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Royalties from alumni association insurance discount program

  • 1.  Royalties from alumni association insurance discount program

    Posted 20 days ago
    Hi, all,

    Our alumni association has a contract with Liberty Mutual to provide our alumni with discounts on insurance, and we receive royalty fees based upon any new or existing premiums that are written for our alumni during the year. Historically, we have booked these payments as gift revenue from the alumni association. 

    I am questioning whether or not these royalties are actually gift revenue. Liberty Mutual is receiving a benefit through the acquisition of our alumni data in order to market their products, ultimately leading to sales revenue for them. Would this benefit preclude these payments from being considered charitable gifts? I am inclined to think this is non-gift revenue. The way it was explained to me by our staff is that the payments are made to the alumni association, and the alumni association has decided to gift the money to the institution's foundation (we're a public university). However, all of the alumni association's money is already held by the foundation, so isn't this really just a payment directly to the foundation?

    Thanks in advance for your expertise!
    Marie

    ------------------------------
    Marie Loson
    Director of Advancement Services
    SUNY Potsdam
    losonme@potsdam.edu
    ------------------------------


  • 2.  RE: Royalties from alumni association insurance discount program

    Posted 20 days ago
    These are not gifts given the contractual requirement for the vendor to make payments to you (or your affiliated organizations).  CASE amplified on this a decade ago referring to these programs as "corporate partnerships."

    And you cannot make a gift to yourself!  It's great that the AA wants to fund foundation programs.  But all of you are part of SUNY Potsdam.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: Royalties from alumni association insurance discount program

    Posted 20 days ago
    Thanks, John. That makes sense to me, but the counterpoint I'm hearing is that yes, it's non-gift revenue to the Alumni Association, but they turn around and give it to the Foundation, so that makes it gift revenue. Would the Alumni Association need to actually process the money into their own bank account, one that is not affiliated or under the control of the Foundation, then issue their own payment to the Foundation in order for this to be gift revenue? I assume that because we are processing the transaction directly from Liberty Mutual, this would be the reason why it can't be considered a gift. I'm trying to put this in writing so that there is no confusion about why we are changing course. Thanks!

    ------------------------------
    Marie Loson
    Director of Advancement Services
    SUNY Potsdam
    losonme@potsdam.edu
    ------------------------------



  • 4.  RE: Royalties from alumni association insurance discount program

    Posted 20 days ago
    I am assuming that the Alumni Association is a supporting organization of SUNY Potsdam (or even your Foundation), just as your Foundation is a supporting organization of SUNY Potsdam.  From a CASE treatment perspective, you are all one entity.  You count all gifts made to all three organizations as though they were one single organization.  So, you count gifts made to the alumni association - not gifts made from the alumni association.

    Here's what CASE says (page 46):

    "5.1.2 Supporting Organizations

    Count gifts to organizations organized solely for the support of an institution (e.g., alumni associations, college and university foundations, and similar societies and clubs) as a gift to the institution itself, so long as the institution is the sole beneficiary of the gift.  Thus, a gift made by an alumna to a chapter of her institution's alumni organization should be reported with gifts from alumni rather than from an organization (as long as that organization functions as a supporting organization of the institution)."

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987