11.6 Accounting for Fundraising and Development Expenses

Policy Statement

Units must ensure that fundraising and development expenses (i.e., costs incurred to solicit and obtain gifts from donors) are properly classified and accounted for within Banner.

Reason for the Policy

To ensure fundraising and development expenses are properly classified and accounted for within Banner. This allows for:

• University of Illinois Foundation (UIF) analysis and evaluation of the University of Illinois System’s fundraising and development efforts, and
• That these fundraising and development expenses are properly excluded from the system’s Indirect Cost Study.

Applicability of the Policy

All units who incur fundraising and development expenses.

Procedure

To ensure that fundraising and development expenses are properly classified and accounted for in Banner, refer to the guidelines and procedural steps below.

1. Identify all fundraising and development expenses incurred that are directly tied to overt donor solicitation efforts. Examples include, but are not limited to:
   1. Personnel costs (such as salaries and benefits) for development officers or any other individual who is materially participating in fundraising efforts
   2. Development office operating expenses, including, but not limited to, costs such as: staff travel, staff training, staff equipment, office supplies and stationery, printed materials used in fundraising efforts, etc.;
   3. Expenses to publicize and conduct fundraising campaigns;
   4. Expenses for direct mailings soliciting donations;
   5. Expenses incurred in cultivating donor relationships and soliciting donations (such as the cost of a meal with a potential donor);
   6. Expenses incurred for major donor cultivation events, development campaign meetings, or development committee events;
   7. Expenses incurred in acknowledging gifts and providing stewardship services to both current and prospective donors; and,
   8. Expenses for holding fundraising events such as fundraising galas, silent auctions, ad hoc fundraising events (such as t-shirt or bake sales), etc.
2. Identify expenses related to advancement, alumni relations, and public affairs activities to ensure that these costs are not classified as fundraising or development expenses. Since these costs are not related to direct donor solicitation efforts, they should not be factored into the analysis of fundraising and development efforts. Examples include, but are not limited to:
   1. Expenses to publish a monthly alumni relations magazine or an annual departmental newsletter where the primary purpose of the publication is to maintain positive alumni relations; and,
   2. Expenses to organize and host reunion events throughout the year (e.g., during homecoming) for alumni and/or retired employees.
3. Ensure all fundraising and development expenses are properly classified and accounted for using an appropriate fundraising C-FOPAL accounting string within Banner by following the guidelines below
   1. Fundraising and development expenses may be charged to a variety of fund types, such as state, indirect cost recovery (ICR), administrative allowance, gift, or endowment income. Determining how to account for these fundraising and development expenses varies depending on the type of fund used.
   2. If the fundraising and development expenses are charged to a fund type utilizing unique program codes (such as state, ICR, or administrative allowance) then a unique program code containing the following characteristics should be used to account for these expenses:
      1. a title containing the word “Fundraising”; and
      2. an assigned Banner A-21 code of “UFR” (Unallowable Fundraising).
         University Accounting and Financial Reporting (UAFR) will ensure all proper coding is assigned to the new fund code in Banner, as long as the related Banner Fund, Program, Index Code Request Form clearly states that the new fund code will be used to account for fundraising and development expenses.
   3. If the fundraising and development expenses are charged to a fund type utilizing generic program codes (such as gift or endowment income), then a unique fund code containing the following characteristics should be used to account for these expenses:
      1. a title containing the word “Fundraising”; and
      2. an assigned Banner A-21 code of “UFR” (Unallowable Fundraising).
         UAFR will ensure all proper coding is assigned to the new fund code in Banner, as long as the related Banner Fund, Program, Index Code Request Form clearly states that the new fund code will be used to account for fundraising and development expenses.
4. Provide an adequate amount of funding or expense budget to the applicable fundraising C-FOAP accounting string within Banner to ensure that no deficits exist by the end of the fiscal year. Follow the guidelines below to ensure this funding is provided using the proper accounting methods.
   1. To provide funding for fundraising and development expenses that posted to a state or institutional fund (e.g. ICR, or administrative allowance C-FOAP), units must complete a Budget Adjustment Request (BAR) Form, requesting a temporary budget exchange from another state, ICR, or administrative allowance C-FOAP to the fundraising C-FOAP. Submit the completed form to the applicable university Budget Office for review, approval, and processing.
   2. To provide funding for fundraising and development expenses that posted to a gift or endowment income C-FOAP, complete a funds transfer via a journal voucher following the guidelines listed below.
      1. Debit (+ plus) an appropriate gift or endowment income fund and credit (- minus) the fundraising gift or endowment income fund, using a 104 rule code and the 417001 account code on both sides of the entry. See Processing Fund Transfers Between Gift Funds for more details.
      2. Debiting an unrestricted gift or endowment income fund is a common and allowable funding source for these types of transactions.
      3. Debiting a restricted gift fund for these types of transactions may be allowable in certain circumstances. For example, if a restricted gift fund contains non-gift revenue in the 303242 account code generated from a fundraising event (such as a silent auction, t-shirt sales, bake sales, etc.), then that restricted gift fund could be debited for an amount up to (but not exceeding) the total revenue within the 303242 account code.
      4. Note: Fund transfers from/to a gift fund (fund type 4M) to/from and endowment income fund (fund type 4J) are unallowable.