11.12 Current and Non-Endowed Term Funds Administration

Policy Statement

The University of Illinois System and the University of Illinois Foundation (UIF) have the responsibility to properly manage and use gifts as intended by the donors and to report to donors or designated contacts on the impact of their gifts within the system.

Reason for the Policy

To confirm that current funds are gifts made to be used in the current fiscal period, while allowing non-endowed term funds to provide an annual funding stream in lieu of an endowment gift.

Applicability of the Policy

This policy pertains to all system universities and to UIF. Donors should be instructed to direct their gifts to UIF (see 11.1 University Gifts.) Exceptions to these policies are allowed only upon review and recommendation by the Vice Chancellor for Advancement at each university and the approval of the UIF President, or designee(s).

Procedure

Current and Non-Endowed Term Fund Guidelines

1. Definition

2. Source of Funds

Current Use Funds

Donor Gift(s)

Non-Endowed Term Fund

Donor Gift(s); units may also supplement the gift with internal sources of unrestricted gift funds to supplement a term funding program.

3. Minimum Gift Required

Current Use Funds

No minimum required

Non-Endowed Term Fund

The system has established the following minimums for "term" support that are subject to periodic review:

4. Pledges / Installments

Allowable, but requires a formal plan (e.g. a pledge or fund agreement) with the donor. Minimum pledge is $1,000 and should be a five year term or less.

Annual gifts leading to an endowment

Donors sometimes seek to create a permanent endowment by providing annual gifts that will simultaneously: 1) provide the level of spendable income generated by a fully funded endowment, and 2) build the permanent fund.

The schedule of annual support shall be contained in a formal gift agreement and shall be pledged for a maximum of ten years. For example, the funding of a named college professorship will require an annual gift of $75,000 for 10 years, of which $25,000 will be expended annually and $50,000 will be designated for the permanent endowment. Income from the endowment will reinvest to principal until the pledge is fulfilled.

5. Fund approval

Term Chairs/ Professorships

Current Use Funds

Not allowed.

Non-Endowed Term Fund

Since funding for term chairs/professorships relies on support in the form of annual gifts or internal allocations, they must be sent to the appropriate university Associate Vice Chancellor for Development for approval by the Vice Chancellor for Academic Affairs/Provost and Chancellor, as necessary.

6. Governing Documents

Current Use Funds

Gift agreements with the donor(s) are optional for a current fund unless a pledge is involved. Any correspondence from the donor as to use of the funds shall serve as the governing document.

Non-Endowed Term Funds

Fund/pledge agreements with the donor(s) are required for all levels of term funds.

Document Preparation

All governing documents must be drafted by UIF.

Review and Approval Process

Must be reviewed and agreed to by the donor and UIF; department head and/or dean must review and approve content; university officials must review as appropriate.

Signatories

Donor, department head, dean, and/or other appropriate university officials in addition to the UIF President and a second UIF signatory.

Donor Biographical Information

Biographical information may be added to the gift agreement.

"Purpose of Fund" Section

Alternate Application

If at such a time gifts can no longer be administered as originally intended and it is not possible to seek approval from the donor, an alternate application may be invoked. To invoke an alternate application:

1. the unit must write a letter of justification including the current guidelines for use, why the intent cannot be adhered to, and a suggested alternate use;
2. the proposed alternate use must then be submitted for review by the appropriate university Associate Vice Chancellor for Development;
3. If deemed appropriate, the Associate Vice Chancellor for Development will seek approval from the Vice Chancellor for Academic Affairs/Provost and the Chancellor. If granted, the Associate Vice Chancellor for Development will forward the approved request to UIF’s Vice President for Administration who will, if necessary, confer with UIF’s Office of General Counsel to provide guidance as to whether it would be prudent to pursue legal action to alter the gift restrictions;
4. if deemed acceptable, the Chief Operating Officer will seek approval from UIF’s President for final approval by UIF’s Board of Directors or designee. If a governing document does not contain the Future Circumstances clause, a Cy Pres proceeding may be required upon legal review.

Amended Fund Agreements

Any changes to the fund purpose or designation should initiate an amendment to the original governing document. Refer to document preparation and approval process above.

7. Named Programs/Units (includes Centers, Colleges, Programs, Institutes, and Buildings)

Naming Funds

May be named in honor or in memory of individual(s) as determined by the donor, in consultation with the proper unit/university officials.

8. UIF Spending Policies

Interest Income

Administrative Fee

The current administrative fee for gifts held by UIF is the first 2% of the income earned by the average balances of the short term investment pool, assessed quarterly.

Gift fees assessed by units

Refer to the appropriate university contact listed below for further information.

Responsibility

The unit head (deans, directors, or department heads) is responsible for administering and expending current funds in accordance with university spending policies and procedures; spending must be consistent with donor intent. The university and UIF have a fiduciary duty to the donor to ensure donor intent compliance.

9. Stewardship

Acknowledgement

All gifts are acknowledged and receipted by UIF as part of the gift processing function. Benefiting units are also required to communicate with the donor to acknowledge the gift in a timely fashion, in accordance with internal unit policy.

Proper and Timely Spending

Direct Donor Communication

It is imperative that the donor(s) receive communication from the units as to use and impact of the gift funds.