CASE Reporting Standards and Gift Counting CASE Summer Institute for Advancement Services July 22-26, 2012 Chris Pipkins James Madison University Caroline Chang Santa Clara University 1 Some background Speakers Some Terms CAE VSE CASE PPP (NCPG) NACUBO CRS&MG Terms continued FASB GASB Face Value - (Recognition value) Present value (tax credit value) COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 2 1
History of CASE Standards 1979: committee for standard definitions 1982: Management Reporting Standards for Educational Institutions: Fund Raising and Related Activities 1990: Expenditures in Fundraising, Alumni Relations, and Other Constituent (Public) Relations NACUBO; costs of fundraising 1994: CASE Campaign Standards: Management and Reporting Standards for Educational Fund-Raising Campaigns COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 3 History - continued 2004: CASE Management and Reporting Standards: Standards for Annual Giving and Campaigns in Educational Fundraising. 3 rd edition. (bequests; software; valuation of deferred gifts) 2009: CASE Management Guidelines and Reporting Standards for Education Fundraising. 4 th edition COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 4 2
Review Process 60 members of CASE Commissions 30 trustees of CASE Public comment period (22,000 CASE members) Final approval 90 members of commission and boards COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 5 2009 publication Title change 3 points of emphasis Blue book Ring binder COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 6 3
CRS&MG Point of emphasis #1 - Transparency COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 7 CRS&MG Point of emphasis #2 Fidelity to Financial Impact COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 8 4
CRS&MG Point of emphasis #3 Engagement of Volunteers and Donors COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 9 Just For Fun 2000 2010 1,800 CASE Standard entries in FUNDSVCS archives (3%) Quid pro quo/premiums 3% - 4% COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 10 5
2009 Edition Major Changes Revocable Gifts Conditional Pledges Irrevocable Deferred Gifts Length of campaign Government Funds COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 11 Revocable Gifts Bequests included Donor relationship Set specific goals New commitments only In writing Stating assumed value of gift Realized requires adjustment Age requirements recommended Externally managed life income trusts (beneficiary revocable) All RG reported separately COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 12 6
Revocable Gifts 2004 Publication 2009 Publication CAE Revocable Gifts -Bequests -Retirement Plan Assets Not counted 1) Included 2) Counted Separately - age considerations 3) Adjusted when realized 1) Counted when realized 2) Include bequest expectancy as informational purposes only 4) Must be documented 3) $$ not % 5) Pledged (not found) during campaign 6) $$ not % COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 13 Revocable Gifts example FY 2009 PG Officer secures $1,000,000 will bequest Recorded in planned giving module as FY 2009 addition to Bequest pool 75 year old alum. Recorded at face value FY 2010 Campaign begins FY 2011 - Estate transfers $1,000,000 to you How do you count for campaign purposes? For CAE? How would you count if estate transferred $1,500,000? COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 14 7
Conditional Pledges Pledges that place requirements to perform tasks you might not otherwise initiate Challenge grants Capital projects (if contingent) Could depend on some future event that donor nor institution have control over COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 15 Conditional Pledges 2004 Publication 2009 Publication CAE Conditional Pledges i.e., Not included per FASB and GASB May be counted 1) Reasonable expectation conditions met during campaign 2) Appropriate documentation (dollar amount and payment schedule) 3) Gift Committee should review 4) Reported as Revocable Pledge 1) Pledges not included in totals 2) Optional information item only COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 16 8
Irrevocable Deferred Gifts 2004 Publication 2009 Publication CAE Irrevocable Deferred Gifts Reported at discount present value 1) May be counted in campaign totals at FACE value 2) Present value is tax credit value use IRS 3) Report both face and discounted present values 4) Record separately; make distinct campaign goal 5) Charitable Lead Trusts record payment stream as pledge in that year 6) Set age minimums 1) Only legally enforceable and irrevocable 2) Report at face and deferred COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 17 Government Funds 2004 Publication 2009 Publication CAE Government Funds COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 18 9
Government Funds CASE reaffirms campaigns are fundamentally philanthropic ventures. Should raise visibility for and recognize value of gov t funding to accomplish institutional goals. Why Standards can t level the playing field or compare if include these (large research universities vs. undergraduate liberal arts; State schools with state matching etc.) COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 19 Campaign Length 2004 Publication 2009 Publication CAE Campaign Length 7 years Shorter preferable to longer periods 8 years Recognized that periods may vary Annual outright dollars. No consideration Concerned about financial impact Concerned about donor impact Includes active solicitation period Nucleus and public phases COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 20 10
Campaign Length 43 $1B campaigns through 1/09 How many longer than 7 years? (17) One was 12 years (is that aligned or fair) 17 of 43 had 7 year campaigns Blue book recognizes shorter times for targeted campaigns Will they be more common in post-campaign-rush reality? 8 years maximizes volunteer, staff and donor participation; keeps campaigns honest COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 21 Reach Backs Grandfathered gifts p 83-84 CASE strongly recommends that the quite phase of a campaign not begin until the campaign plan is approved and that gifts not be counted as campaign donations if they were received before the plan s endorsement This also helps ensure that the institution does not count so called reach-back or grandfathered gifts. COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 22 11
2004 publication Outright Gifts, pledges & grants Irrevocable Deferred Gifts (present value) Campaign Total $$ COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 23 2009 publication Outright gifts, pledges & grants Irrevocable Deferred Gifts (present value) & Irrevocable Deferred Gifts (face value) New Revocable Gifts Campaign Total $$ COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 24 12
Campaign Totals a mock up Outright (gifts and pledges Deferred gifts (irrevocable) Public Value (face value) Present Value GOAL face value $39,000,000 $39,000,000 $200,000,000 80% $15,000,000 $5,500,000 $37,500,000 15% % Of Goal Bequests, Revocable Gifts, Conditional Pledges $8,000,000 $8,000,000 $12,500,000 5% Campaign Total $62,000,000 $51,500,000 $250,000,000 100% Campaign GOAL $250,000,000 COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 25 Whither Standards? COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 26 13
Counting Standards Measures fundraising performance objectively Fosters accurate comparisons Engenders trust; strengthens philanthropy Protects nonprofit credibilty John Taylor COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 27 CRS&MG - Counting Counting - POE 1 & 2 Recognition/Crediting - POE 3 COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 28 14
Counting Counting Gift standards that allow reporting comparisons across institutions Typically reflects the actual legal assets transferred Measures progress against strategic goals Allows us to spot trends Tackles political elements early Transparent to audiences Crediting Policies to recognize donors Does not need to mirror counting Institutional decision Multiple people can get credit for the gift John Taylor COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 29 Dis-counting What doesn t count: Advertising revenue Membership dues/fees Appraisal costs Contributed services Partial interest Discounts on purchases (except bargain sales) Reach backs COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 30 15
Guidelines 4 th edition draws distinction between Reporting Standards and Management Guidelines Pledge guidelines Gift guidelines Gift Types Alumni Participation Campaign guidelines COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 31 Pledge Guidelines See FASB 116 promises to give Five years Can be longer ($1M over 10 years) Consider Timing last day of campaign In Writing From or to a donor Legally enforceable Only legal entity exercising control Thus no matching No Donor-advised funds Document payment schedule and amount COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 32 16
Pledge Guidelines Reasonable expectation that conditions will be met in campaign period Pledge review Write off annual annually Partially paid; never paid FASB: Colleges establish policies for reviewing overdue pledges COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 33 Gift Guidelines Gifts, Grants, Contracts Determined by each institution s general accounting policies Report only those that show true philanthropic intent CASE does not distinguish between gift and grant Donor surrenders explicit and implicit control once institution accepts the asset Irrevocable transfer of property; no donor-imposed restrictions, conditions or control. In general, if IRS does not recognize it as charitable, institution should not recognize it for CASE and CAE reporting COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 34 17
Gift continued A contribution received by an institution for either unrestricted or restricted use in the furtherance of the institution for which it has made no commitment of resources or services other than, possibly, committing to use the gift as the donor specifies. If donor receives benefits in return for the contribution, the recorded and reported gift must reflect the reduction of the FMV of the benefit, per US IRS regulations. Good stewardship provides report on how gift was used or invested; good practice but not required COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 35 Grants Contribution with same definition as gift that typically comes from corporation, foundation, or other organization. 1) non-specific grants received but not as result of a grant proposal. Institution does not commit specific resources. Is not required to report on use of funds to the donor. Most often considered gifts for accounting purposes. 2) specific grants received as result of grant proposal. Institution commits resources or services as condition of grant. Donor requests accounting of use of funds and results of program or project. Request of accounting does not invalidate philanthropic nature of the contribution. COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 36 18
Contracts Agreement that provides economic benefit Agreement is binding; creates quid pro quo relationship Basis of exclusion from an institution s fundraising totals Does not apply to annuity contracts or like instruments COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 37 Gift Types Matching Gifts Unrestricted company does not restrict. University can apply to any account; often match donor s gift designation Report in CASE as unrestricted Closely Held Stock Is there a market value? Accept it; Count it only if it can be sold during campaign COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 38 19
Life Insurance Gift Types continued Whole life Significant operational overhead Establish minimum death benefit Require policy be fully paid within 5 years (allows counting of all payments w/in campaign) Count only when named owner and irrevocable beneficiary If paid or partially paid - Use cash surrender value per insurance provider If not paid up at time of gift count premium payments CASE recommends donate premiums No double dipping on realized death benefits COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 39 Gift Types Property Individual (in) Tangible asset Fair Market Value Donor reports to IRS the deduction amount >$5K use appraiser Gift-in-Kind Organization/Business Long-lived asset Educational Discount Value COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 40 20
Alumni Participation VSE calculates it; Asks for distinction in 3 categories of alumni: Undergraduate degree holders Graduate degree holders Non-degreed alumni Rate = alumni making legal donation / undergraduate degree holders of record COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 41 Alumni Participation Degree Holder of Record = good faith assessment that institution can contact them Per JT basically anyone not dead or lost COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 42 21
Alumni Participation CASE Clarified counting of alumni regarding spouses Legal entity clause Institutions may count a gift with one signature as coming from two alumni when there is clear evidence of marriage (or legal partner status) and both individuals attended the institution. JMU s $1M example COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 43 Campaign Guidelines Size matters It doesn t trump Institutional priorities trump Align with needs of institution & interests/capacity of constituency Must factor in maturity of Advancement program including institutional investment of that program They are planned. Thus written, agreed upon via case statements and policies. That includes policies on reporting. COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 44 22
Final Thoughts More pictures There will be another campaign Consider post-campaign plan as thoroughly as campaign plan Stewardship of volunteers and donors Collection of pledges Explain the impact bequests, deferred COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 45 A Different View Stanford has the most conservative counting rules Only real dollars are recorded Revocable gifts are not recorded Irrevocable deferred gifts are recorded only at NPV No soft credit COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 46 23
Bequest Intentions Counting value of unrealized bequest intentions lead to future problems Possible double counting when bequest is realized Length of time between intention and realized Counting from campaign to campaign Donor recognition equity COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 47 Other deferred gifts IRA beneficiary Not counted Life insurance Not counted when Stanford is beneficiary COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 48 24
Questions? Thank you COUNCIL FOR ADVANCEMENT AND SUPPORT OF EDUCATION 49 25