Division of Financial Services
Accounting
A gift/contribution is an unconditional transfer of cash or other assets to the university in a voluntary, nonreciprocal transfer by another entity. Several components of this definition merit further definition:
Although a donor may place some restrictions on the use of or disposition of a gift and may require a report that demonstrates that the donor’s wishes have been met, these terms do not make the gift a sponsored award. Such restrictions essentially create a fiduciary responsibility in which the university, by accepting the gift, is obligated to carry out the wishes of the donor.
Contribution revenue is recognized in the period in which it is received. There are additional accounting requirements for contributions, making it especially important to properly distinguish between contributions and exchange or agency transactions. See the Revenue Matrix for guidelines on making this distinction.
The university must classify its contribution revenue based on the existence or absence of donor restrictions.
If the university is primarily a conduit through which funds are being transferred to an individual or another organization, and the institution has little or no discretion in determining who will receive the funds, then the transaction, for accounting purposes, is an agency transaction, and no contribution revenue is recorded. For example, Pell Grants fall into this category, as the federal government awards the grant and the university only facilitates getting the funds to the eligible students.
| Operating Gifts | All contributions (gifts) that are available to be spent are recorded as operating gifts, whether or not the donor has imposed a restriction on the purpose. This document does not address gifts that are considered “nonoperating,” which include the following:
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| Required Documentation |
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| Procedural Notes | University Policy 3.1, Accepting University Gifts must be reviewed and understood by any unit receiving contributions. All gifts must be processed through Alumni Affairs and Development (AA&D)/WCMC Office of External Affairs (OEA). Permitted Ithaca object code:
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| Gifts-in-Kind | An “in-kind” contribution is a gift of anything other than monetary assets (cash or marketable securities). In-kind goods and services are typically goods and services that the university would otherwise have to buy if they hadn't been donated. The value of the donated goods is recorded as the amount the university would have to pay for similar items. Note: Gifts of capital assets (as defined by University Policy 3.9, Capital Assets) are considered nonoperating gifts. Also, the university typically does not record the value of donated services. |
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| Required Documentation |
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| Procedural Notes | The acceptance of any gift-in-kind must be authorized by AA&D/WCMC OEA. For more information, refer to University Policy 3.1, Accepting University Gifts. When gifts-in-kind are received, both a revenue and expense transaction is recorded. Permitted Ithaca object codes:
Permitted WCMC GL code:
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| Pledges | A distinction is made between an intention to give and an unconditional promise to give (pledges); intentions to give are non-binding and not recorded as assets; unconditional promises to give are considered binding, and therefore, are recorded. If it is clear that a communication from a donor is clearly an unconditional promise to give, then it would be recorded as a receivable and contribution revenue, regardless of whether or not it is legally enforceable. |
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| Required Documentation |
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| Procedural Notes | Units must not record or accrue any revenue related to pledges. Pledges are only recorded based on information provided by Alumni Affairs and Development (AA&D) by University Accounting in the university controller’s office at the institutional level. As payments on pledges are received, they are recorded in the unit accounts as gift revenue (Ithaca object code 4340/WCMC GL code 43xxxx). University Accounting prepares the necessary accounting entries to ensure that pledge activity is recorded properly and that revenue is not duplicated. Permitted Ithaca object code:
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Restricted gifts are assessed an indirect cost recovery (ICR) in Ithaca, or Dean’s Assessment at WCMC. In and of itself, the gift ICR/Dean’s Assessment is not a true revenue to the university; however, it does represent a redistribution of resources and is so entwined with contribution revenue, that it bears inclusion in this document. All income from endowment payout, gifts that support financial aid, and WCMC campaign gifts are automatically exempt from the gift ICR/Dean’s Assessment.
| Indirect Cost Recovery on Gifts | Restricted gifts are charged a 10% indirect cost rate in Ithaca or a 15% Dean’s Assessment at WCMC on all costs other than financial aid. The gift ICR/Dean’s Assessment does not apply to endowment payout. The dean or vice president, after consideration of the proposed gift, may choose to waive or accept an alternative indirect cost/assessment arrangement. Note: Gifts for research faculty recruitment at WCMC are charged a 10% Dean’s Assessment. |
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| Required Documentation | For waivers: Return of Indirect Cost on Restricted Gift Accounts form (endowed Ithaca) or for gift ICR/Dean’s Assessment waiver, a memo with dean/director approval (contract colleges, WCMC). |
| Procedural Notes | Only University Accounting may record or adjust the ICR/Dean’s Assessment on gifts. Permitted Ithaca object code:
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The university has an obligation to reimburse the State of New York for employee benefits on all contract college restricted gift accounts, except when the gifts are from university alumni (including alumni foundations) or the income is from endowment payout (use sub-fund program of ALUMNI or ENDINC, respectively).
