Cash, Checks, or Credit Cards

Transcription

1 Cash, Checks, or Credit Cards The value of any cash gift is the face value of the check or cash. Checks shall be made payable to Embry-Riddle Aeronautical University, ERAU, or such other names under which the University is authorized to do business. In no event shall a check be made payable to an individual who represents the University. The University accepts gifts via credit cards (Visa, MasterCard, American Express and Discover). In every case, verbal or written authorization must be obtained from the individual whose name appears on the card. Publicly Traded and Closely Held Securities 1. The University accepts any securities that are traded on the New York Stock Exchange, the American Stock Exchange or NASDAQ. Gifts of publicly traded mutual funds and bonds are also accepted. All stocks will be processed and received in accordance with the University s internal procedures. All securities will be liquidated once the transfer process is complete, unless otherwise negotiated in accordance with the University s internal audit procedures. 2. The value of the gift of stock will be the average of the high and low quoted selling prices on the date the donor relinquishes dominion and control of the asset(s) in favor of the University. 3. If the donor mails stock certificates, it is safest to mail the certificate(s) in one envelope and mail both a completed stock/bond power form and a completed Letter of Authorization in another envelope. The latter postmark of the two envelopes will be the date of gift. 4. Gifts of publicly traded mutual fund shares are valued at the public redemption price on the date the donor relinquishes dominion and control of the asset(s) to the University (which is the date the shares are transferred on the University s books). Procedures to affect this transfer will differ among mutual fund companies. Please contact the company to learn of their procedures. NOTE: In order for the donor to claim a tax deduction for the full fair market value, the securities must be held by the donor for more than one year. If the securities are held by the donor for one year or less, the IRS will only allow the donor to claim the price originally paid for the securities. For gifts of publicly traded securities amounting to $500 or more, the donor will be required to file IRS Form 8283 in order to claim an income tax deduction. The University s Office of Institutional Advancement can provide a copy of this form (with instructions) as a courtesy upon the donor s request. Otherwise, the donor can obtain this form from his/her tax advisor.

2 Privately Held Securities 1. Non-publicly traded securities may be accepted only after approval from the Development Committee of the Board of Trustees, in conjunction with the Office of the Chief Financial Officer. 2. Prior to acceptance, the University shall explore methods of liquidation for the securities through redemption or sale for cash. It will be important to ascertain if the security will generate any undesirable tax consequences for the University. In addition, a representative of the University or an authorized outside agent shall contact the closely held corporation to determine: a. An estimate of fair market value b. Any restrictions on transfer c. For S-Corporation stock, the donor s cost basis and the history of cash distributions 3. While the University will look for evidence of interest in the purchase of the securities, no commitment from the University for repurchase of privately held securities shall be made prior to completion of the gift. 4. In regard to valuation, the University adheres to the CASE Management and Reporting Standards (Third Edition, 2004), which states: Gifts of privately held stock exceeding $10,000 in value should be reported at the fair market value placed on them by a qualified independent appraiser, as required by the IRS for valuing gifts of stocks that are not publicly traded. The institution may obtain the appraiser s valuation figure from IRS Form 8283, on which the donor must obtain the donee s signature for all such gifts. Gifts of $10,000 or less may be valued at the per-share cash purchase price of the most recent transaction. Normally, this transaction is the redemption of the stock by the corporation. If no redemption is made during the reporting period, the gift may be credited to fund-raising totals at the value determined by a qualified independent appraiser. For a gift of $10,000 or less, when no redemption has occurred during the reporting period, an independent certified public accountant (CPA) who maintains the books for a closely held corporation is deemed to be qualified to value the stock of that corporation. NOTE: For non-cash gifts of $500 or more, the donor will be required to file IRS Form 8283 in order to claim an income tax deduction. The University can provide a copy of this form (with instructions) upon the donor s request. Otherwise, the donor may obtain this form from his/her tax advisor. If the gift exceeds $5,000 in value, the IRS requires that this form be signed by a representative of the University. In addition, the IRS requires the University to submit Form 8282 (with a copy to the donor) in the event that the charitable gift was sold within two years. This form will list the sales price (if applicable).

3 Life Insurance 1. The University accepts life insurance policies (whole, variable and universal life policies only) as gifts only when the University is named as the owner and/or beneficiary of all or a part of the policy. However, to receive gift credit and an income tax charitable deduction, the University must be named owner and beneficiary of the policy. 2. If the policy is fully paid (no additional premiums due), the value of the gift for the University s gift crediting and accounting purposes is the policy s cash surrender value. NOTE: For IRS purposes, the donor s charitable income tax deduction is equal to the lesser of the donor s cost basis (all premiums paid to date, less any dividends paid and outstanding policy loans) or the fair market value (also known as the replacement value) of the policy -- roughly equal to the cash surrender value. Once the University is listed as owner of the policy, the Development Committee of the Board of Trustees will decide whether to keep or liquidate the policy. 3. If the policy is partially paid (premiums still due and owing), the value of the gift for the University s gift crediting and accounting purposes is the policy s cash surrender value. All donated policies that are not fully paid will be liquidated once the University becomes the owner. (Note: For IRS purposes, the donor s income tax charitable deduction is equal to the lesser of premiums paid or its interpolated terminal reserve, which is an amount slightly in excess of the cash surrender value.) 4. Since the University does not place a value on non-cash gifts, the fair market value of policies (as of the date change of ownership took effect) can be obtained on Form 712 from the insurance company. The insurance company can also provide the cost basis. Real Estate NOTE: For non-cash gifts of $500 or more, the donor will be required to file IRS Form 8283 in order to claim an income tax deduction. The University can provide a copy of this form (with instructions) upon the donor s request. If the charitable deduction exceeds $5,000 in value, the IRS requires that this form be signed by a representative of the University. In addition, the IRS requires the University to submit Form 8282 to the IRS (with a copy to the donor) in the event that the policy was cashed-in within two years of the charitable gift. This form will list the amount that the University receives for the policy. 1. No gift of real estate (either residential or commercial) will be accepted without the approval of the Development Committee of the Board of Trustees. 2. No gift of real estate will be accepted without a current appraisal by a qualified appraiser. 3. The University will not accept any real estate without: a. A title search b. An environmental impact study of the property to ascertain if it is subject to environmental restrictions, sanctions, toxic wastes or otherwise encumbered in such a manner as to cause present or future economic liabilities for the University

4 c. A deed d. Under IRS regulations, the donor must pay for any initial appraisal of the property. It is also the donor s responsibility cover all the costs involved in an environmental impact study and title search, unless waived by the Development Committee of the Board of Trustees. Other requirements may include an on-site evaluation by an appropriate the University designee or outside agent and a marketability study Real estate gifts will entitle the donor to receive gift credit for the fair market value established by the qualified appraisal. Since the University does not place a value on non-cash gifts for the donor s tax-deduction, it will be the donor s responsibility to justify the amount they claim for a tax-deduction. According to the CASE Management and Reporting Standards (Third Edition, 2004), IRS requirements for gift substantiation note that the donor has the responsibility for valuing property for tax deduction purposes. For purposes of such substantiation, the IRS requires that the donor obtain an appraisal from a qualified appraiser. NOTE: For non-cash gifts of $500 or more, the donor will be required to file IRS Form 8283 in order to claim an income tax deduction. The University can provide a copy of this form (with instructions) upon the donor s request. Otherwise, the donor may obtain the form from his/her tax advisor. If the gift exceeds $5,000 in value, the IRS requires that this form be signed by a representative of the University. In addition, the IRS requires the University to submit Form 8282 to the IRS (with a copy to the donor) in the event that the charitable gift was sold within two years. This form will list the sales price. Tangible Personal Property 1. The term tangible personal property refers to physical assets other than real property (land) and financial instruments. Examples include airplanes, art, antiques, collections, manuscripts, software, books and vehicles. 2. Gifts of tangible personal property may not be accepted at the department level, but must first be submitted to the Office of Institutional Advancement, which will then submit to the Development Committee of the Board of Trustees if the property is valued over $5, For all gifts of tangible personal property accepted by the University with a value exceeding $1,000, a Gift-in-kind Transaction Form (attachment 6) must be prepared and submitted to the Office of Institutional Advancement. 4. All gifts of tangible personal property must follow the procedures for approval and receipt of Gifts-in-Kind (attachment 7). 5. Unless otherwise approved by the Development Committee of the Board of Trustees, no gift of tangible personal property shall be accepted that involves a burdensome financial obligation, either directly or indirectly, upon the University. 6. University officers, faculty members or staff may not furnish valuations or appraisals to donors or their advisors in connection with such gifts. It will be the donor s responsibility

5 to justify the amount they claim for a tax-deduction. According to the CASE Management and Reporting Standards (Third Edition, 2004), IRS requirements for gift substantiation note that the donor has the responsibility for valuing property for tax deduction purposes. 7. Costs associated with the acquisition, shipment, preparation and installation of donated equipment will be the responsibility of the benefiting user department, unless the Office of Institutional Advancement has agreed in advance to bear such costs. It is the responsibility of the Office of Institutional Advancement to ensure that responsibility for costs has been properly assigned, prior to the acceptance of the gift. 8. All such agreements must be reviewed and approved by the Development Committee of the Board of Trustees prior to receipt of the gift to ensure compliance with all IRS regulations governing such gifts. 9. Except as otherwise provided by the IRS for gifts of vehicles (cars, boats and airplanes), in order to qualify for a charitable deduction for gifts in excess of $5,000, the IRS requires the donor to obtain an appraisal of the property from a qualified appraiser not earlier than 60 days prior to the gift and not later than the donor s tax return due date (including extensions). (See (attachment 7). 10. The IRS will allow the donor to claim the full fair market value of the gift as a taxdeduction if: a. The donor owned the item(s) for more than one year; b. The donated item can be put to use by the University, in direct relation to its charitable mission; c. The donor is not the creator of the item; and d. The donated item is not considered inventory by the donor. NOTE: For non-cash gifts of $500 or more, the donor will be required to file IRS Form 8283 in order to claim an income tax deduction. The University can provide a copy of this form (with instructions) upon the donor s request. Otherwise, donor can obtain this form from his/her tax advisor. If the gift exceeds $5,000 in value, the IRS requires that this form be signed by a representative of the University. In addition, the IRS requires the University to submit Form 8282 to the IRS (with a copy to the donor) in the event that the charitable gift was sold or disposed within two years. This form will list the sales price (if applicable). Will or Revocable Trust 1. Supporters of the University are encouraged to make bequests through their wills and other estate-planning documents. If the University receives written documentation of a bequest and of the donor s preferred designation, the bequest may be counted as a planned gift. 2. Bequest that have immediate value to the University or can be easily liquidated (i.e., gifts of cash, life insurance policies, marketable securities, retirement plan assets), will automatically be accepted. If a donor bequeaths property (tangible personal or real) to the University, it will be accepted only after approval by the Development Committee of the

6 Board of Trustees, in conjunction with the Office of the Chief Financial Officer. Gifts that appear to have more cost than benefit will usually be discouraged and rejected. 3. If the donor wishes to bequeath property to the University, development staff will encourage the donor to communicate with the University in advance to ensure that the University can accept the bequest. Any non-cash bequest that violates this Policy will not be accepted. 4. It is recommended that the donor document the specific purpose of the gift with the Office of Institutional Advancement whether it is to establish an endowment (existing or new), for a specific academic program or department, or for unrestricted use. It is recommended that a letter of agreement be kept in the donor s file outlining his/her philanthropic objectives for the gift. 5. To conform to various state laws governing who legally can serve as Personal Representative for a will, the University will not agree to serve as Personal Representative of a donor s estate. Likewise, the University will not agree to serve as trustee or successor trustee of a revocable living trust, unless otherwise approved by the Development Committee of the Board of Trustees. Approval to serve as trustee or successor trustee will be sought only where all of the following conditions exist: a. The donor cannot find another suitable successor trustee; b. The University Development Committee of the Board of Trustees deems it to be in the best interest of the donor and the University; c. The University is designated to receive the greater of $100,000 or at least 75 percent of trust remainder assets; d. No assets within the trust that will pass to the University would violate this Policy; and e. Any other trust beneficiaries or related parties do not, in the opinion of the Development Committee of the Board of Trustees, constitute an unacceptable conflict of interest or other risk to the University. NOTE: While the donor will not be able to take a tax deduction during their lifetime (when the gift is revocable), at death (when the gift becomes irrevocable) the estate receives an income tax charitable deduction for the value of the bequest. Charitable Remainder Trusts The University encourages gifts establishing charitable remainder trusts in a form substantially similar to the forms approved by the Internal Revenue Service or otherwise determined by the donor s or the University s legal counsel to be legal charitable remainder trusts: 1. The University will gratefully accept a remainder interest in a charitable remainder trust when it is in the University s best interest. 2. The University will not serve as trustee or successor trustee of a charitable remainder trust, unless otherwise approved by the Development Committee of the Board of Trustees. Approval to serve as trustee or successor trustee of a charitable remainder trust will be sought only where most or all of the following conditions are met: a. The trust payout rate does not exceed 8 percent;

7 b. The University is designated as the irrevocable remainder beneficiary of at least 50 percent of trust assets. The donor may not reserve the right to change the remainderman (i.e., remainder beneficiary) for this portion of trust assets; c. The trust is initially funded with a minimum of $500,000; d. The donor s independent attorney drafts the trust s governing instrument; e. The donor s charitable deduction must exceed 15 percent of funding assets; and f. The charitable remainder trust must not hold assets other than cash or marketable securities at the time when the University would serve as Trustee. NOTE: The University encourages donors to consult with their own legal counsel and tax advisors before creating a charitable remainder trust. When desirable, the Office of Institutional Advancement may provide calculations for the donor and his/her advisors. Charitable Gift Annuities 1. The University will accept immediate payment gift annuities, payments that begin within one year of the gift date, as well as deferred payment gift annuities, whose initial payment is at least one year after the gift date. The deferral period will be at the discretion of the donor. 2. The institution will accept annuity gifts for: a. One life b. Two lives in succession c. Joint and survivor annuity agreements 3. Gift annuity agreements are limited to one life or two lives in succession at the time of the gift. 4. The maximum annuity rates offered will be developed from the current Uniform Gift Annuity Rates and in the case of deferred payment gift annuities, the current Uniform Interest Factors which are adopted by the American Council on Gift Annuities. The University may establish a maximum annuity rate chart that is lower, but not higher, than the Uniform Gift Annuity Rates of the American Council on Gift Annuities. To conform to the federally mandated "Clay-Brown Rule," the gift annuity rate offered must generate a charitable deduction of more than 10 percent of the fair market value of the assets given, or the annuity rate will be reduced to qualify for the deduction. Please note that the monthly changing Applicable Federal Rate [AFR] affects the calculated deduction. 5. To conform to various state laws, the maximum annuity rate will be offered to each potential donor/annuitant, based on the actuarial age of the annuitants. In addition, the advantage of a lower rate will be discussed, as this will produce a larger charitable deduction for the donor and will provide greater financial benefit to the University. 6. Gift assets will be limited to cash and securities for which a ready market exists. Closely held stock will only be accepted upon the approval of the Chief Financial Officer and the Development Committee of the Board of Trustees. A gift of real property will not be accepted to fund a gift annuity. 7. To conform to various state laws, the University will operate a segregated gift annuity fund, in which identifiably separate investments will be maintained and which is not a part of any other investment or endowment fund of the institution. The full annuity gift

8 will be admitted to the gift annuity fund of the institution and will be maintained until the demise of the last annuitant in the agreement. 8. A policy or methodology may be established to identify the changing market value of each agreement, so that an appropriate amount may be withdrawn from the gift annuity fund at the termination of each agreement. 9. The minimum acceptable gift will be cash or the fair market value of securities valued at: a. One life: ($10,000) for the first gift and $5,000 for subsequent gifts; b. Two lives: ($10,000) for the first gift and $5,000 for subsequent gifts; c. Deferred Payment Gift Annuities: ($10,000) for the first gift and $5,000 for subsequent gifts. 10. The minimum actuarial age of an annuitant on the date the payments begin is The gift annuity will be effective on the date the University (or an authorized representative of the University) receives a completed University gift annuity application and assets to fund the gift annuity (with all documentation to transfer these assets, if applicable). 12. Annuities may be paid quarterly, semiannually or annually, and in the case of annuity gifts of $25,000 or more, monthly. Annuity payments will be mailed to arrive on the payment due date, or, if paid via direct deposit to the annuitant s bank account, deposited to the account on the payment due date. 13. A separate account for the gift annuity fund will be maintained to permit appropriate reporting of gift annuity fund activity to those states that require it by statute. 14. Investment and administrative records of the gift annuity fund and program will be maintained to ensure that questions can be answered appropriately.