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

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

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

3. Baseline Quiz

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

5. Name That Fund • Gift Fund • Unrestricted Designated Fund • Endowment 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.

6. Name That Fund • Unrestricted Undesignated Fund • Unrestricted Designated Fund • Federal Sponsored Grant 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).

7. Name That Fund • Gift Fund • Endowment Fund • Federal Sponsored Grant 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.

8. Name That Fund • Unrestricted Undesignated • Unrestricted Designated • Sponsored Grant 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.

9. FY13 FAS Revenue Budget

10. CoA Flashback • Unrestricted: Fund number starts with 00 or 01-05 • Sponsored: Starts with a 1 = Federal grant Starts with a 2 = Non-federal grant • 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

11. Maximizing Funds Section I: Gift & Endowment Funds

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

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

14. May be spent immediately Restricted gifts are limited by the donor for a defined purpose Important object codes: 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

15. Excludes student aid charges in object codes: 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 Gift Fund Basics

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

17. Gift 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

18. Grant 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 Gift vs. Grant

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

20. Endowment Fund Basics • 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: • 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 • 9510-9520New Gifts

21. Endowment Fund Basics • 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

22. Chart value combinations are limited by cross validation and security rules Authorized to transact to funds only within your org’s range ‘Relaxing’ cross validation rules allows another department to transact to your fund 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 Cross Validation

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

24. New Gift Fund • 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., 4th floor) to set up the fund • Request forwarded to the Office of the Recording Secretary (RSO) for final approval • New fund number provided by FAS Office of Finance • Depts. must confirm new fund & terms via email

25. New Endowment Fund • 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 • RSO has final approval on fund terms • New fund number provided by FAS Office of Finance • Depts. must confirm new fund & terms via email

26. Balance Forward Designations • 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: • Fund • Fund + Activity • Fund + Root • Fund + Activity + Subactivity • Fund + Activity + Root • Fund + Activity + Subactivity + Root

27. Adding gift income to an existing fund? • 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 hand-delivered to the RSO, 124 Mt. Auburn St. • Endorse back of check upon receipt • Do not hold on to check(s); could become stale-dated.

28. How to Write Off a Gift Balance • 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: • DR Tub.Org.7765.3XXXXX.600300.XXXX.XXXXX • CR Tub.Org.7765.000001.600300.XXXX.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

29. How to Write Off a Gift Balance • 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 (l_kuros@harvard.edu)

30. Non-Gift Income Policy • 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. • 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

31. After the RSO processes a pledge or gift, a gift record is created The gift advice is available in RUFFAS 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 Gift Record / Fund Terms

32. Overview: FAS Endowment

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. Endowments: Behind the Scenes

34. Fund Valuation • Endowment funds actually have two different values: • 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 Units in the fund x $2,138.98 Current unit value $3,352,758.5321 Market value of the fund

35. Maximizing Funds Section II: Faculty Funds

36. Dean’s Fund (also called Start-Up Fund) Course Innovation/Course Enhancement Fund GenEd 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 Faculty Funding Sources

37. Dean’s (Start-Up) Fund Senior Faculty 000770 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 Dean’s Fund

38. Using Startup Funds • 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. 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?

39. 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 Includes scientific equipment and computers/printers Durable assets that may not be charged to faculty support funds include furniture, rare books, and works of art http://finance.fas.harvard.edu/files/fas_finance/files/faculty_start-up_funds_updated.pdf Guidelines for Using Dean’s Fund

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. Guidelines for Using Dean’s Fund

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

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

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

44. Milton Fund 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 Instructional Lunch Fund 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 Additional Funding Sources

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 Faculty Funding Considerations

46. For faculty housing support and educational loans, and other faculty (personal) financial concerns, contact: Tom Skerry, Assistant Dean and Faculty Financial Administrator    tskerry@harvard.edu, x5-0443 Additional Faculty Support

47. Got questions? Section III: Resources

48. Recording Secretary’s Office, 124 Mt. Auburn St.: Denise Gorayeb, Recording Secretary denise_gorayeb@harvard.edu, x5-1758 Alayna Brinkley, Associate Director, Gift Processing alayna_brinkley@harvard.edu, x5-9670 Anne Gotfredson, Sr. Associate Director, Development anne_funderburk@harvard.edu, x5-9325 T.J. Eastman, Associate Director for Gift Funds Management, Communications and Outreach thomas_eastman@harvard.edu, x5-1753 Development Office, 124 Mt. Auburn St.: Beth Thompson beth_thompson@harvard.edu, x5-9014 Resources - University

49. Linda Kuros, Manager of Endowment and Gift Funds lkuros@harvard.edu, x6-3934 Maria Geovanos, Endowment & Gift Administrator geovanos@fas.harvard.edu, x6-8832 Sue Rose, Financial Analyst srose@harvard.edu, x5-9729 Tom Skerry, Faculty Financial Administrator tskerry@harvard.edu, x5-0443 ASAP (Administrative Systems Assistance Program) fasasap@fas.harvard.edu, x6-7136 Resources – FAS Office of Finance

50. Course Innovation/ Course Enhancement Fund Lauren Raece, raece@fas.harvard.edu; x4-74775 Gen Ed Course Development Fund Stephanie Kenen, stephanie_kenen@harvard.edu; x6-0221 Tenure-Track Faculty Publication Fund Office for Faculty Affairs: x4-7256 (Humanities); x4-8169 (Social Science); x5-5083 (Sciences) Resources – Faculty Funds