1. Donations Philippa Woods HOFFRA

2. Donation Income Recognition The accounting treatment for each type of donation is as follows: Unrestricted Donation Income is recognised on receipt No reserves accounting required Restricted Donation Income is recognised on receipt The restricted income received is held in restricted reserves until the related expenditure is incurred – A reserve journal will need to be done once the restriction is met to move the reserve balance from unrestricted to restricted. Donation with Performance-Related Conditions (PRCs) Income is deferred until the University has full entitlement No reserves accounting required The 2015 SORP states that, ‘it is expected that donations with performance-related conditions will be rare’.

3. Donation Income Recognition Any donation (restricted or unrestricted) received of a value more than £50,000 will be accounted for within the specified area, via the Major Gifts account any donation pledge received of a value less than £50,000 to be classified as a unrestricted donation if this donation (<£50k) has requirements attached it will be accounted for within the specified area, via the Major Gifts account Activity codes must be set up promptly in the School/Area to allow this journal, however Faculty codes till be set up to accommodate any donations that we are only aware of late in the month. if this donation (<£50k) has no requirements attached it will be added to the Annual Fund DDAR will work with donors, to try to minimise the volume of gifts accounted for via the Major Gifts account. In particular, for donations of a value less than £10,000, DDAR will strongly encourage the donor towards making a contribution to the Annual Fund, unless there is a strategic reason for doing otherwise.

4. Donation Income Recognition There are new IE codes for the different categories of donation we will be accounting for under the new SORP The existing code of 1701 will no longer be in use. Donations should be accounted for in Oracle on activity codes with a HA prefix. However, there may be occasions where it would be allowable for donation income to be recognised on an AD code An exception report will be run monthly to check all donation IE codes and any donation income not on a HA code will need to be explained.

5. Donation Income Recognition

6. 1. Please see Appendix A of ‘Donations and Endowments De Minimis Threshold’ paper for definitions of these terms (when used in the context of donations and endowments). 2. An endowment is a form of charitable trust, which is created if a donor expresses their intention for the gift to be used to establish an endowment fund. 3. Entitlement is considered to be on receipt, except for legacy donations, when entitlement is considered to be once probate has been granted, the gift purpose agreed, and the gift agreement process completed. 4. If a gift to establish a restricted permanent endowment of less than £100,000 is offered, DDAR will liaise with the donor or executors wherever possible to agree an alternative gift model. 5. It is expected that donations with performance-related conditions will be rare. Please see Appendix A of ‘Donations and Endowments De Minimis Threshold’ paper. 6. Any proposed restricted expendable endowments less than £100,000 must be approved by Finance Sub Committee.

7. Example of a Unrestricted Donation Legacy - £250k bequeathed to the University for the purposes of Cancer Research. No, there are no time conditions attached to the gift, so there are no performance related conditions. Hence the gift should be recognised in full upon receipt. Cancer Research is a broad research activity of the University. Hence funding is unrestricted.

8. Examples of a Restricted Donation Donation of £100k to fund a doctoral scholarship in a broad research area. Donor has specified strict requirements with regard to the type of student: Satisfy the University’s criteria for the a Presidential Doctoral Award Preference for student to be from a particular country Student to be committed to knowledge exchange in the area specific research area between the UK and their country of origin No time conditions attached so recognise income upon receipt. The requirements are strict enough to limit the likelihood the University being able to spend the money, as such they are restrictions. Hence the income is recognised as restricted income and held in the restricted reserve until the conditions are met. At this point the income will be moved to the unrestricted reserves.

9. Example of a Donation with Performance related condition £63k Donation received in July 2015 to support 3 undergraduate scholarships of £6,000 per each year their 3 or 4 year degree in the School of Physics, commencing in 15/16. There is a PRC attached to this funding as it states that the scholarships are for students commencing their studies in 15/16, thus the funding can be deferred until allocated to students commencing their courses in 15/16. At this point the PRC is met and so the income should be recognised in full.

10. Questions?