It is the intent of this policy to assure that all gifts to the Western Washington University Foundation (“Foundation”) are structured for the benefit of the University, while, at the same time, ensuring fidelity to donor intent. Because some gift situations may be complex, or more costly than beneficial, or restricted in a manner not keeping with the Foundation’s goal of benefiting the University, this policy has been developed to outline the procedures for assessing and accepting gifts to the Foundation for the University’s benefit. While this document is intended to provide guidance to Western Washington University Foundation and other University personnel regarding acceptance of prospective gifts, donors are ultimately responsible for ensuring that the proposed gift furthers their charitable, financial, and estate planning goals. These policies have been reviewed and approved by the Foundation’s Executive Committee and Board of Directors. The Executive Committee reserves the right to make exceptions to the policies based on individual circumstances.
All gift acceptance decisions shall be interpreted in light of two overriding principles which reflect the Foundation’s responsibility to donors and the University:
INTEREST OF THE DONORS
To the extent possible, the Foundation will consider the interests of the donor while also, considering the interests of the University and the Foundation. Development staff, however, are not obligated to request or obtain information from the donor strictly for the purpose of determining if the gift is in the donor’s best interest. The Foundation does not provide legal, accounting, tax, or other advice to prospective donors. Donors are encouraged to seek out and rely upon the advice of their own independent advisors.
No member of the Western Washington University Foundation Board of Directors shall take action related to acceptance, disposal or management of a gift that shall confer any material financial benefits on such member. The Western Washington University Foundation adheres to a conflict of interest policy developed in accordance with Internal Revenue Service guidelines.
All donative instruments will be deemed confidential except as authorized by the donor. A donor may authorize public announcement of any feature of an agreement. All files will be made available upon request to the Internal Revenue Service and the external auditors for the Western Washington University Foundation. All other requests for information will be honored only if the donor has provided written authorization releasing information, or if current law requires release of the information.
Support of the University
No gift shall be accepted by the Foundation unless the gift clearly supports the educational mission of Western Washington University. The decision whether a gift will support the educational mission rests with University administration and leadership. The Foundation will provide support to University leadership in their determination of whether the gift supports the University mission.
A gift (or outright gift) is value given to the Foundation for which the donor receives no direct benefit and requires nothing of value in exchange beyond an assurance that the intent of the contribution will be honored. Gifts are typically made in the forms of cash, stocks, bonds, real property, tangible personal property, or gifts-in-kind. Gifts made to the Foundation are both processed and reported by the University Advancement Office.
Grants to the Foundation to support activities will fall into one of two categories; sponsored agreements or philanthropic gifts. Philanthropic gifts are unconditional transfers which are voluntary and non-reciprocal and will be received by the Foundation. Sponsored agreements are reciprocal with each party giving and receiving something of value in the transaction, and will be administered by the University Office of Sponsored Research.
A pledges is a commitment to give a specific dollar amount within a fixed time schedule. Pledges may be considered “conditional” if certain events outside the control of the Foundation must occur prior to the transfer of the gift. While pledges are considered formal commitments by the donor, they are not considered enforceable contracts.
Planned gifts generally are gifts or commitments made in the present with the benefit to Western Washington University "deferred" until a future date (typically, the death of the donor). However, planned gifts may include outright gifts of appreciated property (securities and real estate) or gifts of tangible personal propertyEndowment
An endowed gift is invested in perpetuity for the purpose of producing present and future income that may be expended or reinvested with the original gift. Income is expended according to the donor's intention and may be unrestricted or restricted. (see Foundation Endowment Policy)
Appraisals are customarily obtained by the donor to support the allowance of specific income tax charitable deductions. Qualified appraisals are required when the claimed deduction for the donated property, other than money or publicly traded securities, is more than $5,000.
TYPES OF GIFTS
Cash and cash equivalents. Cash gifts are reported as of the date the cash or check is received in the University Advancement Office. If gifts are transferred by EFT or wire, the date of the gift is the date that the money is transferred into the Foundation's bank account. Credit card gifts are reported on the date that the credit card charges are processed.
Publicly-traded securities. Marketable securities will be accepted as outright gifts or toward existing pledges. The value of securities is determined on the recognized gift date, which is established when the donor relinquishes control of the securities. The average of the high and low trading prices on the gift date determines the value of securities for reporting purposes. Gifts of marketable securities will be sold immediately unless the President and CEO is instructed by the chair of the Investment committee otherwise. All costs related to the liquidation of the stock will be absorbed by the Foundation.
Closely held securities (non-public). The Foundation shall closely examine any security that is not publicly traded prior to its acceptance as a gift, and may decline a gift of such securities if it deems them difficult to value or not easily marketable. The Strategic Initiatives Committee must review all gifts of non-publicly held securities prior to acceptance by the Executive Committee. See Section titled Special Gifts or Situations below.
Real property. Real property includes improved or unimproved land, personal residences, farmland, commercial property, rental property, and mineral interests. Gifts of real property will not be accepted if donor restrictions place undue limitations on the ability of the Foundation to own, manage or dispose of the property. If it is the intention of the donor that the Foundation not immediately dispose of real property (such as the instance of a retained life estate), an agreement must be made in writing between the Foundation and the donor before the Foundation may accept such property. Considerable due diligence must be undertaken by the Strategic Initiatives Committee prior to acceptance of any real property. See Section titled Special Gifts or Situations below.
Personal property or gifts-in-kind. In-kind gifts (equipment, software, library resources, etc.) may be accepted by the President and CEO of the Foundation or his/her designee after consultation with program areas impacted by the gift. Complex in-kind gifts requiring University and/or Foundation commitments (space, technical support, maintenance contracts, transportation, insurance, etc.) must be approved by the Provost, the President and CEO of the Foundation, and the President of the University after consultation with the appropriate dean or college representative.
Gifts-in-kind for which donors are eligible for a charitable gift deduction in accordance with current IRS regulations should be reported at their fair market value. IRS guidelines require that gifts valued in excess of $5,000 require a professional appraisal in order to be considered for a charitable gift deduction. The Foundation will not provide nor pay for professional or third party appraisals. If the donor does not supply a value, qualified University staff (not the Foundation) who has knowledge of the general type of item may provide an estimated value for internal gift Approved, Budget and Audit Committee – April 20, 2017 Page 5 of 11 Approved, Board of Directors – May 19, 2017 counting purposes only. Donors will be provided a gift receipt indicating the gift-in-kind was received, but without a value. Donors are always responsible for determining the gift’s value for their own tax purposes.
Gifts of Art. Gifts of art to the Western Gallery collection must be approved by the Gallery Director prior to acceptance by the Western Washington University Foundation. Gallery gifts as well as other gifts of art require completion of the Gift of Art agreement included in the Gift-in-kind form. Donors agree that any gift of art must be without any conditions or restrictions that would preclude the University’s unrestricted use of the piece of art. If the donor wishes to place restricting conditions on the gift, the Director of the Western Gallery must approve a separate contractual agreement.
Pledges are commitments to make a gift(s) of a specific dollar amount according to a fixed time schedule. Pledges will be accepted and recorded in accordance with the following guidelines.
- To record any pledge, the following information must be clearly specified:
- The total amount of the pledge including a clearly defined payment schedule
- The specified designation(s) desired by the donor
- To record a pledge equal to or greater than $5,000, a formal pledge agreement must be signed by the donor.
- To record a pledge less than $5,000, the donor may submit his/her pledge commitment via email, fax, or verbal commitment.
- Internal Revenue Service regulations prohibit grants from Donor Advised Funds (DAF) to be used fulfill individual pledges. In the event a donor indicates their desire to fulfill their pledge with the proceeds from a DAF, the Foundation will be unable to record a pledge and will recognize the donor gifts as they are received. (See Policy for Donor Advised Funds)
- Since potential matching gifts are not commitments made by the donor, and since matching gift rules are always subject to change, matching gifts cannot be included as part of a pledge commitment.
- Pledges will qualify for donor recognition in 1893 Gift Society.
- Pledge payments will only be recorded with schedules of five years or less. At the completion of the first five years, additional five-year increments maybe entered upon agreement with the donor. Donors may add an additional year to their pledge as annual payments are made, not to exceed a five year pledge.
To record an adjustment to a pledge:
- If original pledge is over $5,000, any adjustments must be made via a signed amendment to the original pledge agreement.
- Any unpaid annual pledges will be voided at the end of the fiscal year in which they were committed to being paid.
- Pledge balances will be written off when the Western Washington University Foundation is notified of a donor's death, unless there are provisions in the donor's will or the family has indicated an intent to fulfill the pledge.
- Before defaulted pledges are written off, pledge deactivation requests must be reviewed and approved by the Chief Operating Officer and/or the President and CEO of the Foundation.
Inclusion in 1893 Gift Society will be voided if pledge is defaulted prior to donor reaching minimum lifetime giving level.
General guidelines and definitions. Gifts covered by these policies shall include bequests, gifts of life insurance, life estates, gift annuities, charitable remainder unitrusts, charitable remainder annuity trusts and charitable lead trusts.
All prospective donors shall be advised in writing to seek legal and/or tax advice from their own counsel. Any materials provided by the Foundation, including computer generated gifts scenarios, shall indicate that such information is provided as an educational tool only.
As a general rule, legal and accounting costs for preparation and execution of planned giving documents shall be borne by donors. The Western Washington University Foundation shall make its legal counsel available to consult with donors’ advisors during the gifting process and will cover the costs incurred by its own counsel.
If the assets from a planned gift are intended to create an endowment upon the deaths of the beneficiaries, an endowment agreement shall be signed by the donor at the time the planned gift is pledged, if possible. This agreement will provide the Western Washington University Foundation with instructions for establishing and administering the endowment in accordance with the donor’s wishes.
Donors executing planned gifts are eligible for membership in the Old Main Society, a recognition society within the Western Washington University Foundation, designed to honor those making planned gifts in support of the University. The Old Main Society recognizes confirmed gifts for which the Foundation has documentation supporting the planned gift; e.g. a will, gift annuity contract, etc.
Charitable bequests – No minimum. A charitable bequest is a commitment to make a distribution from a donor’s estate to a charitable organization upon their death. Donors can make charitable bequests to the Foundation in wills or living trusts.
- Development staff will work with donors and their legal counsel to ensure that correct wording for bequests to the Foundation is included when wills are written. Any issues relating to the purposes and requirements of potential bequests will be resolved at that point.
- Whenever a notice of a bequest is received that contains conditions or stipulations that cannot be agreed to by the University, the Foundation, acting upon the recommendation of the University president, shall decline the gift.
- Bequests may be funded with gifts of cash, real estate, securities or tangible personal property. Acceptance guidelines follow those for outright gifts.
- The Western Washington University Foundation will not serve as executor or administrator of an estate because of the potential for conflict of interest and the scope of the required duties.
- Charitable bequests will be recorded at face value for donors who are at least 65 years old on the date of commitment.
Charitable gift annuities - $10,000 minimum. A charitable gift annuity is a contract between the Foundation and the donor (not a trust agreement), whereby the donor makes an initial payment of cash or marketable securities to the Foundation and the Foundation agrees to pay the donor a fixed rate annuity for the rest of his/her lifetime.
- A charitable gift annuity shall have no more than two income beneficiaries. The youngest of the beneficiaries must be at least 55 years of age.
- The Foundation requires that gift annuities be funded only with cash or publicly traded securities. Exceptions to this rule must be approved by the Executive Committee.
- Gift annuities will be offered to residents of states in which the Foundation has obtained required certification. The Foundation shall adhere to payout rates established by the American Council on Gift Annuities.
Charitable remainder unitrusts and annuity trusts - $100,000 minimum. A charitable remainder trust is established when a donor transfers money, securities or real estate into an irrevocable trust, in which a trustee invests the assets to pay annual lifetime income to the donor or others chosen by the donor. At the end of the beneficiaries' lives, the remaining trust assets are distributed to the Foundation. The unitrust differs from the annuity trust by providing a variable income. Payment is based on a fixed percentage of the net fair market value of the trust assets as valued annually.
- A charitable remainder trust shall have no more than two income beneficiaries. The youngest of the beneficiaries must be at least 55 years of age. A term charitable remainder trust may have beneficiaries of any age but the term may not exceed twenty-five years.
- A charitable trust may be funded with cash, publicly traded or privately held stock or real estate. Mortgaged real estate will not be accepted into a trust. Procedures for acceptance of trust assets will follow the same guidelines as those for outright gifts.
- Trusts shall include provisions for covering third party costs incurred by the trust. Such charges may include, but are not limited to, real estate expenses such as appraisals, surveys, environmental assessments, maintenance and repairs and realtor fees. In addition, trusts shall allow for an annual administrative fee to be charged by the Foundation. The Donor shall pay any third party legal costs incurred to establish the trust.
- The Foundation or its appointee corporate trustee shall serve as trustee for all of its unitrusts and annuity trusts unless the donor directs otherwise. The Foundation will serve as trustee of trusts with multiple charitable beneficiaries only if the Foundation will receive a minimum of 51% of the remainder interest.
Charitable lead trusts. $100,000 minimum. A charitable lead trust provides an income stream for a specified period of time to the Foundation. The Foundation receives the income from the trust and applies it to the specific project. The principal is then returned at the end of the set period to whomever the donor designates. The acceptance process is the same as the charitable remainder unitrusts. Due to the potential for a conflict of interest, the Foundation shall not serve as trustee for lead trusts.
Life insurance – No minimum. The President and CEO of the Foundation is authorized to accept gifts of whole life insurance policies which meet the following criteria:
- The policy is a whole life insurance policy which is either paid up or, if not paid up as of the date of gift, the donor has provided a signed pledge to pay all premiums for the policy.
- The Western Washington University Foundation is designated as owner and beneficiary of the policy.
Any life insurance policy that fails to meet all the criteria specified above will be reviewed and approved by the Executive Committee.
A life insurance gift will be complete upon the execution and delivery of the life insurance policy to the Western Washington University Foundation or assignment of the policy in the event the Western Washington University Foundation is not the original owner.
Retained Life estates. A life estate is retained by a donor when they transfer title to real estate to the Foundation, yet retain the right to live in, or otherwise utilize the property until the death of the donor or other beneficiary, or until they otherwise release their interest in the property.
Acceptance of real estate with retained life estates shall follow gift acceptance procedures for acceptance of outright gifts of real property. Adequate provision must be made by the donor for all expenses of ownership, including payment of mortgages, taxes, insurance, utilities and maintenance. If adequate provision for these expenses is not evident, the Foundation may choose not to accept the gift.
Life estates will be counted at the market value of the home at the time of transfer, less the discounted value of the estimated “rent” over the estimated remaining lifetime of the donor/beneficiary.
SPECIAL GIFTS OR SITUATIONS
The Executive Committee shall review all gifts of unusual or significant risk. All such gifts shall be documented by a written understanding between the donor and the Foundation, and must ultimately be approved by the Executive Committee before the Foundation may accept the gifts. The Executive Committee may establish an ad hoc committee to provide analysis and recommendations to the Executive Committee regarding any specific gift.
Gifts of unusual or significant risk may include but are not limited to:
- Non-publicly traded securities or privately-held stock
- All gifts of real property
- Gifts of personal property if not to be used by the University
- All gifts of real or tangible personal property subject to donor restrictions regarding the disposal of such property
- Any bargain sale of property where a donative element was associated with the acquisition of property by the University or Foundation below its fair market value.
- Cash or in-kind gifts with significant donor restrictions
- All gifts of unusual items or gifts of undeterminable value
- Gifts that may present certain reputational risks to the Foundation or University
Gifts of Privately Held Stock. The Executive Committee may accept gifts of privately held stock.
The donor and the Western Washington University Foundation should make a cooperative effort to obtain repurchase provisions in the donative instrument when securities are donated for which the donor or related parties are the primary market.
The Western Washington University Foundation requires the following criteria to be met prior to acceptance of privately held stock:
- There must be a written donative instrument indicating the donor’s intention to make the gift and its purpose.
- The donor must provide satisfactory financial/valuation information on the stock, including appraisals and/or statements of value.
- Copies of any shareholder agreements/buy-sell agreements that the board would be subject to as shareholders must be provided, especially those that include any restrictions on the transfer of the stock, i.e. rights of first refusal, formulas for determining stock price.
- The donor must provide a written copy of any related offer to purchase the stock, including the purchase price per share.
- The donor must properly assign the ownership of the stock to the Western Washington University Foundation.
- The Western Washington University Foundation must be satisfied that the liquidation value of the stock will satisfy any financial obligations resulting from the gift.
- Gifts of closely held stock shall be sold as soon as possible according to repurchase provisions in the donation agreement.
Gifts of Real Property. Gifts of real estate may be accepted by the Executive Committee of the Foundation. Gifts of real estate shall be sold, managed for income or granted to Western Washington University to enhance University programs. The Committee shall conduct an evaluation of the property including but not limited to such factors as sale potential, income potential, holding costs and management requirements.
- Gifts of real estate will not be accepted if donor restrictions place undue limitations on the ability of the Western Washington University Foundation to own or manage or dispose of the property.
- Gifts of mortgaged or encumbered property will not be accepted unless a clear potential for gain can be demonstrated, a source of funds to meet all requirements is dedicated to the purpose, and the mortgage has acceptable terms.
- It shall be the policy of the Foundation to accept real estate only if such ownership will result in 100% interest in the property. Lesser interests in real estate will be accepted only when a clear benefit to the Foundation can be demonstrated.
- Gifts of real estate with a market value of less than $50,000 will not be accepted.
- The Foundation shall obtain a title report for each potential gift of real estate to insure that there are no recorded liens or encumbrances on the proposed gift.
- Prior to acceptance of a proposed gift of real estate the following materials should be provided by the donor, as relevant:
- Map showing location of property
- Legal description of property
- Proof of ownership (deed)
- Survey of subject property
- List of improvements
- Copies of current leases, if any
- Proof of payment of taxes and association fees, if any
- Appraisal dated no earlier than 60 days prior to the gift date, and copy of any other appraisal made within previous three years.
- Written statement from the donor identifying any known waste disposal sites or spills of petroleum products, chemicals or hazardous waste material on the property or a statement to the contrary
- A Phase I Environmental assessment, at the Western Washington University Foundation’s expense, is required for each real estate gift unless specifically waived by the Executive Committee.
- Prior to acceptance of a real estate gift, The Foundation’s attorney shall review all gift documentation.
- Real estate valuation will be based on a qualified written property appraisal dated no earlier than 60 days prior to the gift date.
- For out of the ordinary gifts, the Executive Committee will prepare a utilization plan for that donated property. Once approval from the Executive committee is received, (if applicable), the President and CEO of the Foundation will be authorized to take all necessary actions to sell, manage or gift the property to the University.
- If the real estate is placed on the market, the Foundation will attempt to sell the property at a reasonable price in light of current market conditions. A sale occurring within two years of the date of gift will be reported to the Internal Revenue Service on Form 8282.
- Any costs incurred with the acceptance, management, or sale of the property shall be charged either against income earned by the property or against proceeds from the sale of the property as appropriate.
Conditional Gifts. Conditional gifts are those gifts that, because of some qualifier or restriction, may commit the Foundation to act within a specified time or use a gift for a specific purpose. If, in any instance, a gift offered by a donor would put the Foundation and/or University in an embarrassing or untenable position, the Foundation may decline acceptance of the gift. Time limits for holding a conditional gift may be reviewed by the Executive Committee. Gift acceptance agreements should specify a time period for meeting the conditions for the gift and should also indicate what will happen to the gift if conditions are not met. The Foundation will draft an acknowledgment of a conditional acceptance for appropriate signature. This conditional acceptance will be sent to a donor within 10 days of approval. A second acknowledgment letter will be sent when conditions have been satisfied.
Refunding of Gifts. In very rare instances, the Western Washington University Foundation may deem it necessary to refund a particular gift. Requests for refunds may come either from the donor or from the recipient department and must include a statement of reason addressed to the Executive Committee. Any refunds must be approved by the President and CEO and the Executive Committee.