Introduction - University of Maryland Foundation, Inc.
POLICIES AND PROCEDURES GUIDE
Contents
The USM Foundation staff is available to assist development staff, account administrators and authorized signers with these Policies and Procedures. The web site version of this guide is intended to contain the most current information, policies, and guidelines needed to maintain and manage your
Foundation accounts. If you have any questions regarding this document please contact us.
Maintenance of this guide is the responsibility of the Director of Business Operations
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Introduction
Incorporated in 1979, The University System of Maryland Foundation, Inc. (USM Foundation, USMF, or the Foundation) is a not-for-profit corporation separate from the University System of Maryland (USM).
The USMF is an independent tax exempt organization organized under the laws of the state of Maryland and is classified by the IRS as a public charity under sections 509(a)(1) and 170(b)(1)(A)(iv) of the Internal
Revenue Code. The USMF meets the requirements of a section 501(c)(3) corporation and gifts to the
Foundation are tax deductible.
This policy and procedure guide outlines the steps we must take to ensure we are in compliance with a myriad of rules and regulations, fulfill our fiduciary and stewardship responsibilities to our clients and donors, minimize our exposure to various risk scenarios, and apply best practices across our operations.
First and foremost, this policy and procedure guide outlines the processes we must follow to ensure we maintain our status as a not-for-profit organization under applicable tax code. We cannot allow any activity that could put our 501(c)(3) status in jeopardy.
Next, we are governed by various federal, state, and local statutes that impact our policies and processes. In addition, there are Generally Accepted Accounting Principles to which we must adhere.
Then, as an affiliated foundation of the University System of Maryland (USM) policies and procedures may be required to ensure compliance with USM Board of Regent policy. Additionally, USM Foundation
Board policies and directives may also have influence on the processes and requirements outlined in this document. Finally, policies and procedures may be written, when appropriate, to provide uniformity with other USM affiliated foundations.
Within this framework, our goal is to implement practices and procedures that are best of class and which ensure we are acting with care, loyalty, and good faith in seeing to the fulfillment of the
Foundation’s mission and our donors’ and clients’ expectations.
The policies and procedures in this guide are organized in a logical manner based on what we do as an organization:
1.
We establish accounts to manage money coming into the Foundation
2.
We receive revenue from contributions and other non-gift activities into these accounts
3.
We pool these revenues together and invest the money we receive
4.
We allocate the earnings and fees from those investments, and fees for our operations, to the various accounts that have been established
5.
We make dollars available for spending from these accounts
6.
We manage the disbursement of those available spendable dollars
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Our goal is to serve all of our constituents in an efficient and effective manner and we certainly will continue to strive to keep our processes as simple and direct as possible.
We hope this information is presented in a logical format and is understandable to the reader. We encourage feedback. Please contact the Director of Business Operations directly with any comments or questions.
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Change Log
Date
June 1, 2013
August 1, 2013
January 1, 2014
Revision Description
Initial Document createdEliminated boarding pass documentation requirement for airline/train travel
Updated Mileage reimbursement rate
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Account Types and Administration
All financial transactions through the USM Foundation - gifts and other revenues, disbursements, and investment earnings and fees - are tracked through accounts. An account must be established before activities can be recorded. Unrestricted donations can be comingled in one account. If a donor places a restriction on the use of a contribution, a separate account must be established.
Account Types
Accounts generally are classified as Operating or Endowment Accounts. Operating accounts, also known as Current Use accounts, are invested separately from Endowment Accounts. Funds in operating accounts are available for current use spending. Endowment accounts are established by donors to exist in perpetuity with annual spending determined by the donor’s wishes or governed by the Foundation’s spending policy.
Quasi-endowments are accounts invested as an endowment, but funds are earmarked for a specific use by the board rather than restricted by a donor or other outside agency. The principal of such funds can be spent at anytime like an Operating account.
For system tracking purposes account types are classified by their numbering scheme as follows:
XX in the first two characters represent the institution
XX-2xxxx Current Use program and faculty support accounts
XX-3xxxx
XX-4xxxx
XX-44xxx
XX-50xxx
XX-55xxx
XX-6xxxx
Current Use Scholarship accounts
Endowment accounts
Quasi-endowment accounts
Current Use research accounts
Grant Accounts
Special program or event accounts
Establishment Requirements
Minimum Requirements
A minimum deposit or transfer of $500 is required to open a new account
Operating accounts that remain below the minimum for a period of 3 months are subject to closure unless special circumstances exist. The Foundation will work with the department to determine where the remaining funds are transferred
Endowment accounts, and Quasi Endowment accounts, can be opened with the minimum deposit noted above and with a fully executed Memorandum of Understanding on file.
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However, endowment accounts must be in existence for one year as of July 1 and have reached a $10,000 market value ($25,000 for UMBC) before Spendable Income is available.
Account Agreement Form
Proof of the minimum deposit or transfer and a completed Account Agreement Form is required to create a new account. The form provides the USM Foundation with important information for the ongoing administration of the account. That information is as follows:
1.
The Department/Unit and Institution for which the account is being established.
2.
The Account Type – see list above. Funds with donor restrictions cannot be deposited into an unrestricted current use account. If a donation comes with restrictions it must be deposited in an existing account with the same restrictions or a new account must be established. A fully executed Memorandum of Understanding is also required for Endowment accounts and Quasi endowment accounts.
3.
Account Name – this must match the Memorandum of Understanding if applicable
4.
Purpose for which the funds will be used. Be as descriptive as possible – do not leave this section blank.
5.
Department/Unit Signature – the form must be signed by the Dean/Chairperson/Vice President or equivalent organizational unit head.
6.
Account Administrator is the person at the institution responsible for the stewardship of the account. He/she will receive monthly statements and is responsible for reviewing and reconciling account activity.
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Authorized signers are the designated people with the authority to approve requests for disbursements or to make other account changes. At least two people must be designated and the Account Administrator cannot also be an authorized signer. Also, donors to an account can not be authorized signers on that same account.
This form can be scanned and e-mailed to our Business Support e-mail box. We do not need the original.
Endowment Memorandum of Understanding
A fully executed Memorandum of Understanding (MOU) must be on file for every endowment and quasi-endowment fund held by the USM Foundation.
The USM Foundation Business Office is the office of record for all MOU’s.
1.
The development officer or his/her designee at the appropriate institution coordinates the production of a rough draft of the MOU (see the MOU Sample and the MOU Worksheet for guidance in preparing the draft.)
Questions about the content of the draft should be directed to the USM Foundation Vice
President of Finance or his/her assistant . Please copy both the assistant and our Business
Support e-mail box on any e-mails sent to the Vice President of Finance.
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The draft is then circulated to the donor and appropriate university officials for revisions and/or clarifications. This step may need to happen multiple times as revisions to the original draft are made.
3.
A copy of the original draft and subsequent revisions must be sent to the USM Foundation Vice
President of Finance for review and approval before a final copy is produced. A completed
Account Agreement Form must accompany the draft.
4.
When all revisions have been made and approved, three (3) original copies of the final version of the MOU are produced and routed for signature first to the donor, then to the institutional president and other designated institutional parties, and finally to the USM Foundation
President.
Note: Since endowment funds represent sizeable gifts, good quality bond paper should be used for all final copies to symbolize the value of the gift and to enhance the appearance of the finished product
5.
The USM Foundation mounts the donor copy of the MOU in a formal cover once the USM
Foundation President has signed the documents. (UMCP provides their own cover and will mount the donor copies themselves.)
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The USM Foundation will forward the donor copy and the copy for the institutional president to the appropriate Development Office for delivery. The USM Foundation will retain the third original in a secure location and attach a scanned copy of the MOU to the new account record in the financial software system. The Development Office can make additional photocopies as needed.
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Planned Gift Endowments are not established in the financial software until the defined terms of the gift are met. An Account Agreement Form should not be submitted with a Planned Gift
Endowment MOU. Once the terms of the gift are met the Account Agreement Form should be prepared and submitted with notification to the USM Foundation that it is ready to be established as an active endowment account. Please submit this notification and the Account
Agreement form to our business support e-mail box.
Administration
Information about specific accounts is made available to donors, account administrators, Deans, USM
Foundation staff, and external and internal auditors.
Those responsible for administering, or overseeing the administration of, accounts should understand that their responsibility is a key element of our donor stewardship as it relates to reassuring our donors that their gifts are being used as they intended. Specific responsibilities are ensuring that gifts are posted to accounts timely and accurately, disbursement requests from an account match the purpose defined in the account agreement or MOU, and available spendable income is used in full to support the students, faculty, or programs defined in the account agreement or MOU.
Account Administrators
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Receive a monthly detailed Spendable activity report and a monthly detailed Non-Spendable activity report. These reports are distributed electronically via e-mail in a PDF format around the 15 th working day of the following month for the Spendable report and the last calendar day of the following month for the Non-Spendable activity report. These reports show all transactions from the beginning of the fiscal year through the prior month-end as well as the beginning and ending balances for the Spendable and Non-Spendable balances for an account.
Each March, the account administrators will receive a report showing the Spendable Income calculation for their accounts for the next fiscal year. After the close of the fiscal year – usually the first part of
August – a report will be distributed that shows the calculation of Spendable Income carryover from the prior year into the new fiscal year.
In addition to the above reports, administrators are encouraged to access their accounts through our financial software via our Account Administrator Dashboard. Administrators who have not used
Dashboard before will need to complete a training class before they will be given access. The Dashboard gives the administrators real time access to their accounts in summary form with the ability to drill down into more detailed information. Also, via the Dashboard, administrators have the ability to view scanned documents related to their accounts or their disbursement transactions.
Vice Presidents for institutional Advancement
Receive quarterly summary reports for each college on their campus showing the amount of spending against available spendable income.
Each March, the vice-presidents will also receive a report showing the Spendable Income calculation for the accounts for each college on their campus.
Deans (or their designee)
Receive quarterly summary reports for their college showing the amount of spending against available spendable income.
Donors
Stewardship reports are provided to donors by the campus advancement/development departments annually. Donors should be given market values, spendable income, and endowment performance results along with disbursement information including scholarship recipient names or information on the programs or faculty supported or funded.
Account Updates
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Changes to Account names, purposes, administrators, authorized signers, or spending parameters are communicated to USM Foundation staff via the Account Agreement Update form or an MOU amendment. Endowments and Quasi Endowment terms are changed via an MOU amendment. All other changes to these accounts and to Operating accounts are made via the Account Agreement Update form.
MOU amendments should follow the same drafting, review, editing, and signature routing process as described above for original MOU’s. MOU amendments will be scanned to the account record in the financial software.
All changes made via an Account Agreement Update form must be authorized by a current authorized signer on the account or, in their absence, by the Dean of the College associated with the account.
Account Agreement Update forms can be sent to the USM Foundation through our Support e-mail box.
We do not need original copies. Changes to account attributes and report distribution lists will be made upon receipt of the Account Agreement Update form and the form will be scanned to the account record in the financial software.
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Revenue Policies
The major source of revenue for the USM Foundation is from individual, corporate, or foundation contributions and grants. Revenue is also received from special fundraising events, auctions, raffles, sales of merchandise, fees for conferences and seminars, affiliate programs, fees for performance, etc.
These policies ensure that all revenue is properly solicited and accepted, promptly deposited, recorded, and acknowledged, and managed to comply with any and all donor restrictions.
The USM Foundation will not return contributions received. While we are aware that some charities will return charitable gifts, doing so is a technical violation of the 501(c)(3) rules. A 501(c)(3) organization is required to use its assets solely and exclusively to advance its 501(c)(3) purposes. Once a contribution is received and deposited, the USM Foundation is obligated to use the funds to advance its
501(c)(3) purposes.
Solicitation Policy
The University System of Maryland (USM) Board of Regents Policy on Affiliated Foundations
( http://www.usmd.edu/regents/bylaws/SectionIX/IX200.html
) requires that all solicitations for contributions, conferences, seminars, special fundraising events, grants, or other activities where the funds are to be deposited in a USM Foundation account MUST be identified as USM Foundation activities.
USM Board of Regents Policy stipulates “all correspondence…shall be clearly identified as an activity of that foundation…” Samples of suggested wording that would be appropriate are noted below:
“This event is an activity of the University System of Maryland Foundation, Inc. (USM
Foundation). Funds earned or contributed will be managed by the USM Foundation for the benefit of [particular program]. Please make your check payable to the University System of
Maryland Foundation, Inc.” THIS IS THE PREFERRED VERBIAGE
OR
“This [program/activity] is an activity of the University System of Maryland Foundation, Inc.
Please make your check payable to the University System of Maryland Foundation, Inc.”
OR
“The funds raised will be administered by the University System of Maryland Foundation, Inc. for the benefit of [program/university]. Please make your check payable to the University
System of Maryland Foundation, Inc.”
Acceptable Monetary Revenue Types
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The USM Foundation accepts monies via check, money order, credit card (MasterCard, Visa, American
Express), EFT/ACH, wire transfer, and publicly traded stocks, bonds, and mutual funds. We do not accept cash. Cash should be converted to a check before deposit.
Receipt of foreign currency via bank transfer or check is acceptable. Please be aware that funds from a check written on a foreign bank in either US dollars or foreign currency may not be immediately available for use.
Check Acceptance Guidelines
Checks may be accepted for processing if they are made payable as one of the following:
University System of Maryland Foundation, Inc
University System of Maryland Foundation
USM Foundation, Inc
USM Foundation
USMF, Inc
USMF
University of Maryland Foundation, Inc
University of Maryland Foundation
UM Foundation, Inc
UM Foundation
UMF, Inc
UMF
University of Maryland University College Foundation, Inc
University of Maryland University College Foundation
UMUC Foundation, Inc
UMUC Foundation
UMUCF, Inc
UMUCF
University of Maryland Baltimore County Foundation, Inc
University of Maryland Baltimore County Foundation
UMBC Foundation, Inc
UMBC Foundation
UMBCF, Inc
UMBCF
University of Maryland Eastern Shore Foundation, Inc
University of Maryland Eastern Shore Foundation
UMES Foundation, Inc
UMES Foundation
UMESF, Inc
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UMESF
Universities at Shady Grove Foundation, Inc
Universities at Shady Grove Foundation
USG Foundation, Inc
USG Foundation
USGF, Inc
USGF
University of Maryland Center for Environmental Science Foundation, Inc
University of Maryland Center for Environmental Science Foundation
UMCES Foundation, Inc
UMCES Foundation
UMCESF, Inc
UMCESF
If a check is made payable to an institutional program or to the institution itself, and the check is for a program/activity for which the USM Foundation has an account, the USM Foundation can accept the check for deposit if one of the following is provided:
A copy of a donor/pledge card that includes the statement “Make check payable to the
University System of Maryland Foundation, Inc.” and signed by the donor. (The signed card
serves as confirmation of the donor’s intent that the check be deposited in the USM Foundation.)
A letter signed by an individual donor stating his/her intention to have the funds deposited in the USM Foundation
For corporate or foundation checks, a letter signed by an authorized representative of the organization, or an e-mail with a corporate e-mail address from an authorized representative of the organization, stating the organization’s intention to have the funds deposited in the USM
Foundation. (This exception is acceptable for the initial payment from the organization.
Subsequent checks from the same organization with an incorrect payee will not be accepted.)
Gift donations should clearly indicate on the check or in the attached documentation the donor’s intention for the gift and should indicate a USMF account number.
Checks should be current dated and signed.
International Checks – please flag these checks to draw our attention to them. We can accept international checks in US dollars and in foreign currency. There is a fee to process these checks, similar to a credit card fee. The foundation recommends you encourage international donors to consider ACH or Wire transfer. If the donor wishes to do that, please send an email to usmf-businesssupport@usmd.edu
to get the information required to accomplish an ACH or Wire.
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Please do not staple checks to the deposit form or supporting materials. Checks are scanned in-house for deposit and the staple holes interfere with the scanning process.
Credit Card Processing
The Payment Card Industry Data Security Standard (PCI DSS) is an information security standard for organizations that handle cardholder information for the major debit, credit, prepaid, etc. cards.
Defined by the Payment Card Industry Security Standards Council, the standard was created to increase controls around credit card fraud. As a small volume organization under the standards, the USM
Foundation validates our compliance with the standards on an annual basis via a self-assessment questionnaire.
All units and personnel that collect credit card payment information are required to abide by the following security guidelines to prevent the loss or disclosure of customer credit card information in accordance with these standards.
Credit card payments may be received via telephone, mail, web site, or point of sale.
Card holder signatures must be obtained for mail and point of sale transactions
All credit card payment information received must be promptly forwarded to the department responsible for processing gifts for a particular campus
Credit card information must be sent in a sealed envelope marked “CONFIDENTIAL” and addressed to the appropriate person/department. o Do not fax or e-mail credit card information o Do not label the envelope “Credit card information” o Do not share, disclose, duplicate or store, in any fashion, a record of cardholder information
Cardholder information must be kept in a secure location, such as a safe or locked file cabinet or drawer, when left unattended during regular working hours or overnight. You should treat credit card information as securely as you would treat cash
Once a credit card transaction has been processed and approved the credit card number should be redacted from any donation forms or other documentation accompanying the payment
Credit card gifts are recorded in the Advance donor software system after the transaction has been authorized. These gifts are posted to the appropriate USM Foundation account throughout the month.
Fees associated with the credit card transaction are charged to the account as an expense at month-end as part of the credit card bank reconciliation process.
Non-gift credit card receipts are recorded to the appropriate USM Foundation accounts at month-end as part of the credit card bank reconciliation process and are also charged the associated fees.
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Credit card fees are allocated as a flat percentage of the credit card charge. This percentage is determined by the USM Foundation Director of Business Operations and is set so as to cover all of the various credit card and bank fees associated with processing a credit card transaction. This fee percentage is reviewed periodically and adjusted as needed to ensure all credit card fees are being allocated.
Contribution Processing
Contributions may be received by a USM institution, school, department, or directly at the USM
Foundation Business Office.
Upon receipt of a contribution, the procedures are as follows:
Review checks as to payee and restrictively endorse them for deposit to the USM Foundation. (See
Check Acceptance Guidelines above)
Forward funds to be deposited to the appropriate Office of Institutional Advancement (OIA) with the transmittal form required by the institution. OIA enters all contributions into the Advance donor database to ensure the institution’s fundraising totals are complete.
Include the name and number of the account to which each contribution is to be deposited.
Attach documentation that verifies the contributive nature and purpose of the gift, unless funds are for an already established endowment or a payment on an already recorded pledge.
Note: USM Foundation personnel can post contributions that are received by the USM Foundation
Business Office, provided they are not designated for a specific USM institution, and provided documentation supporting the gift is included.
Process all funds within 48 hours of receipt, unless there is a problem (i.e., not knowing the purpose of the contribution, payee incorrect, etc.).
Retain unprocessed funds in a locked file. If problems are not resolved within 10 business days, checks should be returned to the donor or deposited in a university account.
Separately batch contributions to the USM Foundation from those to an institution. Separately batch credit card contributions, Gifts in Kind, payroll deductions, and other non-check type gifts from check batches.
File supporting documentation (i.e., a letter from the donor and/or a copy of the check) with the Batch
Detail Report at each OIA.
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Remit checks and two copies of the Advance Batch Detail Report to the USM Foundation. For non-check batches remit copies of supporting documents with two copies of Batch Detail Reports.
For campuses scanning their own checks for deposit remit a copy of scanned deposit batch with two copies of the Advance Batch Detail Report.
When received, the USM Foundation Gift Processor does the following:
Signs the Batch Detail Report, indicating receipt of the checks and/or supporting documents, subject to verification
Returns the signed copy to the applicable OIA office
Reconciles the checks to the transmittal documentation
Closes the batch in Advance. This action releases the "gift receipts" (they are now ready for printing) and flags the gift records for posting to the USM Foundation's accounting software during the nightly posting process
After batches have been imported to the accounting software, reconciles the reports from the accounting system to the Batch Detail Reports
Prepares the bank deposit and scans the checks for deposit
Gift Receipts are printed and mailed to the donors by the OIA office that entered the gift.
The Revenue Reconciliation Act of 1993, The American Jobs Creation Act of 2004, and the Pension
Protection Act of 2006 include contribution substantiation requirements.
All donors who wish to take a deduction for charitable contributions of $250 or more in cash and noncash donations must have receipts, and those receipts must indicate whether the donor received any goods or services in exchange for that “gift.” IRS policy suggests the following language, which we recommend:
“The amount of your contribution that is deductible for Federal income tax purposes is limited to the excess of the amount contributed by you over the value of the goods and services that you receive. We estimate the value of those goods and services to be $______ and therefore you may be able to deduct any contribution in excess of that amount.”
Note: The USM Foundation usually prints and mails gift receipts for contributions received from USM
Foundation Board members and for contributions of $1,000 or more that are specifically designated for
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USM, university-wide or USM Foundation purposes. These gift receipts are reviewed by the Vice
President for Finance and then given to the President of the USM Foundation, who sends the receipt to the donor along with a personal letter.
Each USM institution has its own procedures for stewardship of its large donors.
Matching Gifts
A matching gift is a charitable gift made to a non-profit organization by a matching donor (usually an employer) under the provision that the original donor first made a gift to the organization. Matching gift programs generally consist of the following steps:
Individuals donate
Donors submit matching gift requests to the matching organization (usually their employer)
Non-profit validates receipt of gift from individual to the matching gift organization
Organization cuts check to non-profit
Non-profit records organization check as matching gift against original donation record
It is the donors’ responsibility for submitting the request for a matching gift to the matching organization. The USM Foundation has no role in this step.
The USM Foundation gift processor is responsible for validating matching gift requests submitted by matching gift organizations. Since many organizations now have Internet based validation processes, the
USM Foundation gift processor is responsible for maintaining login information for these various validation websites. The USM Foundation has no responsibility for “collection’ of matching gifts from these organizations after the requests have been validated.
The procedure for processing matching gifts is as follows:
1.
Forward all matching gift forms or e-mails to USM Foundation gift processor
2.
The USM Foundation gift processor: a.
Reviews all matching gift requests to ensure compliance with individual company policy as to eligible gift, donor, purpose, and recipient institution/organization. i.
Forms will not be processed if they do not meet company policy. Those that do not qualify will be returned to the appropriate OIA. b.
Review the donor’s record to confirm that the donor and the specific gift are recorded and the donor is linked with the matching gift company c.
Link the gift to the matching gift company d.
Complete the form (hard copy or online), including appropriate signatures and submits to the matching gift company. Note: matching gift programs often have time limits for submission of matching gift requests and validations. It is the gift processor’s
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responsibility to ensure all forms are submitted in a timely manner so that potential
matching gifts are not lost e.
File a copy of the form under the company name
Forward all matching gift checks to USM Foundation gift processor for data entry
The USM Foundation gift processor matches the check with the copy of the matching gift form filed in
Step 2 and enters the matching gift in Advance when it is received. Matching gifts should be entered in separate Advance gift batches.
Wire or ACH transfers
Bank transfers may be used to deposit money with the USM Foundation. It is necessary to request bank transfer instructions prior to each transfer as the type of transfer, country of origin, and type of account to which the money will be credited can affect the transfer instructions that should be sent to the payee. Also, the Business Office must make a determination, prior to the transfer, that we can accept the funds being transferred. Failure to notify the Business Office in advance could result in the funds being returned to the sender.
An Inbound Bank Transfer Notification form should be completed and submitted prior to the transfer of funds. The information needed to complete the form is:
Submitter Name
Submitter e-mail address
Payer Name
Amount of transfer or approximate amount and currency
Date expected or approximate date expected
USM Foundation Account number and name to which the funds are to be credited
Explanation/purpose of transfer. If available, attach a document from the person or organization that will be transferring the funds or a copy of the invoice sent to the payer
Upon receipt of the completed form the USM Foundation will provide wiring instructions.
TRANSFERS MAY BE RETURNED IF THIS INFORMATION IS NOT RECEIVED PRIOR TO THE TRANSFER
Payroll Deductions
The USM Foundation processes contributions from state employees received through payroll deductions. Each USM institution is responsible for securing the appropriate documentation from their employees and entering the pledge information in Advance.
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1.
Forward Payroll Deduction Cards to the USM Foundation Business Office Gift Processor. (The
USM Foundation business office will notify campuses of the deadlines each year for submitting the deduction cards to the USM Foundation so that they can be forwarded in time to Central
Payroll for setting up of the payroll deduction for the new year. The USM Foundation has no
responsibility for payroll deductions not being set up in time by Central payroll.)
2.
Upon receipt of the above, USM Foundation personnel will: a.
Photocopy the originals and file the copy alphabetically by institution; b.
Send the originals to the Central Payroll office in Annapolis.
3.
Bimonthly checks, representing funds withheld, are received from the State payroll department and are posted to USM Foundation holding accounts.
4.
Monthly checks, representing withheld funds that have been received from the State payroll department, are written from the USM Foundation holding account to the participating USM institutions that have their own foundations. ( Participating institutions with their own foundations are currently Bowie, Frostburg, Salisbury, Towson, UMB and UMCP )
5.
Quarterly, for participating institutions that are affiliated with the USM Foundation (those not listed above), a report is prepared that identifies each participating employee and the total amount of his/her deductions within that reporting period. The individual OIA or the USM
Foundation posts those totals in Advance, either as a pledge payment or as an outright gift, if there is no pledge on record. a.
The posting batch is adjusted to change the cash account to the holding account for the
USM Foundation affiliated institutions’ deductions.
Maryland Charities Campaign and Combined Federal Campaign
The USM Foundation participates in the Maryland Charities Campaign (MCC) and the Combined
Federal Campaign (CFC).
Maryland Charities Campaign (MCC):
In the first calendar quarter of the year a report is received from MCC for each institution. It details the donor name, address and amount donated for those donors who gave permission to the release of their name. All other donors are listed on the report as “Anonymous Giver” with the $ amount of their gift noted.
A copy of the MCC report is forwarded to each institutional OIA. The gift processing office uses this report to enter a pledge for each donor whose name in on the list. The pledge is posted to an account designated by the donor, if applicable, or to the institution’s MCC account.
Contributions from all donors who did not choose to be identified are not posted as pledges.
These will be posted later as outright gifts to the institution’s MCC account.
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Distributions, representing these designated and undesignated funds, less the MCC administrative fee, are received each quarter and deposited to a USM Foundation holding account.
Annually, in the second quarter of the following calendar year, after all payments have been received from MCC, the pledges are cleared based on the payments received and the balance in the holding account is adjusted to account for the administrative MCC fees. Anonymous donor gifts are recorded at this time.
Combined Federal Campaign (CFC):
A report is received from CFC. If a donor has given permission to the release of his/her name, the report details the donor name and address.
Distributions, less the MCC administrative fee, are received each quarter and recorded as outright gifts as received.
Periodically we will receive donations through United Way agencies or other third party donation clearinghouses. These donations are handled as outright gifts.
Stock, Bond, and Mutual Fund Gifts
Gifts of publicly traded stocks, bonds, and mutual funds are welcome. Upon receipt of these gifts the stocks, bonds or mutual funds are immediately sold. For stocks and bonds the gift is recorded at the average market value on the day of transfer (high + low for day divided by two). For mutual funds the value is the fund’s closing price on the day the shares are received into our account. Any difference between the value and the proceeds received for the sale is recorded as an investment gain/loss.
When a gift of stock, bonds, or mutual funds is intended, the donor, or development officer on behalf of the donor, should complete the Give a Gift of Stock form with the following information:
Donor name
Name/Ticker Symbol of the stock/bond/mutual fund and # or approximate # of shares or dollar amount to be gifted
Name of the brokerage firm that will transfer the stock/bond/mutual fund
Expected date of transfer (if known)
Account number to which the gift is to be applied
Method of transfer (DTC or Sending Certificates)
Stocks and bonds are transferred through one of these procedures:
DTC transfer,
OR
Sending the Certificate along with a completed Stock/Bond Power Form
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DTC Transfer - Stock Wire
DTC (Depository Trust Company) transfer is the easiest method when a third party ( not the donor ) holds the Certificate. Upon receipt of the Give a Gift of Stock form the USM Foundation Business Office will contact the donor with specific information and instructions on using this method.
NOTE : IF A DTC TRANSFER IS INITIATED AND THE USM FOUNDATION HAS NO INFORMATION , THE
STOCK / BOND MAY BE RETURNED .
When a DTC transfer of a stock/bond Certificate is received:
The USM Foundation Assistant Comptroller informs the institution of the $ value of the stock/bond; ( The dollar value of the gift is the average of the high and low value of the security on the day the gift is given times the number of shares)
OIA enters the gift information in Advance for stock gifts to USM Foundation campuses (UMBC,
UMUC, UMES, UMB, UMCP)
The USM Foundation enters the gift information in Advance if the stock gift is to benefit the
USM Foundation or UMCES.
The USM Foundation adjusts the batch posting report to record any gains or losses on the sale of the stock along with any fees associated with the transfer and sale.
Sending a stock/bond certificate
If the donor has the Certificate, do one of the following:
1.
Use a separate Stock/Bond Power Form as the endorsement vehicle and send the paperwork to the institution or to ATTN: Assistant Comptroller, the USM Foundation; OR
2.
Have the stock/bond reissued in the USM Foundation name by sending the Certificate to the
Transfer Agent along with the USM Foundation name, address and tax id number. The Transfer
Agent will send the reissued certificate to the USM Foundation; OR
3.
Endorse the back of the certificate and send the paperwork to the institution or to ATTN:
Assistant Comptroller, the USM Foundation ( However, this is a last resort as a signed certificate is negotiable and if lost could cause the donor a problem)
NOTE : IF THE USM FOUNDATION RECEIVES A STOCK OR BOND CERTIFICATE ABOUT WHICH NO PRIOR
INFORMATION HAS BEEN PROVIDED , THE DONOR , IF IDENTIFIED , WILL BE CONTACTED . IF DONOR IDENTIFICATION
IS NOT AVAILABLE , THE USM FOUNDATION WILL CONTACT THE INSTITUTIONS .
If the institution receives the Certificate, do the following:
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1.
OIA forwards the certificate and any information regarding the donor and the donor's designation(s) and/or restriction(s) to the USM Foundation Business Office.
2.
Upon receipt of the certificate by the USM Foundation Business Office: a.
The USM Foundation informs the institution of the $ value of the stock/bond; ( The dollar value of the gift is the average of the high and low value of the security on the day the gift is given times the number of shares.
) b.
OIA enters the gift information in Advance or if the stock gift is to benefit the USM
Foundation or UMCES, the USM Foundation enters the gift information. c.
The stock Certificate is forwarded to the USM Foundation custodian. ( Corporate
Resolution Forms needed to complete the transaction are on file with the USM
Foundation custodian ). d.
The USM Foundation adjusts the batch posting report to record any gains or losses on the sale of the stock along with any fees associated with the transfer and sale.
Gifts in Kind
Gifts-in-kind are non-cash contributions such as real estate, equipment, and art. Gifts of this nature are usually processed by the OIA or the USM institution that will benefit from the gift, with the exception of
USM Foundation and UMCES, whose gifts in this form are processed by the USM Foundation Business
Office. Only contributions that are of direct benefit to an institutional program or to the USM
Foundation, or which can be immediately sold will be accepted. The procedure to process gifts-in-kind is as follows:
1.
OIA or the Gift Processor at the USM Foundation Business Office enters the gift information in
Advance.
2.
Forward the Batch Report and copies of the documentation related to each gift (i.e., appraisals, deed of gift, etc.) to the USM Foundation Business Office. Include an Inventory Control Form for all property where ownership is to be through the USM Foundation.
3.
The USM Foundation Gift Processor changes the GL code in the Batch Report, from a cash account to the appropriate asset account.
Note: Gifts with a value over $1,000 are recorded as assets. Gifts with a value under
$1,000 are expended in the year they are received.
4.
Donors who contribute non-cash gifts with a total value greater than $500 must file IRS Form
8283 with their tax return ( http://www.irs.gov/pub/irs-pdf/f8283.pdf
). If the donor cannot obtain the form, the USM Foundation Business Office can provide a copy. The donor must complete the appropriate sections of the form, including the appraisal section, which details information regarding the value of the item(s) donated. The donor must forward the completed form to the USM Foundation Business Office for review and signature. a.
For those items with a value under $500, the donor's estimate is acceptable. b.
For those items with a value between $500 and $5,000, an internal “expert” can value the property.
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c.
For those items with a value of over $5,000, an independent qualified appraiser must sign the form or provide the information on their letterhead. d.
The USM Foundation mails the form back to the donor after it is signed.
5.
The USM Foundation files IRS Form 8282 ( http://www.irs.gov/pub/irs-pdf/f8282.pdf
) with the
IRS if the property is sold within two years of the date of the gift.
Life Insurance
A donor may make a gift of life insurance, designating the USM Foundation as the owner and beneficiary. The premiums are paid to the USM Foundation by the donor and then the USM Foundation pays the premium to the life insurance company. Premium payments received from the donor are taxdeductible contributions to the donor. Payment of the premiums continues until the donor dies or the policy is surrendered.
Upon initial set-up of this arrangement, the donor should sign either an MOU for an endowment or letter of understanding for an operating account, indicating the distribution of the life insurance proceeds upon their passing.
The USM Foundation Gift Processor oversees the payment process as follows:
A schedule listing the due dates for the premium payments is maintained.
Two months prior to the date the premium is due for payment, the Gift Processor prepares a reminder notice of payment due and sends it to the donor.
The mailing date of the reminder notice is noted on the payment schedule.
The USM Foundation does not remit premium payments to the life insurance company until the appropriate payment has been received from the donor. The Gift Processor prepares a
Disbursement Request Form to process the payment to the insurance company.
The account is reconciled monthly to reflect any premium payments received from the donor and sent to the insurance carrier.
The Office of Planned Giving and/or the Development Office at the appropriate USM institution is notified when a problem occurs.
Trusts and Annuities
A donor may purchase an annuity contract or establish a trust with the USM Foundation. The net present value of anticipated future annuity payments is recorded as a liability on the USM Foundation’s records. The difference between the total amount received for the annuity or trust and this liability is the gift amount and should be receipted as such.
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The annuities and trusts are revalued each year in accordance with generally accepted accounting principles and any change in value is booked as a change in value of split interest agreements. This revaluation does not change the original gift amount.
Upon death of the annuitant, the remaining value of the trust or annuity is transferred to the donor designated operating or endowment account identified when the trust or annuity was established. If the donor outlives the actuarial life used for the calculations then the annuity payments will deplete the value of the trust and there would be little or no proceeds to be transferred upon death. Annuity payments that need to continue to be made after the value has been reduced to zero are covered from the USM Foundation’s reserve funds.
The Vice President of Finance coordinates the establishment of the annuity contract or trust.
The VP of Finance notifies the USM Foundation Client Relations Specialist when documents for establishing an annuity or trust are prepared and sent to the prospective donor.
The VP of Finance forwards the signed annuity contract, the annuity / trust information and the Gift
Information Form to the Client Relations Specialist when the necessary paperwork has been completed.
The USM Foundation creates an account for each annuity contract or trust.
Payments due to the donor are disbursed via a USM Foundation check or via direct deposit on a scheduled monthly, annual, or quarterly basis depending on the terms of the contract. The USM
Foundation Client Relations Specialist will coordinate the payment arrangements with the beneficiary and will have them complete a Direct Deposit Form if that is the payment option chosen.
The individual campus development offices are asked that any known changes to annuitants contact information (address, phone, e-mail) be immediately communicated to the Client Relations Specialist.
TAX FORMS
The USM Foundation Business Office submits the required SS-4 Form, the Application for Employer
Identification Number, to the IRS for all trusts established.
1099 Tax Forms are prepared annually by the USM Foundation and sent to each annuitant.
Tax Returns for all Trusts administered by the USM Foundation are prepared for each donor by USM
Foundation accountants. Costs for preparation of the tax forms are charged to the trust.
Real Estate Gifts
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Policy for acceptance of real property:
Real property may be accepted as a gift or acquired by other means agreed upon by the University
System of Maryland Foundation as long as it conforms to USM policies for solicitations and contributions, and as long as it meets the following criteria and requirements:
1.
System-related Property: property that will be held and/or developed for the benefit of the
University System of Maryland. All expenses that USM Foundation incurs in holding such property shall be reimbursed according to the terms of an agreement with the System.
2.
Investment Property: Property that will be held or developed in order to provide income to the
USM Foundation. The USM Foundation may retain ownership of the land, and will participate in the profits of its development in conjunction with experienced private sector development companies. The Enterprise Committee and the Executive Committee shall approve proposals for the development of any investment property before submission to the Board of Directors for final approval.
3.
Other Property: Property that does not lend itself to profitable development or use by the
System or the USM Foundation. Normally, the minimum value of real property the USM
Foundation will accept, but neither uses or develops, shall be $25,000, as based upon a current appraisal provided by the prospective donor at the time of the proffer of the property.
The minimum value of real property given to a charitable remainder unitrust shall be $50,000, as based upon a current appraisal provided by the prospective donor at the time of the proffer of the gift.
Upon acceptance, the USM Foundation may either immediately place this property for sale or hold for future appreciation, at its option.
The USM Foundation will generally not accept the following types of real property:
Time share units
Distressed property: property that would require the USM Foundation to make major repairs, or to provide for renovation or remodeling to be considered salable
Mortgaged property except in the most exceptional of circumstances
Obsolete property: property on which a zoning change or use has seriously and detrimentally affected the value of the property to such an extent that it can no longer be profitably used
Environmentally damaged property.
The USM Foundation may contract for the provision of real estate services (e.g., real estate brokerage services) for its benefit, or for that of the System, if approved by the USM Foundation Board of
Directors.
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Procedures for Real Property Gifts:
Information required to evaluate a proposed real property gift:
1.
Donor must indicate a clear charitable intent when offering real property as a gift.
2.
Donor must provide a current appraisal performed by a certified appraiser familiar with that type of property. The appraisal should be done within 60 days of the date of the gift.
3.
The appraiser should be informed that the appraisal will be used to determine the value of a gift for IRS purposes, and the appraisal must be conducted under those criteria. The latest copy of the tax assessment notice is not sufficient to determine the market value of the property. a.
The IRS has ruled that the donor may deduct the cost of the appraisal as an expense paid in connection with the determination of the donor’s income tax liability.
4.
Donor must provide a current title examination showing the property is free and clear of liens, encumbrances, etc., and that it is not currently the subject of any litigation. a.
The title report may also qualify as a deduction as an expense paid in connection with the determination of the donor’s income tax liability. b.
The donor is encouraged to consult with his/her tax accountant to confirm this.
5.
All real property taxes that are due for the year in which the property gift is given to USMF must be paid by the donor.
6.
The property must meet the criteria of USMF Real Property Gift Acceptance Standards for current value and use.
7.
A member of the USM Foundation staff must be given an opportunity to inspect the proffered gift, and have an inspection, if it is determined to be necessary.
8.
If the USM Foundation determines it is necessary, the USM Foundation may have an environmental assessment of the proposed gift performed prior to a decision to accept or refuse the gift. a.
An environmental assessment must be performed prior to acceptance of any commercial property. b.
The donor may or may not be requested to pay for, or assist in paying for, the assessment.
The Development Officer must explain the following requirements to the donor, and must be sure that the donor understands them, before the real property gift may be accepted by the USM Foundation:
1.
The IRS requires the donor to fully relinquish custody and control over the property. Real property gifts must be placed under the control of and for the exclusive use of USMF in order to qualify for the charitable tax deduction.
2.
The development officer working with the donor must carefully explain that USMF policy for real property gifts is to sell such gifts as soon as possible, except in the most exceptional circumstances.
3.
If the donor claims the appraised price as his/her tax deduction and USMF sells the property for less during the first two years following the gift, the donor may be required to amend his tax
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return to reflect the lower purchase price. After the initial two years, the donor is not required to amend his/her tax return if the gifted property sells for less than the appraised price.
These policies and procedures apply whether the proffered real property gift is an outright gift or a planned gift.
Grants and Contracts
The USM Foundation administers grants that are philanthropic in nature. Under special circumstances, the USM Foundation may administer government grants and contracts, as well as other contracts.
Acceptance of grants and contracts that would create burdensome administrative requirements on the
USM Foundation, such as additional audit requirements tied to the grants or significant reporting or monitoring, will be accepted only under special circumstances and only if arrangements have been made with the unit to cover the additional anticipated administrative costs via overhead from the grant or from another source. This arrangement must be documented in advance.
Please contact the USM Foundation Grant Administrator prior to submitting a proposal if there are
any questions about the process
All University guidelines must be followed before the USM Foundation can accept a grant or contract, including compliance with policies on faculty consulting, patent policy, human subjects, affirmative action, conflicts of interest, and any other such policy governing grant and contract activities.
The appropriate academic administrators and the Office of Sponsored Programs (or its counterpart) must review and approve all proposals before submission to the USM Foundation for processing.
Grants/Contracts to be administered by the USM Foundation must explicitly name the
University System of Maryland Foundation, Inc. as the administrative agent.
To submit a proposal, please complete the following steps:
1.
Prepare and send the paperwork identified below to the USM Foundation: a.
Letter of approval from the Office of Sponsored Programs or equivalent department b.
One copy of the proposal for the USM Foundation
2.
When the above are received, a transmittal letter, signed by an officer of the USM Foundation, will be prepared. The USM Foundation will forward the letter, the proposal, and other required documents to the funding agency or return the packet to the department for submission, depending on the agreed upon arrangements between the parties involved.
Follow-up to Notification of Acceptance from the funding agency:
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The USM Foundation establishes a separate account for each grant/contract to assure that financial reports can be prepared and that grant/contract funds are not co-mingled with other funds.
Through attributes on the grant record in the financial software the USM Foundation maintains key elements of the grant for tracking and monitoring purposes. These include:
Granting Organization
Grant Start and End Dates
Grant Award Amount
Grant Reporting Dates
Grant Funding Dates
The USM Foundation maintains electronic files of all documentation for each grant/contract administered by the USM Foundation. Documents maintained include the following:
The grant/contract proposal paperwork (see items listed under Submitting the Proposal above)
Documentation supporting receipts from the funding agency
Documentation supporting disbursements (these documents are attached to the disbursement record in the financial software)
Copies of filed reports or confirmation that the principal investigator has filed reports or other documentation indicating the narrative reports have been filed
Copy of financial reports filed with the funding agency. These reports are prepared by the department, but must be submitted to the USM Foundation for review prior to submission
Copy of the transmittal letter that accompanies technical reports prepared and submitted to the funding agency by the principal investigator for the grant/contract.
Grant backs:
The USM Foundation has the ability to sub-grant a portion of the grant to an institution. This enables the department to use university employees and to purchase goods and services using university funds and provides assurance to the university that those expenditures will be reimbursed.
Requests for grant backs are submitted to the Grants Administrator and must include the following information:
USM Foundation account number
Campus account number
$ amount requested
Person requesting the grant back
Disbursements for Grants/Contracts: See Cash Disbursements for more information.
Fees: Upon review of documentation, the USM Foundation may charge an administrative fee.
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Non-Gift Revenue
Revenues from sources such as those identified below are not contributions. They may be received by a
USM institution, school, department, or directly at the USM Foundation Business Office:
Auctions
Raffles
Conferences & Seminars
Sales
Part Gift / Part Non-Gift
Special Fundraising Events
As noted under the Solicitation Policy above, all literature soliciting non-gift revenues must identify the University System of Maryland Foundation, Inc. (in accordance with guidelines established by the Board of Regents) and must be reviewed by the USM Foundation prior to the activity or event. The USM Foundation reserves the right to refuse deposits where the literature has not been submitted for review.
Checks, supporting documentation and the Non-Gift Deposit Form should be forwarded directly to the
USM Foundation Business Office for processing. Before remitting, be sure that all of the following information is included on/with the form:
Revenue code
Purpose stated
Legible signature
Check has been made payable in accordance with the Check Acceptance Guidelines
Supporting documentation is attached (i.e., event literature)
Auctions
Auctions provide persons the opportunity to bid openly or silently for one or more items. The revenue from auctions is tax deductible to the extent that payment for the item exceeds the value of the item.
The purchaser must be informed of the value of the item prior to the bidding.
1.
Submit all literature advertising the event to the attention of the USM Foundation Staff
Accountant and Grant Administrator for review prior to printing the literature or it may be impossible for the USM Foundation to accept and deposit the funds. He/she will inform the department as to whether the literature meets the criteria or if it needs to be modified.
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2.
Send a copy of the list detailing the fair market value of the items to the USM Foundation
Business Office.
3.
Send revenue with the completed Non-Gift Revenue Form to the USM Foundation Business
Raffles
Office.
A raffle is an appeal for money consisting of a prize, the element of chance, and consideration or payment for the right to participate. The cost of a raffle ticket is not tax deductible; therefore, it must be classified as non-gift revenue. The IRS notes that the only amount eligible for deduction purposes is the difference between the gift and the total of all the prizes offered in the raffle, whether the raffle is won or not.
1.
Submit all literature advertising events to the attention of the USM Foundation Staff Accountant and Grant Administrator for review prior to printing the literature or it may be impossible for the USM Foundation to accept and deposit the funds. He/she will inform the department as to whether the literature meets the criteria or if it needs to be modified.
2.
State law regulates raffle activities. The USM Foundation is registered in the State of Maryland and any appeal for money to Maryland residents is covered under that registration. However, there may be local regulations that require a license. It is the responsibility of the unit holding the raffle to ensure all local regulations have been followed.
3.
The value of prizes received by the winner must be included in calculating the winner’s gross income. If the prize is in the form of goods and/or services, the fair market value of those good and/or services must be included.
4.
The USM Foundation must be informed of the value of the prize, and the name, address and social security number of the winner(s). That information is reported on a Form W9, subject to the following guidelines: a.
If the single prize has a value of $600 or less, the USM Foundation is not required to report or withhold. b.
If the single prize has a value of $600 or more, but not more than $5,000, the USM
Foundation must withhold 31% backup withholding if a W-9 is not completed. c.
If the value is $5,000 or more, the USM Foundation must withhold 28%. d.
Note: Withholding is required even if the prize is not cash. The prize can be grossed up so that the tax can be paid or the winner can remit the amount to be withheld to the
USM Foundation. The USM Foundation must withhold the prize if there is no way to pay the taxes.
Note: If a raffle is held at an event and the raffle is only open to the attendees of that event then the entire event registration is considered a non-gift. The value of the event ticket beyond any other calculated fair value of the event is considered the cost of participating in the raffle.
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Sales
The USM Foundation may accept the proceeds from sales of tangible merchandise, books, tapes, wreaths, sweatshirts, etc. The USM Foundation must be notified prior to the sale.
Note: All sales within the state of Maryland are subject to 6% sales tax, and may additionally be subject to Unrelated Business Income Tax (UBIT). Sales tax is paid as required by law and charged to each account accordingly.
When submitting the Non-Gift Revenue Form from sales proceeds use the GL Code 4250 (Sales Taxable) on the form.
When the item(s) to be sold is purchased and the Disbursement Request is submitted for payment, use the GL Code 4253 (Cost of Goods Sold) on the request form.
Conferences & Seminars
The USM Foundation may administer funds for conferences and seminars.
1.
Submit all literature advertising events to the attention of the USM Foundation Staff Accountant and Grant Administrator for review prior to printing the literature or it may be impossible for the USM Foundation to accept and deposit the funds. He/she will inform the department as to whether the literature meets the criteria or if it needs to be modified. a.
Only revenues relating to conferences where the corresponding expenditures are to be disbursed through the USM Foundation will be accepted.
Special Fundraising Events
The USM Foundation may administer funds for activities such as dinners, theater programs, golf tournaments, etc., where the attendee is provided with a benefit in exchange for a contribution.
1.
Submit all literature advertising events to the attention of the USM Foundation Staff Accountant and Grant Administrator for review prior to printing the literature or it may be impossible for the USM Foundation to accept and deposit the funds. He/she will inform the department as to whether the literature meets the criteria or if it needs to be modified.
2.
Provide donors who attend with information regarding what portion of their payment is tax deductible when the total amount paid by them is $75 or more (per the Revenue Reconciliation
Act of 1993). This is not per attendee, but the total amount of the check. a.
All solicitation materials must include this information, per IRS rules.
3.
All solicitation and/or receipt literature must identify the gift and non-gift portion. a.
`The non-gift portion represents the fair market value of any goods or services received by the person attending the event, not the cost. All benefits have a fair market value, even if the event costs the sponsoring department nothing (i.e., a donor is contributing
33
all the food, entertainment, etc.) The fair market is determined by what it would cost an individual to purchase the item. In order to determine the fair market value of the benefit, the following items should be considered and a fair market value determined, when appropriate: (See Fair Market Value Worksheet ) i.
Meal $__________ ii.
Entertainment $__________ iii.
Favor/Gift $__________ iv.
Activity (Golf/Tennis, etc.) $__________ v.
Speaker $__________ b.
IRS policy suggests the following language for your solicitation/receipt, which we recommend: i.
“The amount of your contribution that is deductible for Federal income tax purposes is limited to the excess of the amount contributed by you over the value of the goods and services that you receive. We estimate the value of those goods and services to be $ ______ and, therefore, you may deduct any contribution in excess of that amount.” c.
When submitting requests to pay for expenses associated with a special fundraising event, use GL Code 4320.
Part Gift/Part Non-Gift
If a contributor received a benefit in exchange for part of his/her contribution, a Non-Gift Deposit Form must be completed for the non-gift portion.
Send the completed non-gift deposit form to the OIA along with the corresponding gift transmittal form and the check or cash. The OIA enters the gift portion in Advance and sends the Non-Gift Deposit Form with the gift batch detail report to the USM Foundation Business Office.
Revenue Codes
The following GL codes are used for coding revenue. The highlighted codes are gift revenue codes and should not be used for non-gift revenue.
GL CODE DESCRIPTION
4002 .................................................................................. Alumni
4004 .................................................................................. Alumni - Gift in Kind
4012 .................................................................................. Friend
4014 .................................................................................. Friend - Gift in Kind
4015 .................................................................................. Friend - Bequest/Estate
4022 .................................................................................. Foundation
4023 .................................................................................. Foundation – Matching
4042 .................................................................................. Other Organization-Restricted or Design
4052 .................................................................................. Business
4053 .................................................................................. Business - Matching
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4054 .................................................................................. Business – Gift in Kind
4056 .................................................................................. Contribution from Deferred Giving
4070 .................................................................................. Government - Federal
4072 .................................................................................. Government - State of Maryland
4074 .................................................................................. Government – County / Local
4076 .................................................................................. Government - Other States
4200 .................................................................................. Memberships / Dues
4250 .................................................................................. Sales Taxable
4251 .................................................................................. Sales – Non-taxable outside MD
4260 .................................................................................. Other Income
4265 .................................................................................. Affinity Program Revenue
4270 .................................................................................. Consulting Contracts
4275 .................................................................................. Subscriptions/Newsletter
4280 .................................................................................. Ad Sales
4295 .................................................................................. Other Activities ( NOT fundraising, NOT staff )
4300 .................................................................................. Royalties
4310 .................................................................................. Rent
4320 .................................................................................. Special Fundraising Event ( Non-charitable portions)
4400 .................................................................................. Education Programs
4410 .................................................................................. Conference / Seminar
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Investment Policy
Responsibility for the Investment Policy of the Foundation lies with the Investment Committee of the
Board of Directors. The Investment Policy statement outlines the overall philosophy that guides our
Investment Committee, in-house staff, and hired investment managers to ensure the exercise of prudence and appropriate care in managing and investing our assets in accordance with the Uniform
Prudent Management of Institutional Funds Act (UPMIFA).
The below Investment Policy Statement was last updated on June 14, 2013.
The University System of Maryland Foundation endowment fund’s (herein Endowment) Statement of
Investment Policies and Objectives is based on certain investment principles the Investment Committee of the Board of Directors regards as fundamental and constant. The Committee’s intent is to manage the endowment assets in accordance with these principles, regardless of cyclical ebbs and flows in the capital markets, and this documentation of these principles is intended to ensure continuity of purpose and implementation regardless of changes in the composition of the Committee.
1.
TIME HORIZON. On the one hand, the Endowment’s investment time horizon should be infinite, since the institution is expected to exist in perpetuity. On the other hand, the purpose of the
Endowment is to provide a steady and sustainable distribution of funds, which means that large fluctuations in endowment market value over short time periods are highly undesirable. In setting asset allocation policy, the Committee will attempt to take into account both of these conflicting time horizons.
2.
SPENDING. The ideal endowment spending policy considers inter-generational equity, whereby the current needs of the institution are not sacrificed in the interests of the future, nor future needs sacrificed to those of the present.
3.
DIVERSIFICATION. By allocating funds to asset classes whose returns are not highly correlated over time, the Investment Committee aims to mitigate some of the volatility inherent in equities and thereby provide greater stability in spending distributions than might be possible with a more concentrated portfolio. Although such diversification means the endowment may not reap all of the benefits of equity bull markets, it will also avoid the full brunt of bear markets. No more than 5% of the Fund’s assets may be invested with one investment fund and no more than 10% of the Fund’s assets may be invested with one investment manager. The Committee may however make exceptions in special circumstances.
4.
RETURN AND RISK OBJECTIVES. The overall goal of the Endowment is to manage the funds to an appropriate risk level that meets its long-term objectives. The Endowment will be managed to a return commensurate with the Endowment’s objectives, relative to market conditions. Both quantitative and qualitative assessments of risk will be made on the portfolio as a whole.
36
Investment Staff will monitor and report to the Committee underlying portfolio allocations and risk exposures.
5.
EXCHANGE LISTED PRODUCTS. It may be appropriate for Staff to invest in holdings of index products and their associated derivatives in order to develop core positions within the asset allocation structure, rebalance the portfolio, and/or thematically tilt the portfolio.
6.
CONFLICTS OF INTEREST. The Foundation, Investment Committee, and Investment Staff make best efforts to avoid potential conflicts of interest. There is a written policy detailing best efforts to avoid these situations or to appropriately manage conflicts of interest when they exist.
7.
INVESTMENT POLICY REVIEW. The Committee will take into consideration risks and liquidity needs, with respect to changing market conditions in assessing investment policy. It is expected that the
Committee will review the Endowment’s investment policy and asset allocation annually. While it is not anticipated that the investment policy will be changed frequently, the Committee should review the policy periodically to ensure that the endowment is capitalizing on available market opportunities.
8.
ROLES AND RESPONSIBILITIES OF THE INVESTMENT COMMITTEE
The Committee has been granted the authority by the Board and bears sole responsibility for the management of the endowment and operating portfolios.
The Committee shall determine and review the Foundation’s investment policy for the endowment portfolio and the operating portfolio. This shall include the determination of the return objective, risk tolerance, asset allocation and other constraints. Both return objectives and risk tolerances shall be considered in the context of the spending policy and an appropriate time horizon.
The Committee may, within the prudence guidelines set forth in the Uniform Management of
Institutional Funds Act as adopted in Maryland, delegate to external investment managers all or part of the endowment and operating portfolios.
The Committee may delegate to the Investment Staff authority to hire and discharge external investment managers as appropriate and to make direct investments consistent with the asset allocation and the overall return objective and risk tolerance established by the Committee. In addition, the Committee may delegate to Investment Staff authority to buy and/or sell individual securities.
The Committee shall periodically monitor the portfolio’s performance and risk exposures.
The Committee may, at its discretion, use the services of any outside advisors as the Committee determines is necessary and appropriate to enable the Committee to fulfill its responsibilities.
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9.
ROLES AND RESPONSIBLITIES OF THE INVESTMENT STAFF
The primary responsibility of Staff is to analyze and manage the investments of the Foundation, in accordance with the risk and return guidelines set forth by the Committee.
The Staff shall manage the portfolio within the risk and asset allocations set by the Committee from time to time.
The Staff shall monitor and maintain investment exposures, as set forth by the Committee. The parameters of the delegation to Staff shall be monitored by the Chairperson of the Committee.
The Staff shall use its discretion and execute the following portfolio actions, so long as Staff has followed the processes and procedures as outlined below:
1) Terminating or partial redemption from an Investment Manager – Staff is granted full discretion to perform this action.
2) Retaining or making an additional commitment to an Investment Manager – Staff must: a.
Gather Strategic Investment Manager’s input in writing. b.
Put forth the prospective investment manager to the appropriate Asset Class
Committee Member Specialist (or back-up Member if unavailable), the Risk
Management Committee Member, and the Committee Chairperson. c.
Receive approval to invest in writing from the Committee Chairperson and at least one of the other two investment committee members consulted. Notify the full
Investment Committee via email of the potential action with three days notice before execution. Approval from the full committee is not required.
3) Exiting / Selling Individual Securities – Staff is granted full discretion to perform this action.
4) Buying Individual Securities – Staff must receive the Risk Management Committee Member or Committee Chairperson’s approval in writing.
The Staff will promptly inform all Committee members of any manager hiring and or terminations.
The Staff shall work with its Strategic Investment Managers to maintain appropriate records and provide reports to the Committee and Clients on performance and risk exposures.
10.
ROLES AND RESPONSIBILITIES OF THE STRATEGIC INVESTMENT MANAGERS
The Strategic Investment Managers shall act as additional fiduciaries for the Foundation and its investment portfolios.
The Strategic Investment Managers shall provide additional investment expertise to the Committee and Staff. This includes top-down portfolio asset allocation as well as investment strategy and manager sourcing, due diligence, risk measurement, monitoring, performance measurement & attribution.
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The Strategic Investment Managers shall reconcile performance reporting with the Foundation’s other service providers and managers.
The Strategic Investment Managers shall maintain appropriate records. They shall also provide portfolio analysis that allows Staff to carry out its roles and responsibilities.
The Strategic Investment Managers shall work with Staff to generate Client and Committee reports.
11.
ROLES AND RESPONSIBILITIES OF THE INVESTMENT MANAGERS
The Investment Managers hired by the Foundation shall provide portfolio management, risk management, security selection, and performance attribution reporting in accordance with the purposes for which they were hired.
The Investment Managers’ goals shall meet or exceed their defined benchmarks or expected targets, as established when hired.
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Investment Earnings and Fee Allocations
Monies received by the USM Foundation and held on behalf of the institutions are invested in either the
Operating Pool or Endowment Pool depending on the type of account to which the funds are credited.
Monies stay invested in the pools until an actual disbursement from the account occurs.
Operating Accounts:
Realized Income, net of fees, on Operating funds is allocated to each institution on a monthly basis based on each institution’s total portion of the USMF Operating pool balance for that month-end. On an annual basis those accumulated earnings are transferred to each institution’s general Office of
Institutional Advancement operating account to be used to further fundraising efforts or to be allocated to that institution’s operating accounts. It is up to the individual campus Advancement/Development
VP’s to determine how to use this income.
The USM Foundation does not charge any fees to individual operating accounts.
Endowment Accounts:
Income, Realized Gains and Losses, Investment Manager Fees, Investment Bank Custodial Fees, and
Unrealized Gains and Losses are allocated to endowment accounts on a monthly basis based on a unitization allocation methodology.
A unitized endowment pool has mechanics similar to that of a mutual fund. Each endowment owns individual units in the pool and the units are valued monthly based on the total market value of the pool divided by the total number of units in the pool. New monies coming into an endowment account purchase units in the pool based on the current month-end unit value. Monies disbursed from the pool sell units based on the prior month-end unit value. Earned Income (interest and dividends) and fees buy or sell units in the pool based on the current month-end unit value. Realized and Unrealized gains and losses do not impact the number of units but adjust the value of the units each month and establish the new per unit value for the next month.
On an annual basis, in the first quarter of the fiscal year, based on June 30 th market value, the USM
Foundation charges each endowment account with three assessments. These assessments are: an
Investment Services assessment, which covers the annual operating costs of the USM Foundation
Investment Office; an Endowment assessment, which covers the operating costs of the Business and
Advancement offices of the USM Foundation; and an Institutional assessment, which is used to support the fundraising efforts of each campus. These fees are treated as disbursements for endowment accounting and performance purposes.
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Spending Policies
Operating accounts are current use accounts and all monies are available for spending at any time.
Quasi-endowments are current use accounts invested in the endowment pool and are given an annual spendable income amount but are not limited to spending that calculated amount unless specifically stated in the Memorandum of Understanding.
The available spendable income on endowment accounts is governed first by the Memorandum of
Understanding (MOU). If the MOU outlines specific spending guidelines those spending guidelines must be followed to set the annual spendable income amount. If the MOU is silent as to the spending formula or defers to the USM Foundation policy then the spending policy governs the calculation of the annual spending amount.
Spendable income is calculated on a fiscal year basis and is available to use as of July 1. The spendable income rate for the upcoming fiscal year is set in February each year. That rate is applied to the prior
Dec. 31 market values to determine the spendable income for those endowments covered by the spending policy. Those calculations are completed in early March and communicated to the individual campus administrators, budget officers, and deans at that time for planning purposes for the upcoming fiscal year. Carryover spendable income calculations are not available until after the fiscal year has been closed. These calculations are completed in early August and communicated to campus personnel at that time.
USM Foundation Spending Policy
The two key components of the policy are to preserve the purchasing power of the assets
(“Intergenerational Equity”) and to provide a predictable and steady support for programs. These components are based on the expectation that returns over time should be equal to the spending rate plus a consideration of inflation as well as any expense levies.
In order to achieve the above, the Spending Policy Committee approves an annual spending rate in
February for the coming fiscal year. December 31 values are used to calculate the spending rate. Once approved by the Executive Committee, the funds are considered appropriated for expenditure as of the first day of the fiscal year in which the funds will be spent.
The Spending Rate is a combination of the following two factors by weighting (a) 30% and (b) 70% to calculate a per unit rate. Once calculated, the rate should be no more than 4.5% or less than 3.5% of the moving average market value. a.
Compute the average market value for the period ending December 31, 20XX using the previous twenty (20) quarters. Calculate 5.0% of this average market value. This is equivalent of using a moving average as each year the first four quarters drop off and the most recent four quarters are added.
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b.
Calculated an adjusted spending rate using the prior year’s percentage increased by the Higher
Education Price Index (HEPI – changed from Consumer Price Index (CPI) – effective February 14,
2008) c.
Calculate an equivalent per unit amount. Compute the distributed amount by multiplying the calculated per unit amount by the number of units attributable to each fund.
The Spending Rate yielded by the above formula is only for advisory purposes and is not binding upon the Committee’s deliberations and recommendation to the Executive Committee of the annual spending rate.
Newly created individual endowment funds, in order to have annual Spendable Income, must be invested for at least one year prior to the calculation date and have a minimum value as recommended by the Spending Policy Committee and affirmed by the Executive Committee. The depreciation and/or appreciation in the market value will accrue to each individual endowment fund.
With the enactment of UPMIFA (Uniform Prudent Management Institutional Funds Act) in Maryland, the concept of historic dollar value has been eliminated. Spending from endowments is now subject to a rule of prudence, keeping the following guidelines in mind: (UPMIFA Guidelines)
1.
The duration and preservation of the endowment fund
2.
The purposes of the Institution and the endowment fund
3.
The general economic conditions
4.
The possible effect of inflation or deflation
5.
The expected total return from income and the appreciation of investments
6.
Other resources of the Institution
7.
The USMF investment policy
While spending from funds previously considered underwater (the fair market value is less than the historic dollar value) is not prohibited under UPMIFA as it was under previous law (UMIFA), the
Foundation is nonetheless required to adopt a prudent spending policy, keeping the UPMIFA Guidelines in mind. To that end, there should be no funds appropriated for expenditure from underwater funds except where the institution makes a specific request and that request is supported by an acceptable justification and documentation using the UPMIFA Guidelines, an attempt has been made to secure the donor’s consent to the expenditure, and the President of the institution benefitting from the fund requests the expenditure in writing.
Requests shall be submitted first to the Spending Policy Committee, which will make a recommendation to the Executive Committee. The Executive Committee shall, in making its determination, include all documentation submitted in support of the request as an attachment to the minutes. In no event will funds be appropriated for expenditure from an underwater fund where the donor has expressed a contrary intent in the gift agreement or other relevant documents.
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UPMIFA, as adopted in Maryland, contains the following provisions:
Estates and Trusts Section 15-403 (d) (2) and (3):
(2) The appropriation for expenditure for expenditure in any year of an amount greater than 7 percent of the fair market value of an endowment fund creates a rebuttable presumption of imprudence.
(3) The institution shall notify the Attorney General of the appropriation for expenditure in any year of an amount greater than 7 percent of the fair market value of an endowment fund.
For purposes of the above referenced provision, an appropriation for expenditure does not include carryover funds, i.e., spendable income which remains unspent at the end of the fiscal year and is carried over to the following fiscal year.
In general, the spending guidelines of UPMIFA and the Spending Rate determined by this Policy apply only in cases where the donor has not expressed a contrary intent in the gift agreement or other relevant documents.
Unrestricted assets of the Foundation will not be used to supplement spendable income from underwater funds.
TERMINOLOGY:
MARKET VALUE Current market price of the portfolio using the individual security prices when available, as indicated by the latest trade record or the values as provided by investment managers when those investments do not have readily determined current values. The value of the total fund includes receipts, disbursements, interest, dividends, realized gains or losses and unrealized gains or losses.
UNIT VALUE The standard of measurement for the endowment fund. The value of one unit was established in 1985 at $10.00. Current unit value is calculated by dividing the total market value by the number of outstanding units. New funds and earnings deposited in each account purchase units at the current value. Therefore, each fund owns a specific # of units. All disbursements are based on unit value.
UNDERWATER FUND A Fund with the fair market value that is less than the sum of the initial gift amount plus any additional gifts the donor contributes.
The Spending Policy is reviewed annually to consider if appropriate adjustment is necessary.
Approved by the Executive Committee February 3, 2012, and amended from time to time.
Requests for Underwater Spending
Per the Spending policy above:
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“...there should be no funds appropriated for expenditure from underwater funds except where the institution makes a specific request and that request is supported by an acceptable justification and documentation using the UPMIFA Guidelines, an attempt has been made to secure the donor’s consent to the expenditure, and the President of the institution benefitting from the fund requests the expenditure in writing. Requests shall be submitted first to the
Spending Policy Committee, which will make a recommendation to the Executive Committee. The
Executive Committee shall, in making its determination, include all documentation submitted in support of the request as an attachment to the minutes. In no event will funds be appropriated for expenditure from an underwater fund where the donor has expressed a contrary intent in the gift agreement or other relevant documents. “
To request spending on an underwater account complete the
Underwater Spending Request Form
and submit that with applicable documentation to the Director of Business Operations.
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Cash Disbursements
General Guidelines
The purpose of these disbursement guidelines is to ensure that cash is disbursed only upon proper authorization and that the request for payment is supported by the appropriate documentation, for valid business purposes, and properly recorded.
All disbursements must:
Provide a direct benefit to an institution
Be properly reported and documented for tax purposes
Be used in compliance with any donor restrictions
Payments to Vendors for Goods and Services
In addition to meeting the general guidelines above for all cash disbursements, the following guidelines are applicable to payments to vendors for goods and services.
When goods to be purchased are $25,000 or greater, quotes from at least two (2) vendors should be obtained and submitted with the Disbursement Request Form. If only one price quote is submitted, an explanation as to why this is a sole source purchase must be provided. (If the quote is sufficiently detailed, it can be used in place of a formal contract.)
When the value of services to be rendered is $25,000 or greater, a justification for the selection of a specific contractor must be included with the contract unless more than one bid was received.
A current W-9 form must be on file at the USM Foundation for all vendors
An invoice from the vendor, or a signed quote or contract from the vendor which clearly specifies the payment terms and the goods or services being purchased must accompany the
Disbursement Request form
Checks are sent directly to the vendor unless special circumstances dictate alternate delivery.
Please contact the USM Foundation if special circumstances apply.
Please see additional requirements below regarding when a written contract or independent contractor agreement are needed, as well as specific guidelines related to equipment and other fixed asset purchases:
Disbursements Requiring Contracts
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Requests for payments to purchase equipment or any fixed asset, renovate facilities, engage consultants, etc. can be based on either oral or written agreements. However, in order to process a disbursement request where the total payment to the vendor will be $5,000 or greater, the USM
Foundation requires a written contract. The contract can be with the institution if the disbursement will be paid by the institution and reimbursed by the Foundation. If the disbursement will be paid by the
Foundation then the contract must be with the USM Foundation. If the contract is with the institution, then an authorized person per institution policy must sign it.
If the contract is with the USM Foundation, we require that it be reviewed and signed by the President,
CFO or Director of Business Operations, the only authorized USM Foundation signers. If the contract is non-routine, complex, requires more than a year’s commitment, or has liability exposure, legal review may be required, so please allow sufficient lead time for the process.
Though not required, we strongly advise a written contract for any exchange of promise between two parties. A written contract has many advantages: it formalizes the promises exchanged between the parties, and it details the other terms affecting the performance such as start and end date and payment schedules. It also details each party’s rights and provides tangible proof of the parties’ agreement.
A sample Independent Contractor Agreement can be found on the Business Forms page. It is most suitable for agreements with individuals, but the basic format can be used for agreements with companies. The contractor’s document, subject to review, is acceptable.
Independent Contractors
The complex Internal Revenue Code and IRS rules, regulations and procedures sometimes make it difficult to make the distinction between employee status and independent contractor status and are often subjective in nature. The following 20-question test should help you determine whether a business relationship with an individual would be an independent contractor relationship or an employment relationship.
Because of potential tax liability issues it is very important that, if you have any questions, you contact the USM Foundation before making a commitment, if you need to pay an individual for personal services and it is not through an incorporated organization.
20 question test
Under the common law test, a worker is an employee if the purchaser of that worker’s service has the right to direct or control the worker, both as to the final results and as to the details of when, where, and how the work is done. Control need not actually be exercised; rather, if the service recipient has the right to control, employment may be shown.
If an employment relationship exists, it does not matter that the person providing the service is called something different, such as agent, contract worker, or independent contractor. The facts of the case trump the title.
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1. INSTRUCTIONS:
An Employee receives instructions about when, where and how the work is to be performed.
An Independent Contractor does the job his or her own way with few, if any, instructions as to
the details or methods of the work.
2. TRAINING:
Employees are often trained by a more experienced employee or are required to attend meetings or take training courses.
An Independent Contractor uses his or her own methods and thus need not receive training from
the purchaser of those services.
3. INTEGRATION:
Services of an Employee are usually merged into the firm's overall operation; the firm's success depends on those Employee services.
An Independent Contractor's services are usually separate from the client's business and are not
integrated or merged into it.
4. SERVICES RENDERED PERSONALLY:
An Employee's services must be rendered personally; Employees do not hire their own substitutes or delegate work to them.
A true Independent Contractor is able to assign another to do the job in his or her place and need
not perform services personally.
5. HIRING, SUPERVISING & PAYING HELPER:
An Employee may act as a foreman for the employer but, if so, helpers are paid with the employer's funds.
Independent Contractors select, hire, pay and supervise any helpers used and are responsible for
the results of the helpers' labor.
6. CONTINUING RELATIONSHIP:
An Employee often continues to work for the same employer month after month or year after year.
An Independent Contractor is usually hired to do one job of indefinite duration and has no
expectation of continuing
7. SET HOURS OF WORK:
An Employee may work "on call" or during hours and days as set by the employer.
A true Independent Contractor is the master of his or her own time and works the days and hours
he or she chooses.
8. FULL TIME REQUIRED:
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An Employee ordinarily devotes full-time service to the employer, or the employer may have a priority on the Employee's time.
A true Independent Contractor cannot be required to devote full-time service to one firm exclusively.
9. LOCATION WHERE SERVICES PERFORMED:
Employment is indicated if the employer has the right to mandate where services are performed.
Independent Contractors ordinarily work where they choose. The workplace may be away from
the client's premises.
10. ORDER OR SEQUENCE SET:
An Employee performs services in the order or sequence set by the employer. This shows control by the employer.
A true Independent Contractor is concerned only with the finished product and sets his or her
own order or sequence of work.
11. ORAL OR WRITTEN REPORTS:
An Employee may be required to submit regular oral or written reports about the work in progress.
An Independent Contractor is usually not required to submit regular oral or written reports about
the work in progress.
12. PAYMENT BY THE HOUR, WEEK OR MONTH:
An Employee is typically paid by the employer in regular amounts at stated intervals, such as by the hour or week.
An Independent Contractor is normally paid by the job, either a negotiated flat rate or upon
submission of a bid.
13. PAYMENT OF BUSINESS & TRAVEL EXPENSE:
An Employee's business and travel expenses are either paid directly or reimbursed by the employer.
Independent Contractors normally pay all of their own business and travel expenses without
reimbursement
14. FURNISHING TOOLS & EQUIPMENT:
Employees are furnished all necessary tools, materials, and equipment by their employer.
An Independent Contractor ordinarily provides all of the tools and equipment necessary to
complete the job.
15. SIGNIFICANT INVESTMENT:
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An Employee generally has little or no investment in the business. Instead, an Employee is economically dependent on the employer.
True Independent Contractors usually have a substantial financial investment in their
independent business.
16. REALIZE PROFIT OR LOSS:
An Employee does not ordinarily realize a profit or loss in the business. month after month or year after year. Rather, Employees are paid for services rendered.
An Independent Contractor can either realize a profit or suffer a loss depending on the
management of expenses and revenues.
17. WORKING FOR MORE THAN ONE FIRM AT A TIME:
An Employee ordinarily works for one employer at a time and may be prohibited from joining a competitor.
An Independent Contractor often works for more than one client or firm at the same time and is
not subject to a non-competition rule.
18. MAKING SERVICE AVAILABLE TO THE PUBLIC:
An Employee does not make his or her services available to the public except through the employer's company.
An Independent Contractor may advertise, carry business cards, hang out a shingle, or hold a
separate business license.
19. RIGHT TO DISCHARGE WITHOUT LIABILITY:
An Employee can be discharged at any time without liability on the employer's part.
If the work meets the contract terms, an Independent Contractor cannot be fired without liability
for breach of contract.
20. RIGHT TO QUIT WITHOUT LIABILITY:
An Employee may quit work at any time without liability on the Employee's part.
An Independent Contractor is legally responsible for job completion and, on quitting, becomes
liable for breach of contract.
If it is determined that an independent contractor relationship will exist with an individual service provider then an independent contractor agreement must be executed before the work begins. The contractor may provide the agreement or the Independent Contractor Agreement template can be used to construct an applicable contract for the specific circumstances of the work to be performed.
A completed form W-9 will also need to be provided with the agreement before payments will be made.
Purchase of Equipment/Furnishings
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To ensure that purchases or contributions of tangible property are appropriately safeguarded and properly recorded, the following guidelines apply in addition to the contractual requirements above for purchases of $5,000 or more and the quote requirements for purchases of $25,000 or more.
Assets purchased with USM Foundation funds or contributed to the USM Foundation, must benefit the university and usually become university property when acquired. The USM Foundation reports all purchases, and contributions, to the appropriate USM University office so the item(s) can be inventoried:
1.
A completed and signed Inventory Control Form must be submitted along with the
Disbursement Request Form for all equipment/furnishing purchases over $1,000 and for all purchases of computers, regardless of the cost. No check will be issued without the Inventory
Control Form.
2.
A completed and signed Inventory Control Form must be submitted along with other gift documentation for all equipment/furnishing contributed over $1,000 and for all contributions of computers, regardless of the value.
3.
The Inventory Control Form is sent with a letter of transmittal to the appropriate USM institution inventory department, noting transfer of ownership to that USM institution.
4.
Purchased assets are recorded as an expense and transferred to University ownership.
Contributed assets that will be used and not sold are recorded using the fair market value of the asset as of the date of the donation
5.
A copy of the form and transmittal letter is filed chronologically at the USM Foundation Business
Office.
Note: There are occasional unique circumstances when ownership of equipment / furnishings is retained by the USM Foundation. Also, equipment/furnishings obtained by the USM Foundation for the purpose of conducting Foundation business is retained and owned by the USM Foundation.
In such cases, the USM Foundation tags the equipment and provides insurance and maintenance as per
USM Foundation policy. Equipment / furnishings owned by the USM Foundation are capitalized and depreciated on a straight-line basis over five years using a half-year convention.
Reimbursements to Campus Accounts
In many cases, expenditures are first paid from campus accounts and then reimbursed from USM
Foundation accounts. Since original invoices and receipts have already been submitted for these expenses for them to be paid from the campus accounts, the same documentation requirements as direct payments from Foundation accounts would not apply. There are various forms of these types of reimbursements:
Scholarships – see section below
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General Department Operating Expenses – if expenses are being reimbursed from accounts specifically set up for this purpose, only a departmental financial statement showing the overall expenses of the department is required to be submitted with the Disbursement Request Form
Salaries and Benefits – a payroll register showing specific employee names, earnings, and benefits for the period(s) being reimbursed must be submitted with the Disbursement request
Form. Also, if the employee is being reimbursed for work across multiply projects it is the responsibility of the department to maintain effort reports that substantiate the work performed across the different projects. These effort reports may be asked for to substantiate that the reimbursement request is accurate and to ensure that there is no duplication of reimbursements occurring.
Other expenses – copies of original documentation submitted for payment through campus account and some proof that payment was made through state account (this might be a financial report showing the expenses recorded or a copy of a campus Purchasing or Credit card statement showing the charges incurred on a campus charge account.)
Reimbursements to Employees
Expenses incurred by USM Foundation or University employees out of their own pocket, or through the use of a Foundation issued credit card, are covered by this section. It is the responsibility of the individual incurring the expense to ensure that there are funds available in the appropriate account(s) to cover the reimbursement before the expenditure occurs. Failure to do so may result in insufficient funds available to reimburse the individual.
These policies do not apply to non-employees. For example, gifts may be given to outside business associates if there is a legitimate business reason, outside the de minimis limits. Or travel expenses for an outside contractor would be reimbursed based on the terms of the specific contract and not these policies.
Accountable Plan Rules
For reimbursements, the USM Foundation has an “Accountable Plan,” which is a term developed by the
IRS to set forth rules, define legitimate expense reimbursements and require submission of original documentation.
A qualified accountable plan requires all expenditures to:
1.
Have a bona-fide business purpose: The IRS may view a disbursement as providing a personal benefit if there is any doubt concerning its business purpose. Even though in some cases the business purpose may be implied, it must be specifically documented so that a third party would have no question as to its benefit to the institution. Paying or reimbursing for “lavish or extravagant” expenses is unacceptable.
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o These terms are used in IRC Sec 162 and are repeatedly used in IRS documentation, usually with a statement that such expenses are non-deductible. The USM Foundation will determine at its sole discretion whether to pay, reimburse, or reduce payment requests for expenses that are considered “lavish or extravagant.” If you feel there is justification for a reimbursement that might be deemed lavish or extravagant, please provide your reasoning when submitting the request.
NOTE: The USM Foundation Board established the maximum allowable reimbursement for meals, which are $25 for breakfast and lunch and $75 for dinner.
2.
Be properly substantiated: The USM Foundation will not reimburse for expenses if original receipts are not provided. Exceptions to receipt requirement are as follows: o Business use of personal car at the standard mileage rate o Expenditures under $25 (per item) o
Per Diem based on USM Foundation rates (See section on Cash Disbursements – Travel
Requests for more information.)
o Partial reimbursement from University sources: if an employee is reimbursed for a portion of his/her expenses from University sources, a copy of the receipt and the State reimbursement form will be accepted. o Credit cards: credit card statements do not provide adequate supporting documentation. Original receipts for credit card purchases are obtainable from the vendor and should always be attached to the check request.
A reconstruction of records is allowable if originals have been lost through circumstances beyond the person’s control, such as fire, flood, etc. There may be some cases in which the USM
Foundation will reimburse a person for bona fide business expenses when receipts have been lost, but the reimbursement will generally be included as taxable compensation.
Note: The IRS requires that payments to individuals which do not qualify as part of an
“Accountable Plan” be included in the person’s income, either on a W-2 form or on a form 1099.
3.
Be accounted for on a timely basis: The USM Foundation will not reimburse expenditures if they are not submitted within IRS specified deadlines. o IRS Reg. 1.62-2(e)(1) Substantiation: an accountable plan “…meets the requirements of this paragraph if it requires each business plan to be substantiated to the payer…within a reasonable period of time.” o IRS Reg. 1.62-2(f): an accountable plan “must require persons to return within a reasonable period of time the amounts reimbursed that exceeded substantiated business expenses (advances). o IRS Reg. 1.62-2(g)(2)(i) Reasonable Period – Safe Harbors: “…an advance made within 30 days of when an expense is paid or incurred; an expense substantiated to the payer within 60 days after it is paid or incurred.” OR: “An amount returned to the payer within
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120 days after an expense is paid or incurred will be treated as having occurred within a reasonable period of time.” o IRS Reg. 1.62(h) states that if a company has an accountable plan, but the person does not return excess amounts within reasonable time, the amount, which is taxable, is reported as compensation to the person.
Note: While they are mentioned in the same regulation, the 30-60-120 day timeframes are three distinct parts. The 30 and 120 day requirements apply to advances and returns of excess amounts. The 60 day requirement is the general rule for expenses that are not advances.
Travel Reimbursements
Use of Travel-On for Transportation purchases
Travel arrangements can be made through the Travel-On travel agency. Airline, Amtrak, car rental, and hotel reservations can be booked through the agency. Charges for any reservations booked through
Travel-On will be charged to a USM Foundation Diner’s Card account.
1.
Before using Travel-On for travel that will be paid by the USM Foundation, the Travel Request
Approval Form must be completed, approved, and e-mailed to Accounts Payable at the USMF
Business Office.
2.
Before reservations are confirmed, Travel-On will contact Accounts Payable and verify that the travel has been approved. Accounts Payable will verify that there are sufficient available spendable dollars in the USMF account to be charged to cover the expenses.
3.
Travel-On will book the reservations and send a copy of the itinerary to Accounts Payable.
4.
Accounts Payable matches the itinerary to the Travel Request Approval Form and files
5.
When the Diner’s card bill is received, the itineraries and approval forms are matched to the charges and the Diner’s bill is processed for payment
Travel Guidelines and Documentation Requirements
Introduction:
The reimbursement of travel and entertainment (T&E) expenses must comply with IRS rules and regulations. Non-compliance may subject the USM Foundation and the individual to significant financial risks including tax assessments, penalties, and interest.
While the rules are too voluminous and complex to detail, the IRS requires an employer to establish and consistently administer an "accountable plan." Under an accountable plan, individuals can be reimbursed for expenses incurred, without negative tax consequences, when the following conditions are satisfied:
Advances and/or reimbursements are made for business expenses only
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Advances and reimbursements are made within a reasonable period of time before or after the expenses have been incurred
Documentation, including original receipts, is obtained prior to reimbursement and retained for potential IRS review substantiating: o the reimbursed amounts and reasonableness thereof o the timing of the reimbursement and the incurrence of the expense o the business purpose of the expenses o the timely return of any advances in excess of incurred reimbursable expense
The USM Foundation, as a charitable organization, also has a fiduciary responsibility to ensure its resources are used prudently and that individuals do not incur inappropriate or excessive expenses, or gain financially.
Collectively the objectives of these policies, guidelines and procedures are to:
• Ensure that reimbursable expenses are paid to individuals in a timely manner,
• Ensure a clear and consistent understanding of the policies and procedures for the reimbursement of reasonable T&E expenses,
• Ensure compliance with applicable external rules and regulations including those promulgated by the IRS,
• Ensure that those who travel and entertain on behalf of the USM Foundation understand that the Foundation is not obligated to reimburse them for expenses that are not in compliance with these guidelines,
• Ensure that those who incur expenses on behalf of the USM Foundation understand that reimbursements that may be considered taxable are generally not permitted. Any exceptions must be properly identified, authorized and reported to appropriate taxing authorities.
These policies apply to all individuals who are reimbursed for travel expenses by the USM Foundation.
Traveler and Entertainer Responsibility:
Individuals traveling and entertaining on behalf of the USM Foundation must exercise good judgment with respect to incurring T&E expenses and are expected to spend the Foundation's funds prudently.
The individual requesting reimbursement is responsible for ensuring that his/her incurrence of the expense and related reimbursement request complies with all applicable policies, is properly authorized, and is supported with required receipts and other documentation. The signature on the reimbursement form of the individual requesting reimbursement affirms that these responsibilities have been met.
Payment Options and Reimbursement Deadlines:
Individuals are generally expected to use the USM Foundation’s Diner’s Club Credit Card or other personal credit cards to pay for T&E expenses subject to reimbursement. For expenses incurred using the USM Foundation’s Diner’s Club Credit Card, expense reports and receipts should be submitted within 5-7 business days of the monthly statement date.
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For expenses incurred not using the USM Foundation’s Diner’s Club credit card, properly approved and documented reimbursement requests should be submitted to the Foundation within thirty (30) days of the end date of the business activity.
As a general rule, reimbursement requests submitted after six months (182 days) will not be paid.
Under limited circumstances, usually extended travel situations, T&E advances may be requested.
Advances must be repaid within 30 days after the business activity.
Advance Approval for Travel:
All travel, except within the State of Maryland or the Washington DC metropolitan area must be preapproved. Also, all overnight travel, regardless of location, must be pre-approved. The approval request should include:
• The purpose of the travel and the names of the persons or entities with whom you will be meeting,
• If the request is to attend a conference, the conference agenda should be included,
• The destination,
• The anticipated mode of transportation, and
• Whether or not an overnight stay is required.
Any travel expense incurred without prior approval, whether using personal resources or the USM
Foundation Diner’s Club credit card, shall be the responsibility of the traveler. If such expenses were incurred using the Diner’s Club credit card, such amounts must be reimbursed to the USM Foundation by the traveler within 10 days of receipt of the credit card bill by the Foundation.
Documentation supporting the pre-approval must be provided with any travel reimbursement request.
Changes to the pre-approved travel, if substantial and known in advance of the travel, should be submitted for approval. Otherwise, changes to pre-approved travel should be reasonable and grounded in a substantial business purpose.
Air Travel:
The mode of air travel is expected to be the least costly option consistent with the itinerary and particular USM Foundation business involved.
1.
Coach accommodations should be used at all times and travelers are expected to take advantage of advance purchase rates.
2.
Business or first class travel will not be reimbursed or allowed, except in cases of international travel where the flight time is 6 hours or more and then only with specific pre-approval. Travel for short distances while abroad should be booked at coach fares.
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3.
Full coach fares that allow upgrade opportunities are unacceptable if a lower fare was available.
Upgrades at the expense of the USM Foundation are not permitted.
4.
If a traveler elects to fly business and/or first class and agrees to pay the difference between the two fares, the difference will be calculated from the least expensive logical airfare on that particular routing. Documentation should be provided to support this calculation.
5.
Participation in frequent flyer programs must not influence flight selection, which would result in incremental costs to the USM Foundation beyond the lowest logical airfare. The USM
Foundation will not reimburse travelers for tickets purchased with frequent flier miles.
6.
When a trip has been cancelled after a non-refundable ticket has been issued, the ticket can be applied to a trip in the future by that traveler on that airline less a change or cancellation fee.
Travelers must apply any unused ticket value towards a business trip in the future, to mitigate any financial loss to the Foundation. In most cases the traveler has a year during which that ticket can be applied towards a new ticket. If a traveler will not be able to use that credit toward a future business trip in the time period allowed they may use it for personal reasons if they reimburse the USM Foundation the full amount of the available credit.
7.
When a trip has been cancelled after a non-penalty ticket has been issued, the ticket must be submitted for refund. If the traveler has already been reimbursed for this prepaid expense, the traveler must return the money to the USM Foundation once they have received the refund from the airline.
8.
Expenses related to changed itinerary fees will not be reimbursed or allowed unless a clear business purpose necessitated the change.
9.
Baggage fees are allowable and reimbursable for up to two bags.
Rail Travel:
The mode of rail travel is expected to be the least costly option consistent with the itinerary and particular USM Foundation business involved. Except as otherwise provided herein, only coach tickets will be reimbursed or allowed. Acela tickets will be reimbursed or allowed only if the tickets are obtained using the University of Maryland discount.
If a traveler elects to take the Acela or upgrade to business class (except in cases where the tickets are obtained using the University of Maryland discount) and agrees to pay the difference between the two fares, the difference will be calculated from the least expensive logical rail fare on that particular routing.
Documentation should be provided to support this calculation.
Rental Cars:
The size of the rental car should be consistent with the number of travelers and the business purpose of the trip. Regardless of size, the lowest cost vehicle that meets the business needs should be used.
• Travelers are authorized to use rental cars when other transportation is not available or when their use results in a cost savings.
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• Legitimate car rental costs include daily rental fees, local and state taxes, concession fees, mileage fees and drop-off fees. Non-reimbursable costs include, but are not limited to, unnecessary upgrades, car repairs, tickets and fines. Travelers renting cars on behalf of the USM
Foundation are expected to refuel the car prior to returning the car to avoid excessive refueling fees.
• Travelers should decline the loss damage waiver (LDW/CDW) option, supplemental liability coverage, personal accident insurance (PAI) and other additional insurance options when renting a car for business purposes. None of these costs will be reimbursed or allowed.
• All individuals who intend to drive the rental vehicle must be listed on the rental agreement for insurance purposes.
Ground Transportation:
Travelers can elect to use their personal cars for business purposes if such use is less expensive than other options, such as rental cars or taxis, or if such use saves time.
1.
When driving a personal vehicle, drivers are reimbursed for the actual miles traveled. The mileage reimbursement rate is shown below and is the same as is used by the University System of Maryland and covers all transportation and operating costs of the vehicle, including gasoline.
2.
Additional allowable expenses include turnpike tolls, bridge tolls and reasonable parking fees.
3.
A driver will not be reimbursed for parking tickets, fines, moving violations or vehicle towing charges. No reimbursement will be made for vehicle repair costs regardless of whether it results from the traveler's acts or acts of others.
4.
Travelers who choose to use their own automobiles on a trip where air travel is more appropriate will be reimbursed an amount not to exceed the lowest logical airfare to the destination. Documentation to support this amount must be provided with the reimbursement request.
5.
Expenses associated with normal commuting between an employee's home and regular place of business are not reimbursable.
6.
The most economical mode of transportation, such as shuttle service, is expected to be used to and from air, rail or bus terminals, subject to paragraph 8 below.
7.
Taxis utilized while traveling on USM Foundation business are a reimbursable expense.
8.
Sedan/limousine car services are authorized expenses only when the valid business purpose precludes the use of more economical modes of transportation.
Meals:
Personal meals are defined as meal expenses incurred when traveling on an out-of-town business trip.
Meal reimbursements will commence from the time you leave home until your return. Travelers will be reimbursed for personal meal expenses provided they are documented and reasonable. In general, meals should be taken at the most economical restaurant fitting the occasion.
• Travelers have the option of using the per diem rates allowed by the University System of
Maryland (see below) or actual costs. If actual costs are used, they are reimbursable only up to
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the following limits: Breakfast-$25, Lunch $25, Dinner $75. For any given day of travel travelers must use either the per diem rates or the actual costs, but not both. For either the per diem rates or the actual costs, travel must begin before 8:00 am to claim a breakfast expense and end after 7:00 pm to claim a dinner expense.
• When not using the meal per diem rates, any meal must be supported by original itemized restaurant receipts. A credit card receipt with just the total meal cost is not sufficient.
• If a meal is provided by a conference as part of the conference fees and a traveler elects to purchase a meal independent of the conference, such meal will be considered a personal expense and will not be reimbursed, unless traveler can show a justifiable business purpose for purchasing the meal independent of the conference.
Business meals are meals with a clearly substantiated business purpose and are directly associated with the active conduct of USM Foundation business. At a business meal the business discussion is the primary purpose of the meal. Examples of business meals include meetings with business associates, professional colleagues, and others at which a bona fide business discussion takes place. Expenses for business meals, including a reasonable amount of alcohol, are allowable and reimbursable.
Lodging:
When possible, travelers should stay at limited service hotels (e.g. Hampton Inns, Marriott Courtyards).
Internet sites can often be used to find good hotel deals and use of these sites is encouraged. When attending a conference, travelers may stay at the hotel where the conference is being held. Travelers should avail themselves of the negotiated rates at these hotels whenever possible.
The cost of lodging should be kept to a minimum by requesting standard accommodations, whenever possible.
Legitimate lodging expenses include:
• Standard room rate
• Business telephone calls (reasonable calls home)
• Luggage storage and tips for service
• If traveler has a cell phone issued by either the Foundation or USM, the cell phone should be used instead of the telephone in the hotel room
• Internet access fees
The USM Foundation will not reimburse travelers for the following expenses:
• In room video rentals
• In room mini-bar charges for alcoholic or non-alcoholic beverages or snacks
• Health club or exercise room fees
• Recreational charges such as golf, tennis and ski lift tickets
• Laundry and dry cleaning charges (unless traveling for more than five days)
• Costs incurred for failure to cancel hotel reservations
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Lodging reimbursement must be done for actual costs. Per diems may not be used for lodging.
Receipts:
The USM Foundation requires that travelers retain and submit all original receipts for reimbursement purposes.
An acceptable receipt is a document that contains:
• Transaction date
• Name of merchant
• Transaction details (what was purchased)
• Form of payment used
• Amount of purchase
• Indication that the amount was paid
An acceptable receipt for an airline or Amtrak ticket is defined by the type of ticket purchased.
• An acceptable receipt for a printed ticket is the original passenger receipt coupon. Such receipts are provided to the traveler when a printed paper ticket has been purchased.
• An acceptable receipt for an electronic ticket purchased through an agency or on the web, is the printed itinerary/invoice. The itinerary/invoice should show the airline, flight numbers, times and destinations, class of service, amount and that a payment has occurred.
• An acceptable receipt for a change or cancellation penalty is a document showing the additional charge accompanied by an explanation as to the business purpose for the change or cancellation.
Service fees charged by travel agencies do not always have a receipt but they are a reimbursable expense.
No receipts are necessary for mileage reimbursement in a personal vehicle but an attached mileage log is recommended. A printout from Map Quest or another on-line mapping site must also be submitted to substantiate the distance.
An acceptable receipt from the rental car company is a receipt showing the breakdown of costs, i.e. size of vehicle, daily rate, tax, concession fees, city surcharge, etc. A credit card receipt does not contain detailed information and is not considered adequate documentation.
An acceptable receipt for business meals is an itemized meal receipt along with the credit card payment receipt. A credit card receipt does not contain detailed information and is not considered adequate documentation.
An acceptable receipt for hotel charges is the itemized hotel receipt provided at time of checkout showing the room rate, tax and other items.
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A receipt in foreign currency must be accompanied with the US Dollar equivalent amount. The best and most accurate currency conversion is the conversion that credit card companies provide on statements.
Combining Personal and Business Travel:
When personal travel is combined with business travel the traveler should demonstrate to the USM
Foundation that no additional costs were incurred as a result of the combined travel. In the event that there are additional costs, the costs are the responsibility of the traveler.
Special Circumstances:
There may be special or unusual travel situations that arise that may result in reimbursable expenses being allowed outside these stated guidelines. Where possible it is best to get pre-approval, if possible, and maintain detailed receipts and provide detailed explanations of the specific circumstances involved.
Mileage and Per Diem Rates
FY2014 PER DIEM RATES FOR MEALS, BEGINNING JULY 1, 2013
Breakfast
Lunch
Dinner
$8.00
$10.00
$24.00
Total $42.00
MILEAGE RATE FOR USE OF PERSONAL VEHICLE, BEGINNING JANUARY 1, 2014
56.0 cents per mile
Note: Mileage related to commuting (travel between your home and your normal workplace) is not reimbursable. Home is defined by the IRS as where you reside. Transportation expenses between an individual’s home and their regular place of work are not reimbursable but transportation expenses between an individual’s home and a temporary work location, or between two temporary work locations can be reimbursed.
Other Reimbursements
Business Meals
The USM Foundation will reimburse reasonable meal expenses (including food, beverages, and tip) where a bona fide business purpose exists. Bona fide business purposes may include, but are not limited to, meals with: job applicants, guest speakers/lecturers, potential donors, board members, legislative influencers, vendors or independent contractors. The name and affiliation of the other person(s), and the business reason for their inclusion in the expense must be provided.
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Meals with co-workers where the sole purpose is to discuss a business topic that could be discussed in an office setting are not reimbursable.
Cellular Phone Reimbursements
The USM Foundation will not purchase mobile phones for any employee or university employee, but will reimburse for business use of personal cell phones. There are three options for reimbursement of these expenses:
1.
Submit a DRF for actual expenses incurred for individual cell phone calls. The documentation should include copies of the itemized bill with the business calls clearly identified and noting the time, date, place, and business purpose of the call.
2.
Submit a DRF for the entire cell phone bill to be reimbursed with a signed statement that the entire use of the phone was for business purpose. This statement is made on our Cellular Phone
Usage form . Complete the form and submit it along with a copy of the cell phone bill with the
DRF.
3.
Submit a DRF for a portion of the cell phone bill. Use the Cellular Phone Usage form to identify the percentage of the usage that was for business purposes. Complete the form and submit with a copy of the cell phone bill with the DRF.
Employee Appreciation Gifts or awards
Gifts to employees are generally discouraged and may violate state ethics laws. USM Foundation policy allows for reimbursement of non-cash employee gifts of a de minimis amount (valued at $75 or less per employee.)
Cash or cash equivalent (gift cards and certificates) gifts are never allowed.
This policy is based on current IRS regulations, which state that an employee may not need to report the value of a gift that is de minimis in nature.. This rule also applies to flowers, plaques, t-shirts, etc. that are given to employees as an appreciation gift or award.
Faculty & Staff Awards
Payments made to university employees as bonuses, awards, or for services in excess of their usual duties must be included on the employee’s Form W-2. All such payments must therefore be made through the university payroll system, after which the USM Foundation can be asked to reimburse the university from the appropriate USM Foundation account.
Flowers/Memorial Contributions
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The limit on flowers and memorial contributions is $75, including delivery and any taxes or other charges. Flowers may be sent, when intended as an expression of sympathy or concern related to the hospitalization of or memorial for an employee, his/her spouse, lineal descendants, adopted children, stepchildren, ancestors, siblings and members of the immediate household, as long as the cost does not exceed the above-noted limit. In-laws are not included. Congratulatory notices or flowers for the birth of a child or wedding are not included. Memorial contributions to charitable entities or other appropriate expressions of sympathy, in lieu of flowers, are acceptable, subject to the same restrictions. Multiple flower purchases and/or memorial contributions are not allowed for the same event.
Moving Expenses
Moving expense reimbursements are classified as either exempt or non-exempt fringe benefits. Exempt fringe benefits are not included in taxable income but non-exempt fringe benefits are included in taxable income. Exempt expenses can be reimbursed directly to the university employee or reimbursed to the university. Non-exempt expenses can only be reimbursed to the university as these expenses must be paid by the employer and included in the employee’s W-2.
All moving expense reimbursement arrangements should be clearly outlined in the employee’s job offer/relocation letter and submitted with the disbursement request.
Exempt moving expenses: The following moving expenses are exempt if the new main job location is at least 50 miles farther from the former home than the old main job location:
Moving your household goods and personal effects (including in-transit or foreign move storage expenses)
Travel expenses for yourself and members of your household (including lodging but not meals) to get to the new home. (Travel reimbursement policies apply)
Auto expenses, if you use your car to take yourself, members of your household or personal effects to your new home. Reimbursement can be either actual expenses or a per mile rate as set by the IRS each year (the mileage rate used for moving expense reimbursement is a different rate than the mileage rate used for other business travel).
Non-exempt moving expenses: The following expenses are not exempt under tax law:
Pre-move house hunting trips
Temporary living expenses
Meal expenses while moving or living in temporary quarters
Expenses of buying or selling a home
Car tags, driver’s license, etc.
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Personal Gifts
USM Foundation funds should not be used to purchase personal gifts, such as those for Administrative
Assistant’s Day, Boss’s Day, a new baby, weddings, etc. This includes flowers, meals, or other tokens of congratulations or appreciation. These items are considered personal in nature and as such are not made for a business purpose as defined by the IRS. If USM Foundation funds are used to provide a
“personal benefit,” both the USM Foundation and the person authorizing the expenditure are subject to
IRS sanctions.
Staff Meetings, Luncheons, etc.
USM Foundation funds may be used to pay for bona fide staff meetings, luncheons, etc. The disbursement request must clearly state the purpose of the gathering and/or the business topics discussed and must include a complete list of attendees.
Retirement Events
USM Foundation funds may be used for retirement events but those must be pre-approved by the Dean or Vice-President and the USM Foundation. A budget for the event and a description or list of planned invitees should be provided as part of the pre-approval process.
Diner’s Card credit card
The USM Foundation has a corporate credit card program with Diners Club International. Individuals who incur Foundation related expenses on a frequent basis and in larger dollar amounts should request an application for a corporate credit card by contacting us . We will review your request and make a determination as to whether you would qualify for this program.
Individuals who have been issued a corporate credit card must still follow all other guidelines related to reimbursement of expenses and failure to properly follow the documentation requirements or to meet other reimbursement guidelines will result in the card holder being held personally responsible for those non-reimbursable expenses charged to the Foundation credit card.
Disbursements to Students
Payments to and for the benefit of students can be for scholarships, awards, employment-related, or for reimbursement of expenses.
Scholarships
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The USM Foundation does not pay scholarships directly to students. All scholarships are paid to students through the Financial Aid Office of each campus. The USM Foundation will reimburse the campus for applicable scholarships awarded.
It is the responsibility of the Financial Aid offices to verify that student awardees meet all terms of the scholarships being awarded. It is also the responsibility of the account administrators to ensure that the proper Foundation accounts are being used for reimbursing the scholarship accounts.
Proper documentation for scholarship reimbursement requests must include:
The Student’s name
The Name of the scholarship awarded
The amount awarded
The school term to which the award is applicable (Fall, Spring, Summer)
The institution requesting the reimbursement must provide this information on a standard financial aid form or report in addition to the Disbursement Request.
Awards
Awards are designed to recognize achievement. Awards to recognize academic achievement may be paid directly to the student. A W-9, as well as the award notification letter, must accompany the
Disbursement Request Form.
Awards paid to students are considered taxable and are reportable to the student on Form 1099 under
IRC Section 74.
It is standard policy that all checks are mailed directly to the student. However, if the campus unit would like the check delivered to them so that the check can be presented at an award ceremony, the unit should note that on the Disbursement Request and provide an addressed envelope for mailing or intercampus delivery.
Employment Related
If a student is given funds for which s/he must work (i.e., teaching assistant), that student must be an employee. Employment can either be handled through the University’s payroll system (the preferred method), in which case the USM Foundation can reimburse the University from the appropriate
account, OR can be arranged through the USM Foundation payroll system. (See section on PAYROLL for
information on placing a person on the USM Foundation payroll.)
Any payment given for services rendered, even if it is called a scholarship, is compensation and must be reported on a Form W-2.
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Expense Reimbursement
Expense reimbursement falls into two categories for students.
1.
When the student is representing the University, such as a debate team competition: a.
The student is treated as an employee and any payment must comply with the accountable plan rules. b.
These payments are not reportable as taxable income.
2.
When travel is for activities related to the student’s academic program, such as a research trip: a.
The payment is considered a scholarship and therefore is subject to the rules for scholarship payment, potentially making the payment taxable to the recipient.
Disbursements to Foreign Nationals
Payment to foreign nationals (also known as “nonresident aliens”, or NRA’s), whether it is for employment, honoraria, reimbursement of expenses or some other university-related purpose, is subject to many requirements and restrictions and requires special documentation. The information provided here is for general reference only. Contact us before promising payment to a foreign national and well in advance of his /her arrival.
Documentation Requirements
The Immigration and Naturalization Service (INS) requires that we have copies of the following unexpired documents on file and available for an inspection by an auditor when payment to a foreign national/nonresident alien is required for services/activities performed or reimbursement of expenses needs to be made:
Visa: copy of the information page/picture page of the document (optional for visa waiver countries and Canada)
I‐94 Card: copy of the front and back of the card governing this admission, or, in the case or a foreign national from a visa waiver country, a copy of the passport page with the I‐94 stamp (if a separate card was not issued)
Passport: copy of the information page/picture page
Form I‐20: required if on F‐1 Visa
Form IAP66/DS2019: required if on J‐1 Visa
“Notice of Approval” of H‐1B Petition: required if on H‐B1
1.
The classification written on the visa usually agrees with the I‐94 entry status. If they differ, it is the I‐94, not the visa that governs the admission of the foreign national and defines what kinds of income/reimbursement are allowed. An I‐94 stamp should have a notation by U.S. Customs as to the nonresident alien class upon entry to the United States.
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2.
Immigration generally staples the I‐94 card to the U.S. visa upon entry to the U.S. and removes the I‐94 card upon departure. Please make sure you get a copy of the card before the foreign national departs, as the USM Foundation cannot process a payment without it.
3.
Prior written authorization signed by the "Responsible Officer" (identified on the IAP‐66 or
DS‐2019 form) is required to authorize payment to the foreign national if he/she is sponsored by an institution/organization that is not part of the University System of Maryland.
Immigration Definitions:
Foreign National – a citizen of another country
Nonresident alien – a foreign national who is allowed entry into the USA for a limited time and sometimes for a specific activity at a single organization – such as an F-1 student or a J-1 teacher
Immigration Types:
B-1 Business Visitor Visa
B-2 Tourist Visitor Visa
WB Visa Waiver for Business
WT Visa Waiver for Tourism
F-1 Student Visa
J-1 Teacher/Researcher/Student Visa
H-1B Specialty Occupation
Immigration Rules:
B‐1, B‐2, WB and WT Visa holders: MUST sign a statement attesting to specific criteria for each payment.
The statement is called “Nonresident Alien Required Statement Academic Honoraria Payment/Incidental
Expense Reimbursement B1/B2 Visa Classification.”
F, J, and H‐1B Visa holders: can be paid by the sponsor of their Visa only. Since the USM Foundation is affiliated with the USM and thus with the USM campuses, the USM Foundation can pay a Visa holder if the Visa is sponsored by a USM institution.
Visa Types and Immigration Entry:
As already noted, a variety of Visa types are issued to foreign nationals. The classification types identified below are the ones seen and processed most frequently by the USM Foundation with regard to foreign nationals, who, upon admission to the U.S., are associated with a USM institution:
B‐1 or B‐2 Entry Status– Persons with B‐1 or B‐2 entry status can generally receive reimbursement for travel under “Accountable Plan” rules. Honoraria payments may be made, under very specific
circumstances. Prior to any payment being made, the USM Foundation must have on file a statement
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signed by the foreign national, which attests to their VISA classification status and any other circumstances that are required to validate their eligibility for payment. Please contact the USM
Foundation for the required form.
F‐1 Entry Status – Persons with this entry status generally can be paid income if the USM institution requesting the payment sponsors the F visa and if other required documentation is supplied to the USM
Foundation.
J‐1 Entry Status – Persons with this entry status generally can be paid income if the USM institution requesting the payment sponsors the J visa and if other required documentation is supplied to the USM
Foundation. If sponsored by an institution that is not part of USM, income may be paid, provided that prior written authorization from the “Responsible Officer” of their designated program had been secured.
Payments Allowed
Reimbursements for qualified business expenses: To reimburse a foreign national for qualified business expenses (out of pocket expenses on behalf of the university) the following guidelines apply:
Copies of documents required by U.S. Immigration (identified above) must be on file with the
USM Foundation
All original receipts must be submitted
Accountable Plan rules apply
No SS or ITIN # is needed
Not subject to IRS withholding
Compensation for Dependent Personal Services Rendered: Dependent Personal Services requirements and rules apply when an employee/employer relationship exists:
Compensation is taxed using the U.S. withholding rates.
A foreign national can never claim exemption from income tax on Form W‐4. S/he must submit copies of all of the general documents specified above, which are required for payment, along with a copy of SSN.
Nonresident Alien must complete Form W‐4 as follows: single filing status, 0 or exemption
Nonresident Alien employees can claim tax treaty benefits, if there is a valid dependent personal services article in the treaty between the US and their country
Nonresident Aliens receive a Form W‐2 at the end of the year reporting any wages earned.
Compensation for Independent Personal Services Rendered: Honorariums, consulting fees, independent contractor services, stipends, etc. are Independent Personal Services. Compensation to a foreign national for such services requires the following documents/information is provided:
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Copies of documents required by U.S. Immigration (identified above) must be on file with the
USM Foundation;
Copy of the letter/invitation/agreement from the campus department to the foreign national specifying what the payment is for;
SS# or ITIN#. Payment of income to a foreign national cannot be made without a SS# or ITIN #.
IRS Taxation
IRS General Rules: To receive the compensation/income payment on U.S. source income, the foreign national must already have (or obtain) a U.S. social security number or ITIN number, regardless of I‐94 entry status.
The USM Foundation requires Form W‐8BEN on file for all foreign nationals who receive a payment.
The general rule for taxation of payments to foreign nationals (except for business expense reimbursements) is to withhold 30% of all payments.
Foreign nationals do not receive a Form 1099. Form 1042‐S is used to report all income payments that are taxed, and all income payments exempted under the reasons specified below. (Reimbursements are not income and are not reported.) Form 1042 is the annual return filed with the IRS, along with the IRS copies of Form 1042‐S. The USM Foundation prepares and files the IRS Form 1042‐S by March 15th. A copy of the completed Form is provided to the foreign national.
IRS Tax Exemptions:
There are 3 ways to exempt income payment to a foreign national from tax:
1.
Foreign Source Income Exempt: this is income sourced outside the U.S. There are different sourcing rules, depending upon the type of income being paid. a.
Independent Personal Services are sourced to the location of the activity b.
This type of income is not reported to the individual and to the IRS on Form 1042‐S.
2.
Exempt under Internal Revenue Code: this rule applies if the income, by its nature, is exempt by code. An example is qualified tuition payments exempt by Section 117 of IRS Code. a.
Income in this category must be reported to the individual and the IRS on Form 1042‐S.
3.
Tax Treaty Exempt: treaties that the U.S. has with other countries exempt certain amounts and types of payments from U.S. income tax. The exemption does not apply to Social Security Tax withholdings, except for those who are classified as F-1 and J-1. Those who are classified can have their gross earnings exempt from taxation for five years. a.
The foreign national is responsible for knowing about and asking for treaty benefits b.
To claim a tax treaty benefit, a foreign national must already have (or obtain) a U.S. social security number (SSN) or ITIN number, regardless of visa status. Prizes and awards
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are not addressed by tax treaties and are therefore subject to the 30% federal withholding rate. c.
Form 8233 must be completed and submitted to the USM Foundation to apply for a treaty benefit. The USM Foundation reviews the 8233, and if it is compliant, we will complete the withholding agent portion and file the form with the IRS. There is a 10 business day waiting period from the date the form is mailed to the IRS, at which point the USM Foundation can approve the treaty benefit if the IRS has not denied it. d.
Income exempted by a tax treaty must be reported to the individual and the IRS on
Form 1042-S.
Unallowable Expenses
There are certain expenses that we cannot pay from USM Foundation funds. Although not all-inclusive, this checklist should provide helpful guidance:
Personal expenses. If the expense is not incurred for a bona-fide business purpose it cannot be paid. Examples include: o travel expenses of family member that accompanies you on a business trip o hotel room movies or other personal entertainment or personal indulgence (spa or health club charges) while traveling o lunch meeting with a coworker to discuss something that could be discussed in the office o expenses related to celebrations of coworkers birthdays, weddings, births, graduations, holidays, or other events of a personal nature.
Purchase and/or maintenance of equipment located at home or other off-site location without express approval of the Chair, Dean, or Vice President.
Political contributions, including the purchase of tickets to attend a fundraiser.
First class airline tickets for any travel
Business class airline tickets for domestic travel, but may be purchased for international travel if approved ahead of time
Payments of fines, tickets, penalties, or finance charges
Donations to other charitable organizations, unless it is a de minimis amount (under $75) given as an expression of condolence or sympathy.
Expenditures that may be considered extravagant and therefore might be misconstrued as a misuse of charitable funds. (for example, expenses to travel across the country for an Excel training class when the same class could be attended locally)
Questionable items (expenditures without sufficient documentation or explanation and which might be misconstrued as a misuse of charitable funds if paid)
Loans and Advances
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As a 501(c)(3) organization, the USM Foundation may not make loans or advances, with or without interest, that would be used for the private inurement of any individual.
Loans through the USM Foundation are made only to students and only under bona fide loan programs wherein the funds were donated for that purpose.
NO OTHER LOANS OR ADVANCEMENTS WILL BE MADE.
The Disbursement Request Process
Once you have gathered all of the appropriate documentation and ensured you have available dollars to cover your disbursement request, it is time the complete the Disbursement Request Form (DRF).
1.
The first step is to go to the USMF website ( www.usmf.org
) to open the Disbursement Request
Form . Do not use a form you might have saved locally at an earlier date as the forms on our website are always the most up-to-date form.
2.
You will complete the DRF online and save it as a PDF document.
3.
Beginning with the first field, Campus Account. This section is currently for UMCP only. If you are reimbursing a campus account, please enter the campus account. Note: the documentation you attach must include and match this account number.
4.
Date: the date you are completing the DRF.
5.
USMF Project #: This is the number of the account at the Foundation. (We call them project numbers not account numbers). Please include your campus code in front of your project number. The number should look like this XX-XXXXX.
6.
Project name: This is the descriptive title for the project number. Note: We verify that the project # and name match in our system.
7.
Make Check Payable to: and Address: This is the payee who will receive the check. Ensure you provide a current address for the payee. Checks are mailed directly to the payee except in the following situations – payee is the campus, special handling instructions, or foreign address.
UMCP units requesting reimbursement for a state account will enter the information below.
University of Maryland, College Park
Cashier’s Office
Office of the Bursar
1115 Lee Building
College Park, MD 20742
8.
SS# or ITIN#: This field is locked. If you are submitting a request for a new vendor you will need to include a W9 form. Subsequently, a new W9 is only needed when a vendor/payee changes their address or name. The field is locked so that you cannot type anything there. All documents are scanned into our financial software and clients are able to now see that data - we must take steps to protect social security number and tax identification numbers. If you are reimbursing someone for expenses such as a dinner, supply purchase, etc., the social security number and a W9 form are not required. PLEASE DO NOT WRITE ANY NUMBERS IN THIS FIELD
WHEN YOU PRINT THE DRF.
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9.
Is Individual a USM State Employee? - choose correct answer. Is Individual a UMF Employee?
Choose correct answer.
10.
Citizenship Status - indicate if the payee is US Citizen, permanent resident alien, or not a US citizen. See our policy on payment of Foreign Nationals.
11.
Expense Code and Amount fields – it is important to choose the correct expense code. You can find a list of the Foundation’s expense codes and definitions below. Be sure to use the
Foundation’s codes and not your campus sub-codes. You can tab through these fields as you enter data. It is acceptable to include more than one invoice or expense on the DRF as long as they are from the same account. If you wish to submit one DRF for several accounts or allocate an expense across several account, you will need to use the second page of the DRF . As you tab through the fields the form will total your entries. FOREIGN CURRENCY: If you are submitting a request in foreign currency and wish to have a wire transfer done for your request the DRF form for wire transfers should be completed in that currency and when you print the form out, you will indicate the currency by writing it next to the total. For example, if you want British pounds the abbreviation would be GBP. You will also need to collect wire transfer information from the vendor/payee and complete that section of the wire transfer form.
12.
Business purpose: In this field please provide a brief description of the reason for the reimbursement and a business purpose. Please note: “dinner with Mr. Jones” is not a valid business purpose. You need to provide information on who Mr. Jones I and what was discussed or explain why Mr. Jones was visiting. This is also where to include special instructions regarding the disbursement of the check. (Special instructions might be requesting that a copy of an invoice be sent with the check or to hold the check for pickup). If you want information/documentation to go with a check please include an extra copy of that information/documentation with the DRF
13.
Signature Section: Complete the indicated fields completely. Remember to include your full phone number. Anyone may be a requestor, an approver can only be an authorized signer on the project. An authorized signer may not approve their own DRF. If you need to obtain a signature at a higher campus level, indicate who that person is. For example, for a Dean it might be the Provost, your note would say Supervisor of Dean – Provost.
14.
DOCUMENTATION: Include with your DRF documentation that supports your request. Your documentation should support the amount of the DRF, if the DRF is for reimbursement of expenses, the documentation should include an itemized receipt and proof of payment. For event related expenses please provide a copy of event notification and attendee list. For reimbursement to state accounts you may include a copy of your campus financial record showing your state account incurred the expense. If the documentation shows an amount greater than the disbursement request please provide an explanation of why the request is less.
The requested reimbursement amount can never be greater than the documented amount.
Please note: if your documentation totals more than your request on the DRF, the Foundation will issue the check for the amount of the DRF. If your documentation totals less than the amount on the DRF, the Foundation will issue the check for the amount of the documentation.
For DRF’s reimbursing a state account the supporting documentation account number must
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match the one listed on the DRF for the state account. All DRF’s and their supporting documentation are scanned to our financial software; please keep this in mind when sending your documentation. We will scan everything you send.
15.
Where does it go? Once completed your DRF should be sent to the foundation. The
Foundation address is USMF Disbursements 3300 Metzerott Road Adelphi, MD 20783. We do receive campus mail from College Park and items by courier from other campuses. If you require a name to direct an overnight package, please use Dawn James. Unless specifically instructed by a Foundation staff member, do not address DRF’s in another manner. This is to insure your items are attended to promptly. When the DRF Administrator is absent, staff are assigned to monitor incoming mail and distribute to the appropriate person. DRF’s addressed in a different manner may be delayed.
16.
When are checks issued? Checks are generally issued on Mondays. Changes to the check schedule are announced in the Monthly Ledger, the Foundation’s newsletter. If your DRF is received by 1:30 Thursday, unless there are questions, the check should be issued the following
Monday.
17.
Special notes:
A.
Please notify your payees that Foundation checks are voided automatically 90 days after issue. If you are contacted by a payee because their check was voided you can request a re-issue.
B.
Review the Disbursement Request Form Checklist below. This checklist is used as a guide by the USMF business office for screening the DRF’s when received.
DRF Checklist
The following checklist is used by the USM Foundation Business Office to determine if the DRF has been prepared properly and all necessary documentation is complete and accurate. Please refer to this checklist before submitting your DRF to ensure there are no delays in processing your disbursement request.
____Campus Account (FRS #) is required to process payment (UMCP ONLY)
____USMF Disbursement Form required from Department to process payment
____The Employee gift of a de minimis amount has been exceeded (Allowable limit $75.00)
____Payee and Approver cannot be the same person (Approver cannot authorize their own DRF)
____NO STAPLES and RECEIPTS MUST BE TAPED
____Approver is not listed as an authorized approver on the account agreement form
____Reimbursement check requests require supervisory approval (Signature required)
____Business purpose does not comply with donor restrictions for the account being charged
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____Business purpose/reason for the expense is vague or absent
____Improper project number
____Outdated Disbursement Request Form (new forms are on our website)
____Outdated/wrong expense code (Codes and Definitions enclosed for reference)
____Inadequate back‐up documentation: itemized invoice or itemized receipt was not attached
____Need original invoice and /or back‐up documentation
____The total on supporting documentation does not agree with the total on the disbursement
Request form
____Account CLOSED or Account DEFICIT
____Distribution of charges on disbursement request form does not equal the total
____Social security number (for individuals) or Tax ID number (for businesses) is required for taxability purposes
____Payee address is missing or does not agree with vendor address in our accounting system.
____For business meals, events, and entertainment expenses, please provide the business purpose, names of individuals attending, and the attendees’ relationship to the institution.
____Citizen status information is not provided. Please check the appropriate box on the disbursement request form and provide proof of Permanent Resident Alien Expiration Date. VISA HAS EXPIRED
____A W‐9 tax form is required (For services Rendered)
____A W8BEN tax form is required
____Event Literature MISSING (provide email, invitation, flyer, brochure or announcement)
____Other:___________________________________________________________________
Expense Code Definitions
4253
4321
5000
COST OF GOODS SOLD - Cost of items purchased for resale ( i.e., sweatshirts, tapes, CD’s )
FUNDRAISING EVENT EXPENSES - An event put on solely to raise money for the
University ( e.g. Golf Tournament, Dinner for which people pay to attend etc.
)
ADVERTISING - Newspaper, radio or TV ads for a program or University related event.
Does not include job recruitment ads.
73
5050
5053
5054
5200
5201
5300
5400
5454
5455
5458
5459
5464
5555
5560
5561
5057
5150
5570
5700
5750
SCHOLARSHIP / FELLOWSHIP AWARDS (payable to individual) - Any financial aid given directly to a student. ( Most institutions require payment directly to the institution – if in doubt
Please verify in advance)
STUDENT AWARDS (payable to individual) – cost of awards given directly to student in recognition of a particular achievement
TRANSFER - SCHOLARSHIP / FELLOWSHIP (payable to USM institution) - Transferring money from your USM Foundation account to a State for payment of a
Scholarship/Fellowship.
DIRECT ASSISTANCE - Charitable assistance to individuals (other than scholarship, fellowships, awards, and travel grants)
BUILDING REPAIR & RENOVATION / MAINTENANCE – costs of building repair and maintenance expenses and cost of building/grounds maintenance contracts. Capitalized costs, if applicable, will be transferred to the appropriate fixed asset account by the
USM Foundation staff.
U.S. CONFERENCE / SEMINAR - registration fee for attending a conference / seminar within the U.S.
NON-U.S. CONFERENCE / SEMINAR - registration fee for attending a conference / seminar in a foreign country
POSTAGE - Stamps, Federal Express, overnight mail, etc.
DUES / MEMBERSHIPS - Payments to join outside organizations.
CAMPUS SPONSORED CONFERENCE / SEMINAR – Expenses for putting on a conference by the University - either at the University or another location.
CAMPUS SPONSORED CONFERENCE / SEMINAR TRAVEL EXPENSE - Travel expenses for anyone who attended as an invited guest or speaker.
GRANTS TO RELATED ORGANIZATIONS - Grants to other related non-profit 501 (c)(3) organizations
LAB SERVICES / SUPPLIES - Supplies or services used only in a Lab
EDUCATIONAL SUPPLIES - Books & other such resource materials used for classroom activities or research.
EQUIPMENT RENTAL – costs for equipment rental including rental contracts
EQUIPMENT PURCHASE – costs of all equipment purchases. Capitalized purchases will be transferred to the appropriate fixed asset account by the USM Foundation staff.
EQUIPMENT REPAIRS & MAINTENANCE - costs of all equipment repairs and maintenance including maintenance contracts. Capitalized costs, if applicable, will be transferred to the appropriate fixed asset account by the USM Foundation staff.
SOFTWARE – PURCHASE / LEASE / MAINTENANCE – costs for the purchase, lease, or maintenance of computer software including on-going maintenance and lease contracts. Capitalized purchases will be transferred to the appropriate fixed asset account by the USM Foundation staff
LEGAL FEES - Payments to attorneys.
OFFICE SUPPLIES – self-explanatory
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6150
6160
6170
6180
6190
6200
6250
5765
5800
5900
5910
5920
5930
6000
6005
6010
6020
6025
6030
6050
6052
VISITOR PARKING PERMIT – cost for a guest's parking on campus or an off-site location.
This is for visitors only. Parking reimbursements for faculty and staff should be charged to travel.
ROOM / SPACE / OFFICE RENTAL - Payment for use of off-site facilities NOT related to a conference/seminar, meetings, or fundraising events.
PRINTING / REPRODUCTION – All costs related to a printed piece including expenses related to editorial content and design services. Also expenses related to reproduction: i.e., copies of photos, news articles, copies of videos, etc.
BOOKS / PRINTED MATERIAL / SUBSCRIPTIONS - Self-explanatory
MAILING SERVICE - Payment to a company hired to handle large mailing, zip coding, stuffing envelopes, etc.
ROYALTIES – charges for use of trademarked or copyright protected materials not otherwise classified as conference, meeting, research, or fundraising expense
MEETINGS / ENTERTAINING / MEALS - Lunch, dinner etc. with a visitor, guest speaker, potential donor.
CAMPUS EVENT FOR STAFF - Food for a STAFF meeting ( i.e., Donuts, pizza, etc., taking STAFF to lunch ).
PUBLIC RELATIONS / GIFTS - Flowers, T-shirts, Pins, Trophies, Employee-of-the-Month, etc. or other non-cash tokens of appreciation, condolence, or congratulations to employees, staff, or outside business associates
TICKETS - COMMUNITY EVENTS – costs of COMMUNITY related event ( i.e., Art Shows,
Musical/Theater Performances, Athletic Contests, Award or Celebratory Dinners or Events, etc.
)
LEGISLATIVE LIAISON ACTIVITIES - costs related to lobbying activities
SPONSORSHIPS - Sponsorship of events for public relations/business development purposes.
RECRUITMENT EXPENSE - Taking a job candidate to dinner, lunch, etc. advertising for a job, search firm expenses, etc.
RELOCATION AND LIVING EXPENSES – reimbursement of relocation and temporary living expenses for faculty or staff that are part of a new employment agreement. Do not use for students on fellowships as those should be charged to Fellowship expenses.
HONORARIUM – Payment for speaker or participant at a conference, etc. for one time only.
OUTSIDE CONSULTANT - Payment to an individual or company for a specific or specialized project.
RESEARCH STUDY - Payment to an individual company or organization for performing a contracted study.
TEMPORARY EMPLOYMENT SERVICES (to Agencies) - Payments to an outside agency for temporary employee
PERFORMANCE AWARDS - NON-STUDENT – awards given to faculty or staff
OUTSIDE SERVICES - Payment for contracted services not otherwise classified.
TELEPHONE - Telephone, mobile phone, Fax, teleconferencing charges
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5251
5252
5253
5254
5255
5256
5257
5258
5259
5260
5261
5262
5263
5264
5265
5267
5268
5269
5270
5271
5272
5273
5274
6300
6310
6320
6350
USM TRANSFER – OPERATING EXPENSES ( NOT Sponsored Program ) - Transfer of funds from the USM Foundation account to a State account for operating expenses.
USM TRANSFER – SALARY ( NOT Sponsored Program ) - Transfer of funds from the USM
Foundation account to a State account to pay a salary.
USM TRANSFER – BENEFITS ( NOT Sponsored Program ) - Transfer of funds from the USM
Foundation account to the State account to pay a benefit.
U.S. TRAVEL EXPENSES - Travel expenses within the U.S. including mileage reimbursements, meals, lodging, transportation, etc.
NON-U.S. TRAVEL EXPENSES - Travel expenses outside the U.S. including mileage 6355 reimbursements, meals, lodging, transportation, etc.
The following codes are used for reimbursement of sponsored program (grant/grant-back) expenses.
Refer to corresponding definitions above for same named account
5250 SpProg – PRINTING
SpProg – BENEFITS
SpProg – SALARIES
SpProg – POSTAGE
SpProg – OFFICE SUPPLY
SpProg – TELEPHONE
SpProg – OVERHEAD
SpProg – ADVERTISING
SpProg – EQUIPMENT
SpProg – U.S. TRAVEL
SpProg – CONFERENCES
SpProg – CONSULTANTS
SpProg – HONORARIUM
SpProg – RESEARCH STUDY
SpProg – FOREIGN TRAVEL
SpProg – RECRUITMENT
SpProg – EQUIPMENT RENTAL
SpProg – EQUIPMENT REPAIR & MAINTENANCE
SpProg – SOFTWARE
SpProg – EDUCATIONAL SUPPLIES
SpProg – DUES/MEMBERSHIPS
SpProg – OFFICE/SPACE RENTAL
SpProg – MEALS
SpProg – OTSIDE SERVICE
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Miscellaneous Administrative Policies
These policies pertain to administrators and other campus personnel who mange employees paid through the USM Foundation payroll system or who maintain Foundation related documents and records. Also, please see our Foundation Policies for additional administrative guidelines applicable to employees, volunteers, and board members of the USM Foundation.
Payroll
Control Objectives: To ensure that payroll disbursements are made only upon proper authorization of management to bona fide employees; that payroll disbursements are properly recorded; and that related legal requirements such as payroll taxes are in compliance.
Employee Categories: Employees can be classified as a full-time or a part-time employee; exempt or non-exempt (exempt means they are not entitled to overtime). Labor laws are specific as to what constitutes exempt, so please check with the USM Foundation Payroll Administrator to determine which category the employee falls.
Employee Personnel Files:
• Required documents: Before an employee can be paid, the following documents submitted by the department must be on file at the USM Foundation
1.
Employment Data Form: specifies employment status, salary, and eligible benefits; identifies the department, account number, employee supervisor and person with signature authority.
2.
Signed form confirming that the employee has received a copy of the USM Foundation personnel manual.
3.
IRS Form W-4 and State W-4
4.
IRS Form I-9
5.
Nonresident Aliens (also known as Foreign Nationals) require the following additional documents as part of their file:
Copy of their Visa with a valid I-94 card/stamp
Copy of a valid passport
Form I-20 or Form IAP 66 (whichever is applicable)
Copy of Social Security card
Completed Foreign National Data Form (used to determine whether a person is a nonresident alien or a resident alien for U.S. income tax purposes.) The form is available through the USM Foundation payroll office.
Employment Agreements: an Employment Agreement may be included in the personnel file when and if an employee has been hired for a specific time period and the employer wants to document that
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arrangement for the record. In those cases, the person with signature authority should submit a letter to the USM Foundation that documents the arrangement. The USM Foundation President will also sign the letter if the parties involved want the document to reflect the signatures of both the employer and the
USM Foundation.
Any promises or commitments made to a new hire outside of the normal pay and benefits must be preapproved and documented in an employment agreement. This may include promises related to bonus pay arrangements, specific salary adjustments at specific times, or prearranged leave time outside normal leave time policies.
General Payroll Procedures:
• Personnel files: The Payroll Administrator maintains the personnel files. He/she confirms that all required documents are completed and on file for each employee.
• Timesheets: bi-weekly timesheets approved by immediate supervisor(s) must be submitted.
These are done on-line through the third party payroll provider’s web-site. This record is used to compute pay for hourly employees and maintain leave records for salaried employees.
1.
Hourly employees will only be paid upon submission of a timesheet. Timesheets must be entered and approved by the end of business on the Monday after the pay period ends. If it is received late, payment will be deferred to the next pay period.
2.
Salaried employees must also submit a timesheet for every two week period.
• Annual Leave: the USM Foundation Payroll Administrator, using information submitted through the third party on-line bi-weekly timesheets, maintains the record of annual leave accrued and used by the employee. It is the employee’s responsibility to check and monitor these accrued/used balances and to notify the Payroll Administrator immediately if there are any errors. When an employee resigns or is terminated, accrued annual leave will be paid only to the extent that the information has been provided to the USM Foundation for its payroll records.
• Payroll Changes: All payroll changes must be submitted on the proper form with employee and/or supervisory approval as applicable. Questions regarding the form to be used should be directed to the Payroll Administrator.
Payment Procedures:
1.
The Payroll Administrator maintains the employee records based on new hire documentation and various change forms and prepares the payroll register based on the supervisor approved time entry into the third party payroll provider’s time & labor web-site.
2.
The Personnel Changes report and Payroll register, along with all supporting documentation are reviewed by the Director of Business Operations. Upon approval, the Senior Executive
Accountant submits the payroll for check printing by the third party payroll service provider.
3.
The third party payroll service provider prints the checks and direct deposit advices. The checks, direct deposit advices and various reports are delivered to the Administrative Assistant to the VP of Finance of the Foundation. The reports are given to the Payroll Administer and the
Administrative Assistant distributes the checks and direct deposit advices by hand delivering or
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mailing to individual employees. Checks or direct deposit advices are not given to supervisors for delivery or holding.
4.
The Assistant Comptroller performs the monthly bank reconciliation with approval by the
Director of Business Operations.
The third party payroll service provider or the Payroll Administrator calculates and remits tax payments, insurance premiums and other required assessments according to the schedule indicated below:
BI
-
WEEKLY
• Federal payroll taxes
• Retirement plan deposits
• SRA deposits
• State payroll taxes – MD
MONTHLY
• Health ins premiums
• State payroll taxes
• Parking fee withholding
QUARTERLY
• SUTA taxes
• Form 941
ANNUALLY
• Form W-2
(by 01/31 to the employee, by 2/28 to the government)
• Form 5500
Tax Information for Non-US citizens:
Resident Aliens: for U.S. Income Tax purposes, people in this category are treated as U.S. citizens.
Non-resident Aliens: specific tax rules and requirements apply, per Internal Revenue Code
• For U.S. income tax purposes, F-1, J-1, M-1 and Q-1 Visa holders classified as Nonresident Aliens are exempt from FICA and Medicare.
• Form W-4: for U. S. income tax purposes, the law requires an additional federal withholding each pay period for all persons classified as Nonresident Aliens at the current required rate. o Nonresident Aliens may never claim exemption from federal withholding and must complete the Form W-4 as follows:
Filing Status – Single (even if marital status is not single)
Number of exemptions claimed must be 1 or 0
Additional federal withholding must be shown
Note: State tax rules and requirements follow the federal guidelines.
Nepotism
Purpose and Applicability: To establish a policy for employees of the University System of Maryland
Foundation (USM Foundation) and/or for any individuals paid by the USM Foundation for services rendered, which permits members of the same family to be employed by or paid by the USM
Foundation.
General: Members of the same family are eligible for employment by the USM Foundation and/or for payment by the USM Foundation for services rendered. However, a supervisor or subordinate
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relationship shall not exist between family members, nor shall one member of a family assume for the other the role of advocate or judge with respect to conditions of employment or promotion or remuneration.
Definition of a Family Member: For purposes of this policy, “family member” means spouse, children, parent of employee or spouse, brother or sister of employee or spouse, aunts and uncles of employee or spouse, nephews and nieces of employee or spouse, brother-in-law and sister-in-law of employee or spouse, sons-in-law and daughters-in-law of employee or spouse.
Family Members Recommended to Work for the Same Supervisor: When members of the same family are recommended to work for the same supervisor, the arrangement shall be approved in advance by the President of the USM Foundation or his/her designee. No appointment of a family member may be made without such prior approval.
Development of a Supervisor or Subordinate Relationship after Employment: If a supervisor or subordinate relationship between family members develops during employment or in a payment for services rendered arrangement, family members must notify the USM Foundation Payroll Administrator immediately. Upon such notification, the USM Foundation must take action to ensure that the supervisor or subordinate relationship does not continue to exist. Such action may include transfer, reassignment or removal of one or more family members from the USM Foundation payroll.
This policy does not apply to appointments and promotions made, or to family relationships, which existed prior to the effective date of this policy.
Document Retention
This policy is established to ensure that the records of the University System of Maryland Foundation
(hereafter the "Foundation") are retained as required by law and/or for a period of time deemed to be sufficient given the content and purpose of the record. “Records” includes all forms of communications or information relating to the Foundation and its business which have been reduced to “hardcopy” such as paper or film or which can be retrieved from electronic media. Records shall include all incoming and outgoing records as well as drafts, notes, calendars and personal records relating to Foundation business.
Failure to retain records as required by law could subject employees and the Foundation to penalties and fines, cause the loss of rights, obstruct justice, spoil potential evidence in a lawsuit, place the
Foundation in contempt of court, or seriously disadvantage the Foundation in litigation.
The Foundation expects all employees and other persons who generate and access Foundation records to fully comply with this policy. In addition, if an employee or other person believes or is informed by the Foundation, that Foundation records are relevant to litigation or potential litigation (i.e., a dispute that could result in litigation), then those records must be preserved until the Foundation in-house or
80
outside legal counsel determines the records are no longer needed. This exception supersedes any previously or subsequently established destruction schedule for those records.
Retention time periods are noted below unless needed for a longer period of time due to audit requirements or litigation:
Institutional and Legal Records:
Articles of Incorporation; By-Laws; Annual Reports- Permanently
Minutes of Director and Director Committee Meetings – Permanently
Copyright and Trademark Registration – Permanently
Contracts (including agreements with investment managers) and Leases – while active plus 7 years
Deeds and Titles – Permanently
Licenses – While active plus 7 years
Files should be retained in fire proof safe in USMF offices
Federal and State Tax Records (retained in files within USMF office unless noted below)
Form 990, Form 990T and State returns with attachments– Permanently
Form 990, Form 990T and State Support – 7 years
IRS Exemption Application and Determination Letter - Permanently
Private Letter Rulings, and Revenue Agent’s Reports – Permanently
IRS Audit Files – 7 years
Trust Returns for which USMF is trustee – 7 years
Unclaimed Property Reports – Permanently
Litigation Records
Claims – While Active plus 2 years
Court Documents and Records - While Active plus 2 years
Deposition Records – While Active plus 2 years
Discover Materials – While Active plus 2 years
Litigation Files – While Active plus 2 years
Records relevant to pending or threatened litigation should be retained until litigation is resolved or threat of litigation gone.
Capital Property Records
Inventory – While Active plus 7 years
Property Records including motor vehicle records – While Active plus 7 years
Depreciation Schedules – While Active plus 7 years
Property Improvement Records – While Active plus 7 years
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Sales – 7 years
Tax Exemption Records – Life of Property plus 7 years
Mortgage, Bonds, and Other Long Term Debt Records – While Active plus 7 years
Memorandums of Understanding with Donors – Permanently (in fire proof safe)
Bank Records
Bank Reconciliations and support, bank statements, deposit records, wire transfer records and cancelled checks- 7 years (except for important payments such as payments for purchase of significant property or lawsuit settlements) which should be retained permanently)
Insurance (insurance broker retains)
Property Insurance Policies – Life of Policy
Liability Insurance Policies – Life of Policy
Insurance Claim Documents – Settlement plus 7 years
Payroll- Records
Individual Employee Files o Wage and Salary History – 7 years o Salary or Current Rate of Pay – 7 years o Payroll Deductions – 7 years o Time Sheets – 7 years o W-2 Form – 7 years o W-4 Form – 7 years o Garnishments – While Active plus 7 years
Other o Bi-weekly payroll registers – 7 years o Payroll reports to Federal, State and Municipal Agencies – 7 years o Payroll Journal Entries – 7 years after final payment o Unclaimed Salaries and Wages – until required to be reported to State o Notice of Unemployment Claims – 7 years
Employment o Job Announcements and Advertisements – 1 year
Applicants Not Hired o Applications or Resumes - 1 year
Applicants Who are Hired o Applications or Resumes – While Active plus 7 years o Background Investigations Results (summary letter from contractor for current employees and report for new hires) – While Active plus 7 years o Letters of Recommendations – While Active plus 7 years
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General Files (after expiration)
Pension Plans – 7 years
Retirement Plans – 7 years
Flexible Spending Plans – 7 years
All other employee benefit plans – 7 years
Personnel Files
Applications and Resumes for Employment – While active plus 7 years
Unsuccessful – 1 year
If EEO suit – until resolution
Employment History including performance evaluations, disciplinary warnings and termination or layoff notices– While Active plus 7 years
Beneficiary designations – While Active plus 7 years
Financial Records – including machine-sensible records that contain sufficient transaction – level detail so that the information and the source documents underlying the machine –sensible records can be identified.
Description of Accounting System – While Active
General ledgers, subsidiary ledgers and year end trial balance – Permanently
Journal Vouchers and Backup – While Active plus 7 years
Account Reconciliations – While Active plus 7 years
Annual Audits – Permanently
Audit Reports and Work Papers – While Active plus 7 years
Accounts Payable ledgers and schedules, vouchers for payments and voucher registers and checks– 7 years
Accounts/ Notes Receivable ledgers and schedules – 7 years
Unitized Bank Reports – 7 years
Revenue Records
Contributions, Grant and Non Gift Records – all documents supporting the transaction such as donor correspondence -7 years
Subsidiary Ledgers and Posting Reports – 7 years
Investment Records
All reports received from investment managers relating to investment performance, firm operations and market valuations – 7 years
Monitoring Records – 7 years
Accounts Payable Records
Processed and Paid Disbursement and Expense Reimbursement Requests – 7 years
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Subsidiary Ledgers and Posting Reports – 7 years
Check Preparation Reports – 7 years
1099 and 1042 Reports – 7 years
Check Register – 7 years
Paper or Electronic Correspondence
General/Routine – Screen annually and destroy that material for which no further reference is required. At the end of 2 years all e-mails will be automatically deleted unless noted to be saved. However, employees should periodically review e-mail folder for deletion.
Legal – see litigation
Investment – see investment
Voice mails should be deleted as soon as receiver responds to caller or matter resolved which ever is
later.
Internal Audit
Reports and Responses – 7 years
Retention:
USMF usually retains the most recent two years worth of accounting and payroll documents at USMF’s business office. Documents older than two years are usually archived in an off site facility. (Currently
Iron Mountain, Jessup, MD) However, documents older than two years may be retained on site. All other documents are retained on site.
USM Information Technology performs back-ups nightly. The nightly tapes are kept in a safe on site.
One set of tapes is rotated off site weekly, per USM policy. These tapes include all activity through
Timeline as well as word and excel documents that are on all drives but A: and C:
Employees should consult with CFO prior to destroying any record not identified above.
Disposal:
The CFO is responsible for oversight and approval for the retention and final disposition of records.
(a) A record shall be made of all disposed documents and filed in the in the USMF fire proof safe. The record shall identify the type of record destroyed, the subject matter (if applicable), and the date and method of disposal and the initials of the persons who disposed.
(b) Any document containing the personal information of Foundation employees, vendors, or donors is secured and maintained in locked cabinets and shall be shredded when disposition occurs to prevent the document from causing harm to the person (i.e. identity theft and employee privacy).
(c) The Foundation will have an annual “clean-up” day during which employees shall dedicate their efforts to document storage and disposal in compliance with this policy.
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Privacy:
Many records subject to record retention requirements contain confidential information. For example, medical records of employees must be stored separately. Employee background reports must be stored separately in the custody of General Counsel’s Office.
Compliance:
The Internal Auditors shall periodically audit to ensure compliance.
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