Finance Fundamentals V Maximizing Funds Gifts Endowments Faculty

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Finance Fundamentals V: Maximizing Funds: Gifts, Endowments & Faculty Funds

Finance Fundamentals V: Maximizing Funds: Gifts, Endowments & Faculty Funds

Housekeeping 2 l Session overview l Subject Matter Experts l Sign-in sheet l Timing

Housekeeping 2 l Session overview l Subject Matter Experts l Sign-in sheet l Timing l Slides & Materials l Parking Lot l Feedback l Facilities

Baseline Quiz 3

Baseline Quiz 3

Name That Fund Monies deposited to this fund include undergraduate tuition and application fees.

Name That Fund Monies deposited to this fund include undergraduate tuition and application fees. A. B. C. 4 Unrestricted Undesignated Fund Unrestricted Designated Fund Federal Sponsored Grant

Name That Fund Donations are deposited into a fund for a particular purpose; the

Name That Fund Donations are deposited into a fund for a particular purpose; the full amount of the donation can be spent. A 15% administrative assessment is charged monthly on prior month’s expenses. A. B. C. 5 Gift Fund Unrestricted Designated Fund Endowment Fund

Name That Fund Income derived from non-gift sources that can be used by a

Name That Fund Income derived from non-gift sources that can be used by a department, usually designated for a specific project or program (e. g. royalties, vending machine income). A. B. C. 6 Unrestricted Undesignated Fund Unrestricted Designated Fund Federal Sponsored Grant

Name That Fund The fund has a principal balance; AEA = 11. 1% of

Name That Fund The fund has a principal balance; AEA = 11. 1% of annual income. Typically, only the income derived from the investment of the principal can be spent. A. B. C. 7 Gift Fund Endowment Fund Federal Sponsored Grant

Name That Fund A contract from an outside institution to assist the University in

Name That Fund A contract from an outside institution to assist the University in reaching a particular institutional goal or public purpose. Terms include a deliverable to the outside institution. A. B. 8 C. Unrestricted Undesignated Unrestricted Designated Sponsored Grant

FY 13 FAS Revenue Budget 9

FY 13 FAS Revenue Budget 9

Co. A Flashback Unrestricted: Fund number starts with 00 or 01 -05 l Sponsored:

Co. A Flashback Unrestricted: Fund number starts with 00 or 01 -05 l Sponsored: Starts with a 1 = Federal grant Starts with a 2 = Non-federal grant l l l 10 Gift: Fund number starts with a 3 Endowment: Starts with a 4/5 – Held within an FAS tub Starts with a 6 – President’s or Provost’s Office

Maximizing Funds Section I: Gift & Endowment Funds 11

Maximizing Funds Section I: Gift & Endowment Funds 11

Gift vs. Grant What fund type entitles a donor/sponsor receive something of value in

Gift vs. Grant What fund type entitles a donor/sponsor receive something of value in exchange for funding? A. B. C. 12 Gift Fund Sponsored Grant Both

Maximizing Funds: Gift What are the characteristics of a gift fund? 13

Maximizing Funds: Gift What are the characteristics of a gift fund? 13

Gift Fund Basics – – – May be spent immediately Restricted gifts are limited

Gift Fund Basics – – – May be spent immediately Restricted gifts are limited by the donor for a defined purpose Important object codes: l l 14 3730 Carry forward surplus/deficit balance 4350 Initial gift balance 4530 Interest/charge on surplus/deficit balance 8922 Administrative assessment of 15% charged monthly on prior month’s expenses on object codes 6000 -8999

Gift Fund Basics – Excludes student aid charges in object codes: l l l

Gift Fund Basics – Excludes student aid charges in object codes: l l l l – – 15 6140 - Students in Professional Positions, Salaries+Wages 6410 - Undergraduate Tuition, Fee+Stipend Grants, GENERAL 6430 - Grad Tuition+Fee Grants 6431 - Training Grant payments, Non-Harvard Grad Tuition+Fees 6440 - Grad Stipend Grants, GENERAL 6461 - Other Undergraduate Grants^Prizes+Awards, Students 8922 - Admin Fees to Expense, Internal, GENERAL Departments should not transfer funds to or from a gift fund Cross validation should used to open the fund for use by another tub/org

Maximizing Funds Gift vs. Grant How to tell the difference? 16

Maximizing Funds Gift vs. Grant How to tell the difference? 16

Gift vs. Grant l Gift – – – 17 Donor does not receive anything

Gift vs. Grant l Gift – – – 17 Donor does not receive anything of value in exchange for the funding Donor expresses the goal of an activity; no time period usually associated with the use of the funds Unspent funds are not usually returned to donor Donor may request information on how funds are spent but spending is not subject to prior approval No deliverable to the donor

Gift vs. Grant l Grant – – – – 18 Sponsor may be entitled

Gift vs. Grant l Grant – – – – 18 Sponsor may be entitled to receive data, publication rights, intellectual property rights Sponsor determines protocols & methods; specifies time period associated with the use of the funds Potential penalties for failure to deliver Sponsor may restrict distribution of information Detailed line item budget required, including overhead Unspent funds returned to sponsor Deliverable due to the sponsor

Maximizing Funds: Endowments What are the characteristics of an endowment fund? 19

Maximizing Funds: Endowments What are the characteristics of an endowment fund? 19

Endowment Fund Basics l l Original gift is generally held in perpetuity and inviolate,

Endowment Fund Basics l l Original gift is generally held in perpetuity and inviolate, only the income generated from its investment may be spent, unless specified by the donor in the terms. Important object codes: – – – – 20 – 3720 Surplus/deficit balance 3880 # of Units of endowment principal 3881(Historical Dollar Value) Principal balance 3882 (Non Historical Dollar Value) Principal Balance 4410 Treasurer’s Distribution 4530 Internal Interest 5930 AEA 9510 -9520 New Gifts

Endowment Fund Basics l l 21 Administrative Expense Allocation (AEA) = 11. 1% of

Endowment Fund Basics l l 21 Administrative Expense Allocation (AEA) = 11. 1% of the Treasurer’s (Annual) Distribution Spending from restricted endowments is limited by the donor for a defined purpose Departments should not transfer funds to or from an endowment fund Cross validation should used to open the fund for use by another org/tub

Cross Validation l Chart value combinations are limited by cross validation and security rules

Cross Validation l Chart value combinations are limited by cross validation and security rules – l ‘Relaxing’ cross validation rules allows another department to transact to your fund – – 22 Authorized to transact to funds only within your org’s range Authorized by department that owns the fund Reviewed by Linda Kuros for compliance with donor terms Security granted by FAS Applications Security Journal is processed to ‘fund’ the cross validation

New Gift / Endowment Fund? l 23 How do I open a new gift

New Gift / Endowment Fund? l 23 How do I open a new gift or endowment fund?

New Gift Fund l l 24 Complete New Account Request Form Include any correspondence

New Gift Fund l l 24 Complete New Account Request Form Include any correspondence (including fund terms) signed by the donor and if applicable, the donor’s check Send to Maria Geovanos, (FAS Office of Finance, 1414 Mass Ave. , 4 th floor) to set up the fund Request forwarded to the Office of the Recording Secretary (RSO) for final approval l New fund number provided by FAS Office of Finance l Depts. must confirm new fund & terms via email

New Endowment Fund l l 25 FAS Development Office will work with donor and

New Endowment Fund l l 25 FAS Development Office will work with donor and the department to establish new fund terms Requests to set up new funds should be sent to Development Office; will be forwarded to the RSO l RSO has final approval on fund terms l New fund number provided by FAS Office of Finance l Depts. must confirm new fund & terms via email

Balance Forward Designations l l Balance remaining at the end of the fiscal year

Balance Forward Designations l l Balance remaining at the end of the fiscal year will be carried forward into the next fiscal year All funds carry forward to the Tub/Org level, you can further designate how you would like the balance to be reflected: – – – 26 Fund + Activity Fund + Root Fund + Activity + Subactivity Fund + Activity + Root Fund + Activity + Subactivity + Root

Adding gift income to an existing fund? l l l 27 Use Gift Transmittal

Adding gift income to an existing fund? l l l 27 Use Gift Transmittal Form Forward completed form, donor check and any donor correspondence to the RSO Do not use a Credit Voucher Cash or checks in any amount should be handdelivered to the RSO, 124 Mt. Auburn St. Endorse back of check upon receipt Do not hold on to check(s); could become stale-dated.

How to Write Off a Gift Balance l l l If a restricted gift/current

How to Write Off a Gift Balance l l l If a restricted gift/current use account is no longer being used it can be written off These balances should be transferred to the 000001 fund Example of a write-off entry for a fund with a positive balance: – – l l 28 DR Tub. Org. 7765. 3 XXXXX. 600300. XXXXX CR Tub. Org. 7765. 000001. 600300. XXXXX If you have a fund with a negative balance, then your entry will be the reverse of the example above AEA will be processed by the FAS Office of Finance

How to Write Off a Gift Balance l l 29 What to do once

How to Write Off a Gift Balance l l 29 What to do once the account has a zero balance If fund terms are general you may want to keep the fund open If no additional gifts are anticipated, you may decide to close the account Questions can be directed to Linda Kuros ([email protected] edu)

Non-Gift Income Policy l Non-gift income (i. e. , income other than gift receipts)

Non-Gift Income Policy l Non-gift income (i. e. , income other than gift receipts) should not be booked to a restricted current use gift fund or restricted endowment fund. Per University Policy, you may book miscellaneous income to a restricted fund, the limit is $1, 000 per fund per fiscal year. – – 30 Booking non-gift revenue to a restricted fund makes money subject to terms of fund Questions should be directed to Linda Kuros, FAS Office of Finance

Gift Record / Fund Terms l l After the RSO processes a pledge or

Gift Record / Fund Terms l l After the RSO processes a pledge or gift, a gift record is created The gift advice is available in RUFFAS – – l l l 31 Reporting Utility For FAS http: //admin-apps. fas. harvard. edu/ Gift terms can also be accessed through RUFFAS Review and compare to Detail Listing report for accuracy Departments often use information to thank donors for their gift

Overview: FAS Endowment 32

Overview: FAS Endowment 32

Endowments: Behind the Scenes l l l 33 Donor gifts are received by Office

Endowments: Behind the Scenes l l l 33 Donor gifts are received by Office of the Recording Secretary (RSO) Harvard Management Company (HMC) invests gifts by purchasing units in General Investment Account Payout rate is approved by Corporation each November for upcoming fiscal year Treasurer’s Distribution credited in July of each year Annual distribution = (average number of units invested in prior fiscal year) x (new unit rate after approved increase) Gifts < 1 year will receive a prorated Treasurer’s Dist.

Fund Valuation l Endowment funds actually have two different values: – – l Book

Fund Valuation l Endowment funds actually have two different values: – – l Book Value: Value of actual gifts deposited into fund (object codes 3881, 3882) Market Value: Book Value + Appreciation, what endowment is worth today if you were to "cash it in" Market Value is determined by: – (# of Units) x (Current Month’s Unit Rate) 1567. 4567 x $2, 138. 98 $3, 352, 758. 5321 34 Units in the fund Current unit value Market value of the fund

Maximizing Funds Section II: Faculty Funds 35

Maximizing Funds Section II: Faculty Funds 35

Faculty Funding Sources l l l l l 36 Dean’s Fund (also called Start-Up

Faculty Funding Sources l l l l l 36 Dean’s Fund (also called Start-Up Fund) Course Innovation/Course Enhancement Fund Gen. Ed Course Development Fund Faculty Aide Program President’s Innovation Fund for Int’l Experiences Provost Fund for Arts & Humanties FAS Tenure-Track Faculty Publication Fund Milton Fund Instructional Lunch Fund

Dean’s Fund l Dean’s (Start-Up) Fund – Senior Faculty 000770 – – 37 Junior

Dean’s Fund l Dean’s (Start-Up) Fund – Senior Faculty 000770 – – 37 Junior Faculty 000775 $1, 000 annual allocation from the Dean to all active junior & senior faculty in support of faculty research / scholarly activities performed while at the FAS

Using Startup Funds Professor L. Ameduck has given his notice and will be leaving

Using Startup Funds Professor L. Ameduck has given his notice and will be leaving the University on December 1 and taking a faculty position at Stanford. He has recently ordered a laptop and would like retain it for his ongoing research. Is this allowable? A. B. C. 38 No, this is against University policy Yes, but he must pay the University the current market value of the laptop Yes, but he only has to pay for the shipping costs.

Guidelines for Using Dean’s Fund l l FAS provides faculty funds to support research

Guidelines for Using Dean’s Fund l l FAS provides faculty funds to support research and other scholarly activity expenses for their work Durable assets, i. e. , tangible goods that yield service/benefit over a number of years, should be inventoried and are the property of the University – l Durable assets that may not be charged to faculty support funds include furniture, rare books, and works of art – 39 Includes scientific equipment and computers/printers http: //finance. fas. harvard. edu/files/fas_finance/files/faculty_startup_funds_updated. pdf

Guidelines for Using Dean’s Fund l l 40 Travel and entertainment expenses must conform

Guidelines for Using Dean’s Fund l l 40 Travel and entertainment expenses must conform to University policies and FAS guidelines. Department Administrators are responsible for ensuring the appropriate preparation and approval of requests and for raising questions when in doubt.

Additional Funding Sources l l 41 Course Innovation Fund – Designed to improve existing

Additional Funding Sources l l 41 Course Innovation Fund – Designed to improve existing undergraduate courses or create new ones – Supports one-time opportunities in a course – Administered by the Office of Undergraduate Education Gen Ed Course Development Fund – Supports funding for a research assistant, web design, IT help, etc. for faculty developing a new course for the Gen Ed curriculum – Administered by the Office of Undergraduate Education

Additional Funding Sources l l 42 Faculty Aide Program – Allows faculty to hire

Additional Funding Sources l l 42 Faculty Aide Program – Allows faculty to hire undergraduates as research assistants – Faculty apply for a one-time $1500 grant – Each dollar earned by the Faculty Aide must be matched by the faculty member – Administered by SEO President’s Innovation Fund for Int’l Experiences – Supports the development of creative and significant experiences abroad for Harvard College students – Administered by the Office of the Provost

Additional Funding Sources l l 43 Provostial Fund for Arts & Humanities – To

Additional Funding Sources l l 43 Provostial Fund for Arts & Humanities – To support creative, innovative projects and initiatives in the Arts & Humanities – Administered by the Office of the Provost FAS Tenure-Track Faculty Publication Fund – To provide “supplemental research funds to assist with costs related to publication, broadly defined” (e. g. copying, research assistance, etc. ) – Up to $5, 000 over course of faculty member’s appointment as tenure-track member of FAS – Administered by Office for Faculty Affairs

Additional Funding Sources l Milton Fund – – – l Instructional Lunch Fund –

Additional Funding Sources l Milton Fund – – – l Instructional Lunch Fund – – – 44 Supports projects in the areas of medicine, geography, history and science. Funding up to $40, 000 may be requested for a one year period Administered by Harvard Medical School Facilitates regular meetings over breakfast, lunch, or coffee between course heads and TFs, TAs, and CAs. Reimbursed a maximum of $10/pp, per meeting, up to 15 meetings a year. Administered by the Office of Undergraduate Education

Faculty Funding Considerations l l 45 Discuss funding sources/deadlines with faculty Track spending in

Faculty Funding Considerations l l 45 Discuss funding sources/deadlines with faculty Track spending in faculty funds monthly to avoid deficits and distribute reports periodically Contact Sue Rose with questions about balances, eligibility, etc. for Dean’s Fund “Other” money should not be added to a faculty member’s Dean’s Fund

Additional Faculty Support l For faculty housing support and educational loans, and other faculty

Additional Faculty Support l For faculty housing support and educational loans, and other faculty (personal) financial concerns, contact: – – 46 Tom Skerry, Assistant Dean and Faculty Financial Administrator [email protected] edu, x 5 -0443

Got questions? Section III: Resources 47

Got questions? Section III: Resources 47

Resources - University Recording Secretary’s Office, 124 Mt. Auburn St. : l l Denise

Resources - University Recording Secretary’s Office, 124 Mt. Auburn St. : l l Denise Gorayeb, Recording Secretary [email protected] edu, x 5 -1758 Alayna Brinkley, Associate Director, Gift Processing [email protected] edu, x 5 -9670 Anne Gotfredson, Sr. Associate Director, Development [email protected] edu, x 5 -9325 l l T. J. Eastman, Associate Director for Gift Funds Management, Communications and Outreach [email protected] edu, x 5 -1753 Development Office, 124 Mt. Auburn St. : l 48 Beth Thompson [email protected] edu, x 5 -9014

Resources – FAS Office of Finance Linda Kuros, Manager of Endowment and Gift Funds

Resources – FAS Office of Finance Linda Kuros, Manager of Endowment and Gift Funds [email protected] edu, x 6 -3934 l Maria Geovanos, Endowment & Gift Administrator [email protected] harvard. edu, x 6 -8832 l l 49 Sue Rose, Financial Analyst [email protected] edu, x 5 -9729 Tom Skerry, Faculty Financial Administrator [email protected] edu, x 5 -0443 ASAP (Administrative Systems Assistance Program) [email protected] harvard. edu, x 6 -7136

Resources – Faculty Funds l Course Innovation/ Course Enhancement Fund – l Gen Ed

Resources – Faculty Funds l Course Innovation/ Course Enhancement Fund – l Gen Ed Course Development Fund – l Stephanie Kenen, [email protected] edu; x 6 -0221 Tenure-Track Faculty Publication Fund – 50 Lauren Raece, [email protected] harvard. edu; x 4 -74775 Office for Faculty Affairs: x 4 -7256 (Humanities); x 4 -8169 (Social Science); x 5 -5083 (Sciences)

Additional Funding Sources websites l http: //oue. fas. harvard. edu/icb. do? keyword=k 18059&pageid=icb. p

Additional Funding Sources websites l http: //oue. fas. harvard. edu/icb. do? keyword=k 18059&pageid=icb. p age 498254 l http: //oue. fas. harvard. edu/icb. do? keyword=k 18059&pageid=icb. p age 542267 l http: //hlcra. harvard. edu/finding-funding/internal-fundingopportunities/william-f-milton-fund/ l http: //provost. harvard. edu/funding l http: //drclas. harvard. edu/faculty-grants l http: //isites. harvard. edu/fs/docs/icb. topic 1086272. files/Instructional_ Lunch_Fund_2014_15_UPDATED_24 Sept 2014. pdf l 51 http: //seo. harvard. edu/faculty-aide-program