1. INTRODUCTION AND DEFINITIONS
The University of Calgary relies on private support to achieve its mission. This support may take many forms, from gifts of cash to the transfer of personal property and may come as the result of a request from the University or at the instigation of the donor. Once received by the University this support, in whatever form given, becomes part of the University’s asset base.
For the purpose of this guideline “Gifts in Kind” are defined as items of personal property excluding cash or securities whether owned by an individual, corporation, foundation or other entity, which are transferred to the University for its ownership and use. The most common forms of such gifts include works of art, books, transcripts and manuscripts, equipment, furniture, computer software and software licenses.
It is of critical importance to have an appropriate and uniform process for the receiving and receipting of gifts in kind. Generally Accepted Accounting Principles (GAAP), which guide the presentation of the University’s financial statements and review by the Auditor General, place strict requirements on the treatment of gifts in kind. A gift in kind may qualify as a charitable gift if it is “a voluntary transfer of money or property for which the donor expects and receives nothing of value in return”.
Canada Revenue Agency IT-110R3 – Gifts and Official Receipts, regulate the receiving and receipting of such gifts. Gifts in kind may also qualify for matching funds under certain provincial and federal programs (such as CFI) but must be properly evaluated and accounted for in order to do so.
2. ACCEPTING GIFTS IN KIND
While it may seem that any gift in kind can enhance the quality of teaching or research at the University, in reality this is not so. For example, some gifts may require repair, support or special facilities, which cannot be provided by the University. Reasons the University may decline a gift in kind include:
- There are unusual features to the gift that are contrary to the objectives, values or goals of the University.
The gift could financially or morally jeopardize the donor and/or the University or the reputation and/or values of the donor are inconsistent with the values of the University.
The gift or terms of the gift are illegal or contravene federal or provincial regulations.
The University is unable to honour the terms of the gift.
An appropriate fair market value cannot be determined or will result in unwarranted or unmanageable expense to the University.
There are physical or environmental hazards to the University in accepting the gift.
A suitable physical location or storage cannot be located for the gift.
The gift involves false promises on the part of either party.
PROCEDURES FOR ACCEPTING A GIFT IN KIND
The following procedures are to be followed to ensure that, prior to receiving a gift in kind, the item(s) is deemed acceptable to the University. It is the responsibility of the department head to ensure that the procedures below are initiated/followed depending upon the nature of the gift in kind:
- The head of the recipient department or unit must approve the acceptance of the gift in kind taking into consideration issues or risks such as support costs, third party evaluation costs, impact on space and storage and fit with the academic and research priorities of the unit. If the gift is potentially an environmental or hazardous goods risk (e.g. x-ray machines, etc.) the department of Safety Services must review, test and approve the acceptance of the gift.
If the donor has indicated that a charitable tax receipt will be required, the Development Office will review the gift to determine if it meets University and/or Canada Revenue Agency regulations.
If the gift involves computer hardware, software or software licenses, the Director of Information Technology may be requested, by the appropriate Vice-President, to review the proposed gift and recommend whether it be accepted.
All gifts of fine art must be reported to the department of Risk Management for insurance notification purposes. In addition, all gifts in kind valued at $100,000 or more must be reported to Risk Management.
If the department or researcher intends to use the gift in kind for matching grant purposes (e.g. CFI funding, etc.), the department of Research Services must be contacted to determine the gift’s eligibility under such matching programs.
Gifts of art intended for the permanent collection of The Nickle Arts Museum are subject to consideration and approval by the Nickle Collections Committee.
Gifts of books intended for the permanent collection of the University of Calgary Library are subject to consideration and approval by the appropriate Library division (typically Collection Services).
Gifts of archival materials intended for the permanent collection of the University Archives are subject to consideration and approval by the Archives.
Note: The Development Office must review all gifts, regardless of value, for which the donor is anticipating a charitable tax receipt.
3. RECEIPTING GIFTS IN KIND
Regardless of their perceived value, all gifts in kind received by the University become the property of the University and, as such, must be accounted for in the University’s inventory. This is important not only for accounting purposes, but also to ensure that these items are appropriately insured and that, in case of emergency, can be located and, if required, replaced. It is also important that the donor receive proper acknowledgement of the gift for their record keeping purposes.
Financial Services will issue a Business Receipt indicating the fair market value for each gift in kind. The Development Office may also issue a charitable tax receipt if the gift qualifies as a charitable contribution. Only the fair market value will be used to determine the gift value.
PROCEDURES FOR RECEIPTING GIFTS IN KIND
The following procedures are to be followed by all faculty, staff and units upon receiving approval to accept a gift in kind (by completing the steps in part 2 above):
The recipient department or unit will forward all appropriate donor and gift in kind documentation to Materials Management for determination of the fair market value. A Gift in Kind Donation form is to be completed by the department for all donations of equipment, works of art and specialized furnishings (those items in excess of $1,000 will be added to the capital equipment inventory system and tagged).
Materials Management will review the donor and gift in kind documentation and determine a fair market value, based on factors such as the manufacturer’s list price, the age and state of the donated item, appraisals from qualified experts in the field, especially in the case of works of art, books, manuscripts, photographs, etc. or other factors as required. The cost of third party evaluations is to be born by the department or unit receiving the gift in kind. The cost of pick-up, delivery, installation or storage may also be born by the recipient.
- If a donation tax receipt is being requested, Materials Management will forward the donor and gift documentation, appraisals and Gift in Kind Donation form to the Development Office. The Development Office will generate a charitable tax receipt to the donor for the fair market value. A copy of the tax receipt together with the documentation, appraisals and Gift in Kind Donation form is forwarded to Financial Services.
If no donation tax receipt is being requested, Materials Management will forward the documentation, appraisals and Gift in Kind Donation form to Financial Services.
- Financial Services will record the gift in kind in the University’s capital equipment inventory and financial systems and issue an inventory tag and copy of the Gift in Kind Donation form, where applicable, to the recipient department. Financial Services will issue a business receipt to the donor indicating the date of donation, description and fair market value.
Note: Gifts in kind (art, books and archival materials) intended for the permanent collection of the Nickle Arts Museum, University of Calgary Library or University Archives are evaluated and processed separately within these departments. Final documentation is forwarded to the Development Office for tax receipt issuance and then to Financial Services for recording and accounting purposes.
Normally, it will take six to eight weeks to complete all required documentation. Donors requesting a charitable tax receipt should be advised that the gift is deemed to be made on the date that the property/item is transferred to UCalgary. This date will serve as the date for the charitable tax receipt though that receipt may not be available to the donor for eight to 10 weeks.