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UPPS 03.05.01 - Soliciting, Accepting and Processing Gifts and Grants from Private Sources

Soliciting, Accepting and Processing Gifts and Grants from Private Sources

UPPS No. 03.05.01
Issue No. 10
Effective Date: 6/22/2017
Next Review Date: 6/01/2022 (E5Y)
Sr. Reviewer: Director, Advancement Services

  1. POLICY STATEMENTS

    1. This document sets forth Texas State University policies and procedures related to soliciting, accepting, and processing gifts from private sources.

    2. The Office Sponsored Programs (OSP) will process proposals for funding external grants from non-philanthropic sources. Refer to UPPS No. 02.02.01, Applying for Sponsored Programs.

    3. Solicitations (including Web pages) must clearly identify the entity (the university or affiliated organization) to which the donors will make gifts.

    4. Solicitors may not use Educational and General (E & G) funds for solicitation expenses such as printing and postage unless the gifts solicited are designated directly to the university, rather than to an affiliated organization.

    5. The Texas State Development Foundation, McCoy College of Business Administration Foundation, Texas State Research Foundation, and the Texas State Alumni Association are separate 501(c )(3) organizations. Where not otherwise specified as part of the memorandum of understanding (MOU) with the university, each of these affiliated organizations will establish their own policies and procedures for soliciting, accepting, and processing gifts and grants from private sources, in collaboration with university administration.

    6. An MOU between the majority donor and the university or affiliated organization is required in order to establish a new restricted donation account.

  2. DEFINITIONS AND ABBREVIATIONS

    1. Gift – a voluntary contribution of external support by a donor whose primary intent is philanthropic, and who expects nothing significant of economic or tangible value in return beyond what any general member of the public would receive, other than recognition and disposition of the gift in accordance with the donor’s wishes. Benefits that do not void the tax-deductibility of the gift, as described in IRS Publication 526, and indirect benefits such as tax advantages or business or personal goodwill derived from close association with the university and the miscellaneous benefits derived from donor status shall not be deemed to be inconsistent with the classification of support as a gift. Gifts may originate from individuals, partnerships, associations, foundations, or corporations. A grant from a governmental entity is not included in this term.

    2. Restricted Gift – gifts that are subject to restrictions imposed by the donor.

    3. The abbreviations below have the meanings indicated:

      1. VPUA – vice president for University Advancement;

      2. Provost – provost and vice president for Academic Affairs;

      3. VPFSS – vice president for Finance and Support Services;

      4. OSP – Office of Sponsored Programs;

      5. Affiliated Organizations – Texas State University Development Foundation, McCoy College of Business Foundation, Texas State University Research Foundation, and the Texas State University Alumni Association;

      6. Library – Albert B. Alkek Library;

      7. OGP – online Giving Program;

      8. GIK – Gifts-in-Kind;

      9. UA – University Advancement; and

      10. MOU – Memorandum(a) of Understanding.

  3. GENERAL DIVISIONAL RESPONSIBILITIES

    1. University Advancement Division:

      1. The UA division is responsible for soliciting, coordinating, and reporting all gifts, including those initiated elsewhere in the university. Therefore, the UA division must know who is giving how much and for what purposes. The UA division will reconcile its records with university records maintained by the Finance and Support Services division in order to prepare monthly reports of gift income to the university.

      2. The university and the UA division will also provide support functions for the Development Foundation. An agreement was approved at The Texas State University System (TSUS) Board of Regents’ meeting, November 4, 2003. The agreement states that the university will provide the Development Foundation with support staff to receive, receipt, acknowledge, account for, and report gifts of the Development Foundation.

      3. The donor and the Board of Regents must approve, in writing, the transfer of all gifts from the university to the Development Foundation.

      4. The use of university staff and resources for soliciting gifts on behalf of an affiliated organization must comply with Chapter IX of The TSUS Rules and Regulations.

    2. All Divisions

      1. All divisions will coordinate fundraising from private sources, including philanthropic foundations, with the UA division and will submit federal and state proposals and grant contract requests to the OSP.

      2. Additionally, all divisions and affiliated organizations are responsible for forwarding cash gifts received to Advancement Services. See Section 03. of UA/PPS No. 03.01, Gift Acceptance Policies and Procedures, for policies related to gifts of property other than money.

    3. Role of the Texas State Development Foundation

      1. The role of the Development Foundation is as established in Chapter IX of The TSUS Rules and Regulations, Private Support Organizations.

      2. The Development Foundation’s sole purpose is the support of Texas State. All conditions and understandings are outlined in an agreement dated November 4, 2003.

      3. The Development Foundation will accept gifts that establish endowments, capital improvements, and scholarships donated in the form of cash, legacies, gifts-in-kind, capital gifts, securities, gift annuities and real estate as outlined in the Development Foundation’s Policies of Acceptance of Gifts per the agreement with the Board of Regents.

      4. The Development Foundation can accept and hold real estate donations if it intends to sell the property and deposit the proceeds into a Development Foundation endowment or to generate income for an endowed account.

      5. The Development Foundation also accepts gifts directed toward the president’s unrestricted funds and general or non-specific scholarship funds.

      6. The Development Foundation may direct donations given for operating, short-term purposes (i.e., wages, travel, rent, utilities) or special projects to the university or pass them into the university.

    4. Role of the McCoy College of Business Administration Foundation

      1. The role of the McCoy College of Business Administration Foundation is as established in Chapter IX of The TSUS Rules and Regulations, Private Support Organizations.

      2. The McCoy College of Business Administration Foundation’s sole purpose is the support for the McCoy College of Business Administration at Texas State. All conditions and understandings are outlined in an agreement dated May 7, 2004.

  4. PROCEDURES FOR SOLICITATION OF GIFTS

    1. University employees may participate in fundraising for any restricted fund. University faculty and staff members shall notify UA and the appropriate chair, dean, or director of the intent to solicit gifts. Pending solicitation approval by the chair, dean, or director, the VPUA may assign a designee to work with the faculty or staff member on the project. To ensure proper coordination, the VPUA may limit the individuals or organizations to be solicited or make other requests associated with the solicitation.

    2. Faculty and staff wishing to submit a proposal to an external funding source to apply for a grant or contract shall follow proposal submission procedures included in UPPS No. 02.02.01, Applying for Sponsored Programs. Proposals to private sources may be subject to review and coordination with UA as determined by the VPUA.

    3. A faculty or staff member who receives unsolicited gift inquiries from a prospective donor will notify their appropriate chair or dean and the VPUA as soon as possible after the contact.

    4. University personnel can raise funds and support affiliated organizations as specified in agreements between the affiliated organization and the Board of Regents.

    5. University Advancement Online Giving Program

      1. Purpose – The purpose of the UA Online Giving Program (OGP) is to increase giving to the university by providing constituents with the ability to make quick, secure, and convenient contributions via the internet. The OGP is an electronic payment method for accepting donations to the university and is subject to all applicable university policies and procedures, including those for accepting cash donations and electronic security concerns.

      2. Electronic Payments – The OGP allows donations via credit or debit card and electronic check transactions. Donors may only use those payment methods accepted by the university on the OGP.

      3. Security – Cardholder-related information will not reside on university-maintained software or hardware.

      4. Recipient Accounts – Only endowments, designated funds, or approved operating accounts will receive credit for gifts made through OGP.

      5. Card Returns and Refunds – The university will deduct charges the donor disputes or the credit card processing vendor rejects from the university account that originally received the donation. Student Business Services has the responsibility to enter correcting transactions into the university’s financial system for returns or refunds.

      6. Donor Data Base – The UA division has responsibility for data entry and reconciliation of gifts made via the OGP into the donor database.

      7. Financial System Entry – Advancement Services has responsibility for designating the appropriate gift account corresponding to donor intent and initiating the creation of new gift accounts as needed. Student Business Services has responsibility for allocating gift funds in the university financial system according to the designations received by Advancement Services. The university treasurer and Student Business Services shall coordinate with Advancement Services on new stock and wire transfers received to ensure appropriate allocation.

      8. Refer to UPPS No. 03.06.01, Off-Campus Solicitation by Registered and Chartered Student Organizations for policy on off-campus solicitation by registered student organizations.

  5. PROCEDURES FOR ACCEPTANCE OF GIFTS

    A completed Donations Processing Form must accompany each donation submitted by the university department reporting the gift within 24 hours of receiving the donation as per UPPS No. 03.01.05, University Income Recognition and Associated Cash-Handling Procedures. For gifts that are eligible for a matching grant under the Texas Research Incentive Program (TRIP), UA may require additional documentation per the submission process guidelines provided by the Texas Higher Education Coordinating Board and will coordinate the match request submission process within 30 days of the cash deposit related to the TRIP-match opportunity.

    1. Definitions

      1. Cash – The university may accept cash gifts in U.S. dollars, checks from individual or organization accounts, credit or debit card transactions, payroll deductions, and cashier’s checks.

      2. Outright Gifts – Outright gifts fall into five broad categories: 1) gifts of personal property (tangible and intangible); 2) gifts of real property (real estate); 3) gifts-in-kind (including non-monetary corporate sponsorships); 4) gifts of securities; and 5) gifts of life insurance. Refer to UA/PPS No. 03.01, Gift Acceptance Policies and Procedures, for the specifics of reporting and for forms associated with these gifts.

    2. Gifts of Cash

      1. Report cash gifts as of the date the university processes them.

      2. Credit card, debit card, or electronic check donations are not a gift until the university has received authorization for the charge from the banking institution.

    3. Gift Acceptance

      1. All gifts of real property, regardless of value, are subject to approval by the Board of Regents, in accordance with The TSUS Rules and Regulations, Chapter 3, Section 1, subsection 12.

      2. All gifts exceeding $10,000 in value, except cash or securities, shall be subject to approval by the Board of Regents, in accordance with The TSUS Rules and Regulations, Chapter 3, Section 1, subsection 12.

      3. All gifts of $5,000 (including cash, personal property, and intellectual property) will be reported by the university president to the chancellor, who will publicly report to the Board of Regents, in accordance with The TSUS Rules and Regulations, Chapter 3, Section 1, subsection 12.

    4. In rare instances, the president and the Board of Regents may decline any gift if the gift’s donor or its origin does not reflect the university’s moral and ethical standards.

  6. PROCEDURES FOR ACCEPTING ENDOWMENT GIFTS

    1. The following section provides information on regulations, policies, and procedures regarding endowments and describes the files and records on endowments. In addition to standard processing for deposit, record keeping, and acknowledgement, many gifts to the university require specific approval of the president, VPUA, and VPFSS. The recognition of an endowment donor may include the naming of a campus facility or space. Regulatory and procedural information on this process is included in UPPS No. 08.03.01, Criteria for Namings.

      With guidance and oversight by an Endowment Compliance Committee appointed by the provost, the Endowment Services office will work with administrative officers and appropriate staff in the colleges and schools to:

      1. assess Texas State’s risks regarding endowment compliance;

      2. provide the required reports; and

      3. create procedures to bring Texas State into a desirable position with regard to proper expenditure and accountability of endowed funds.

    2. Endowment Funding Levels

      Periodically, the VPUA, provost, and president will review the current list of endowment types and minimum funding levels for each category. This review will include minimum endowment funding levels for chairs, professorships, faculty fellowships, graduate fellowships, presidential scholarships, program support and scholarships, and any other categories deemed appropriate.

    3. Endowment Types

      The university may use gifts (there is a minimum amount for the creation of each endowment) from private individuals, corporations, foundations, associations, and other organizations to establish endowments. A donor may establish an endowment by a one-time gift, a series of gifts, a pledge paid over a period of years, wills, trusts, gifts of appreciated assets, or by a combination of these. The principal of endowment funds remains intact (nonexpendable) in perpetuity. The university will invest and distribute the funds to support the donor’s designated purpose. It is the policy of the university to comply with the Uniform Prudent Management of Institutional Funds Act (UPMIFA) and Texas Property Code, Chapter 163, in the management of endowment funds.

      The donor may designate that the endowment benefit a specific academic or non-academic department, or request that the university president designate an area of need at the institution. The university may name the endowment after its donor or a person the donor wishes to honor.

      Certain terms are used with endowments and it is important for personnel to understand them. The following definitions come from the National Association of College and University Business Officers (NACUBO):

      1. Permanent or True Endowment – Endowment funds received from a donor with the restriction that the principal is non-expendable.

      2. Quasi-Endowments – A quasi-endowment fund is established by a governing board to function like an endowment fund; however, the governing board may totally expend the fund at any time at its discretion. These funds may originate as gift funds that the donor did not specifically direct for use as an endowment, or funds available to the university from other sources that permit their use as an endowment. This means that the donor of the gift funds did not specifically direct the creation of an endowment. The governing board invests the funds in the same manner as a true endowment with the same payout provisions.

        Essentially:

        1. An existing permanent endowment may receive a transfer of unrestricted gifts or other funds if the gift instrument originally creating the permanent endowment so indicated, with the funds subject to the endowment’s provisions. The fund source can never reclaim the funds.

        2. Should a department wish to combine the use of a permanent endowment and a quasi-endowment for a single purpose, the VPUA and VPFSS should be consulted. A department may create a quasi-endowment if they wish to dedicate at least $25,000 or more of unrestricted funds to the same purpose as a permanent endowment, yet retain the privilege of reclaiming those funds. It must use identical language to describe the purpose of the permanent endowment and the quasi-endowment if they are to serve the same purpose. The department may direct the payout from the two endowments to the same expenditure account and should submit the request to create the quasi-endowment following the procedures outlined under Section 06.05, Endowment Approval Procedures.

      3. Term Endowment – Term endowment funds initially function exactly like true endowment funds. However, after a specific period or event, as defined by the donor, the nature of the principal of the term endowment changes. For example, the donor restricts the gift funds to an endowment benefiting a particular program for 20 years and, after that, the university is free to use the funds to purchase general library materials for the campus. The benefiting program would use the annual distributions, invested as with a standard endowment. At the end of 20 years, the university would dissolve the endowment and transfer the principal to an expenditure account to purchase library materials.

      4. Following are brief descriptions of endowment categories and minimum amounts required for the creation of each.

        1. Faculty Support Endowments

          1. Distinguished University Chair

            1. For outstanding, distinguished, tenured faculty members and visiting scholars. A national search is required.

            2. May supplement state-funded base salary.

            3. Rewards and enhances research and scholarly efforts.

            4. Minimum funding: $1,500,000 to $2,000,000 (depending on college) pending president’s approval.

          2. Professorship

            1. For outstanding, tenured faculty members.

            2. May supplement state-funded base salary.

            3. Rewards and enhances research and scholarly efforts.

            4. Minimum funding: $600,000 to $750,000 (depending on college).

          3. Faculty Fellowship

            1. For any rank of faculty member.

            2. May supplement state-funded base salary.

            3. For research and teaching efforts, and for visiting scholars while in residence at the university.

            4. Minimum funding: $200,000.

        2. Student Support Endowments

          1. Graduate Fellowship

            1. Supports graduate student awards.

            2. Academic merit may be a consideration.

            3. Financial need may be a consideration.

            4. Other allowable criteria may be suggested by the donor.

            5. Minimum funding: $100,000.

          2. Endowed Presidential Scholarships

            1. Renewable support to undergraduate students beginning in the sophomore year for the following two years.

            2. Maintain a GPA of 3.25 or higher.

            3. Financial need may be a consideration.

            4. Other allowable criteria may be suggested by the donor.

            5. Minimum funding: $50,000.

          3. Undergraduate Scholarships

            1. Supports undergraduate student awards or scholarships.

            2. Academic merit may be a consideration.

            3. Financial need may be a consideration.

            4. Other allowable criteria may be suggested by the donor.

            5. Minimum funding: $25,000.

          4. Program Endowment

            1. Provides operating support for a university program.

            2. Other allowable criteria may be suggested by the donor.

            3. Minimum funding: $25,000.

        3. Other Endowment Types

          1. Lectureships

            1. A select position filled by a top scholar who is in residence temporarily, but who typically does not accept a permanent faculty position.

            2. A series that will bring Texas State a variety of outstanding individuals with broad experience and expertise whose presentations will have university-wide and interdisciplinary appeal or special interests relevant to a particular school or college.

            3. Often designated for use at the discretion of a college or school dean, department chair, or unit director.

            4. Minimum funding: $100,000.

          2. Libraries, Teaching, Staff

            1. Recognize outstanding performance in the classroom, in service to the university and in research by faculty.

            2. Minimum funding: $25,000.

    4. Public Announcement of New Endowment

      Public announcement of a new endowment will not occur until the president and the donor officially approve.

    5. Endowment Approval Procedures

      The following is an explanation of the documents that are required and the procedures used to obtain official acceptance of any item listed:

      1. Memorandum of Understanding (forms and sample letters linked below)

        1. Full, Outright Gift

        2. Pledge

        3. Pledge with Corporate Matching

        4. Memorial/Honorific Fundraising

        5. Gift of Property

        6. Dean’s Letter

        7. Estate Intention Letter

        8. Anonymous Estate Intention Letter

        9. Will Language for a Non-Endowed Gift

        10. Will Language to Create an Endowment

        11. Qualified Retirement Plan Beneficiary Designation Language

        12. Insurance Owner or Beneficiary Designation Language

        13. Trust Language to Create an Endowment

        14. Trust Language for a Non-Endowed Gift

    6. Gift and MOU Received from the Donor

      1. A donor may make a gift outright or a combination gift and pledge. The donor should pay the pledge fully within five years of the pledge date, unless otherwise approved by VPUA. If the donor does not fulfill the pledge within the agreed upon time as stated in the MOU, a university representative may contact the donor to determine the pledge’s legitimacy and then to develop a revised MOU for the donor’s signature. If the university cannot make contact with the donor or the donor’s family members, the university will write off the outstanding portion of the pledge.

      2. It is strongly recommended that the donor provide a signed MOU including proscribed language that serves to preserve and protect the gift as a permanent endowment and allows the gift to follow the university’s standard investment policies. The MOU will outline the gift or pledge (including payment schedule) and the endowment’s type, name, and purpose. The donor should seek independent tax or legal counsel before executing a legal document such as an MOU. See samples in Section 06.05, Endowment Approval Procedures.

      3. Never prepare the MOU on university letterhead.

      4. The VPUA should review all drafted endowment MOUs prior to signature by the donor to ensure the instrument’s acceptability under the university policies and procedures.

      5. If the university cannot obtain a signed MOU, a letter from the donor, the dean, or the appropriate department chair to the donor outlining the understanding of the donor’s wishes in establishing the endowment will suffice. Such a letter should contain the following two paragraphs of the sample MOU as an explanation of Texas State’s method of administering endowed funds.

  7. PROCEDURES FOR PROCESSING ACKNOWLEDGMENT LETTERS

    1. The VPUA will generate the following acknowledgment letters and receipts to donors upon the university’s receipt of gifts. Donors will receive:

      1. A receipt for income tax purposes.

      2. A letter from the president if the gift’s value equals or exceeds $10,000, and a letter from the VPUA.

      3. A letter from the VPUA or appropriate staff if the gift’s value is between $5,000 to $9,999.99.

      4. A letter from the assistant vice president for Development, or appropriate staff, if the gift’s value is between $500 to $4,999.99.

    2. In addition to the above, an appropriate person (e.g., program director, chair, dean, etc.) may acknowledge, in writing, gifts restricted to a given department or program, with a copy forwarded to the VPUA.

  8. PUBLICITY

    1. The VPUA, in coordination with the faculty or staff contact person, the donor, and university Media Relations, will coordinate all publicity related to gifts. In all cases, the university will follow the donor’s special desires to the extent possible.
  9. REVIEWERS OF THIS UPPS

    1. Reviewers of this UPPS include the following:

      Position Date
      Director, Advancement Services June 1 E5Y
      Assistant Vice President for University Advancement June 1 E5Y
  10. CERTIFICATION STATEMENT

    This UPPS has been approved by the following individuals in their official capacities and represents Texas State policy and procedure from the date of this document until superseded.

    Director, Advancement Services; senior reviewer of this UPPS

    Assistant Vice President for University Advancement

    Vice President for University Advancement

    President