Policies and Procedures Guide

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

Introduction

Change Log

Account Types and Administration

Account Types

Establishment Requirements

Minimum Requirements

Account Agreement Form

Endowment Memorandum of Understanding

Administration

Account Administrators

Vice Presidents

Deans (or their designee)

Donors

Account Updates

Revenue Policies

Solicitation Policy

Acceptable Monetary Revenue Types

Check Acceptance Guidelines

Credit Card Processing

Contribution Processing

Matching Gifts

Wire or ACH transfers

Payroll Deductions

Maryland Charities Campaign and Combined Federal Campaign

Maryland Charities Campaign (MCC):

Combined Federal Campaign (CFC):

Stock and Bond Gifts

DTC Transfer - Stock Wire

Sending a stock/bond certificate

Gifts in Kind

Life Insurance

Trusts and Annuities

Real Estate Gifts

Policy for acceptance of real property:

Procedures for Real Property Gifts:

Grants and Contracts

Non-Gift Revenue

Auctions

Raffles

Sales

Conferences & Seminars

Special Fundraising Events

Part Gift/Part Non-Gift

Revenue Codes

Investment Policy

Investment Earnings and Fee Allocations

Operating Accounts:

Endowment Accounts:

Spending Policies

USM Foundation Spending Policy

Requests for Underwater Spending

Cash Disbursements

General Guidelines

Payments to Vendors for Goods and Services

Disbursements Requiring Contracts

Independent Contractors

Purchase of Equipment/Furnishings

Reimbursements to Campus Accounts

Reimbursements to Employees

Accountable Plan Rules

Travel Reimbursements

Other Reimbursements

Diner’s Card credit card

Disbursements to Students

Scholarships

Awards

Employment Related

Expense Reimbursement

Disbursements to Foreign Nationals

Documentation Requirements

Payments Allowed

IRS Taxation

Unallowable Expenses

Loans and Advances

The Disbursement Request Process

DRF Checklist

Expense Code Definitions

Miscellaneous Administrative Policies

Payroll

Nepotism

Document Retention

Introduction

Incorporated in 1979, The University System of Maryland Foundation, Inc. (USMFoundation, 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 theFoundation 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

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.

Change Log

Date / Revision Description
June 1, 2013
August 1, 2013 / Initial Document created
Eliminated boarding pass documentation requirement for airline/train travel

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-2xxxxCurrent Use program and faculty support accounts

XX-3xxxxCurrent Use Scholarship accounts

XX-4xxxxEndowment accounts

XX-44xxxQuasi-endowment accounts

XX-50xxxCurrent Use research accounts

XX-55xxxGrant Accounts

XX-6xxxxSpecial 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. 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 Formis 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 Administratoris 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.
7. 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 (seethe 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 FoundationVice President of Financeor 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.

1. 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.
2. 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 Formmust accompany the draft.
3. 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

1. 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.)
2. 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.
3. 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

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 15th 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

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.

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.