictions" and the "Unrestricted Funds" asset class became "Funds without Donor Restrictions." The identification of funds that are permanently restricted is still made, but much less prominently. My US$0.02 worth; the usual disclaimers apply. Good luck! Alan Alan S. Hejnal Data Quality Manager Smithsonian Institution - Office of Advancement 600 Maryland Avenue SW, Suite 600E P.O. Box 37012, MRC 527 Washington, DC 20013-7012 *: 202-633-8754 | *: HejnalA@si.edu


  • 14.  Re: Unrestricted Versus Restricted- How do others "count certain gifts"

    Posted 01-15-2019 04:07 PM
    This question was just looked for what Best Practices are for counting Unrestricted gifts versus restricted gifts in general were.   We still need to have the conversation with Accounting but from we were just seeing what others do both from an Advancement standpoint and an accounting standpoint. From: Marianne Pelletier


  • 15.  Re: Unrestricted Versus Restricted- How do others "count certain gifts"

    Posted 01-15-2019 07:00 PM
    Depends on the size of the donation. But the donation would be received and restricted for Chapel Improvements. As the University expended funds for those improvements, it would be reimbursed by that Foundation fund. In that sense it provides budget relief to other funding sources the University had assigned for those improvements so they, in turn, could be used elsewhere. The assumption being that the Chapel is meaningful enough with regards to expenses and importance to the institution that it would be recognized separately in your books. Bob Swanson, CPA Controller Bowling Green State University 1851 N. Research Drive Bowling Green, Ohio 43403 rswanso@bgsu.edu