EXT-006: Solicitation and Acceptance of Gifts of Real Property and Life Insurance

Date: 09/26/2013 Status: Final
Last Revised: 11/20/2015
Policy Type: University
Oversight Executive: Vice President for University Advancement
Applies To: Academic Division, the Medical Center, the College at Wise, and University-Related Foundations.
Reason for Policy:

The University strives to ensure that gifts support the University’s mission of teaching, research, public service, and healthcare and that donor requirements and restrictions associated with gifts are acceptable to the University. In order to protect the interests of the University and the donor, regulations have been established for acceptance, recording, and disposition of gifts of real and personal property. Specifically, that:

  • any risk associated with the acceptance of the gift is minimized;
  • all funds received are credited to the correct account
  • gifts are accepted and administered in a manner appropriate for the mission of a tax-exempt educational institution; and
  • that gifts are promptly and properly recorded and acknowledged.
Definition of Terms in Statement:
  • Gift:

    Pledges or outright contributions received from private sources for which no goods or services are expected, implied or forthcoming to the donor, and in which no proprietary interests are to be retained by the donor. (Refers exclusively to private gifts, even though such gifts may be termed “grants” by corporations and foundations. For more information, see FIN-001, Determining if an Award is a Gift or Sponsored Project.)

  • Life Insurance:

    Any permanent insurance policy including whole life, universal life, variable life and variable universal life for which the University or one of its Related Foundations may be named as owner and beneficiary or simply named as beneficiary.

  • Personal Property – Tangible and Intangible:

    Tangible property, other than real property, whose value is derived from its physical existence. Tangible personal property includes, but is not limited to, artwork, antiques, automobiles, books, technology hardware, furnishings, appliances, office and other equipment and personal items. Intangible property is property, other than real property, whose value stems from intangible elements rather than physical or tangible elements. Examples of intangible personal property include patents, copyrights, licenses and computer software.

  • Real Property:

    Real estate, including residential, commercial, industrial and undeveloped land.

Policy Statement:

Gifts of real property and life insurance to a department, school, unit, Center, or related Foundation have the potential to obligate the University (e.g., for maintenance of the property before it is sold; or to pay premiums due on gifted life insurance that is not yet paid-up). Thus, the Office of Gift Planning shall be involved when these gifts are being considered for acceptance. Gifts of tangible or intangible personal property will be considered for acceptance only if needed by the University to further its mission of education, research, healthcare and public service. There are only certain offices that may accept gifts of real property and life insurance because of the special nature of these gifts. (See Section 4, Authorized University Agents.)

All Gifts in Kind must be solicited, accepted, processed, recorded, and acknowledged according to the following provisions:

  1. Gifts of Real Property:
    Except for interests of Real Property owned in a time-share arrangement, all gifts of real estate in excess of $50,000, including single and multi-family residential, commercial, industrial, farms and undeveloped land, will be considered for acceptance.

All offers of real estate gifts shall be directed to the Office of Gift Planning for guidance, and reported to the Senior Vice President for University Advancement (or designee) and the Chief Executive Officer (CEO) of the University of Virginia Foundation.

Ordinarily, no financial or other burdensome obligation or expense shall be incurred directly or indirectly by the University as a result of a gift of real property. With any real estate gift, the University may need to perform certain due diligence to include an appraisal, a survey, an environmental inspection and title binder/evaluation. The party responsible for these cost shall be determined as part of the Gift evaluation. Any gift of real property must meet Internal Revenue Service (IRS) regulations with apply to the donor and to the University. Restrictions as to the ultimate sale of real property received as a gift will not be accepted by the University. On the other hand, designating a purpose within the University for a fund or deferred giving vehicle created by the assets received from a sale of such property is permissible. If under extraordinary circumstances, exceptions to the above policies need to be considered, approval by the Senior Vice President for University Advancement and the CEO of the University of Virginia Foundation is required.

Donor interest in retaining a life estate in property shall be directed to the Office of Gift Planning. Gift Planning will coordinate with the beneficiary at the University and the University of Virginia Foundation. Where a life estate is retained in such property, all expenses for maintenance, taxes and other carrying costs will be borne by the tenant. The tenant will be required to maintain the property in substantially the same condition as of the time of the gift and will not let the property suffer waste or diminution of value. Any changes to the property covered by the life estate, including, but not limited to the building, grounds and landscaping will require the approval of the University of Virginia Foundation. Final authority for acceptance of real property gifts rests with the University of Virginia Foundation and such acceptance will be subject to its Real Estate Gift Policy and related agreements with the University.

  1. Gifts of Life Insurance:
    Gifts of life insurance to the University take many forms. Depending on the type of life insurance gift, numerous University departments may be involved. When a gift to the University involving life insurance is being considered by a potential donor, the Office of Gift Planning shall be notified. Gift Planning will coordinate appropriate contacts with the Office of Treasury Management, Financial Reporting and Analysis, Gift Accounting, appropriate stewardship officers, development officers and deans, as well as the Senior Vice President for University Advancement when appropriate.

A Gift Planning officer will assist gift officers and donors with the process of assigning ownership and beneficial interest to the University and will coordinate documentation, when necessary, regarding the cash surrender value or replacement value as of the date of gift and report the gift value to the Office of Treasury Management and Gift Accounting.

Coordination of gifts that potentially involve the University purchasing a life insurance contract on an individual’s life will be coordinated through the Office of Gift Planning and the Office of Treasury Management. If the University accepts a policy in which the donor will make annual contributions equal to the premium payments, it will be based on the understanding that the annual contributions will be received by the University in advance of the due date of the premiums. The policy must have a minimum face value of $25,000. It also must be made clear to the donor that the University may allow the policy to lapse if donor contributions are not received by the premium date.

Similarly, if the University is to purchase a life insurance policy based on a donor gift, the contract will not be purchased until sufficient contributions have been received. Only the Associate Vice President for Finance and the Assistant Vice President & University Comptroller, in consultation with the Senior Vice President for University Advancement, have the authority to execute these contracts.

For related Foundations, it is recommended that the Office of Gift Planning be notified and consulted prior to the acceptance of a gift of life insurance.

  1. Gifts of Tangible and Intangible Personal Property:
    An An offer of a personal property gift may be recommended for acceptance by certain authorized officers. The recommendation is made by executing the appropriate official Deed of Gift form. (See Deed of Gift Preparation Procedures.) Completing and signing the form indicates the property has been received by the area, will be used by the area to further the mission of the University, has been reviewed by the Office of Property and Liability Risk Management if there are potential unique safety or security issues, and is compliant with this policy. For intellectual property gifts, the Vice President for Research will be consulted before the acceptance of the gift.

    The Director of Gift Accounting is authorized by the Board of Visitors to accept gifts with a value of less than $1 million. For gifts of greater value, acceptance must go through the Comptroller. In cases involving donor-requested restrictions and other unusual circumstances, the Gift Policy Committee will review and opine on accepting the gift. Completion of the acceptance portion of the deed will constitute the University’s final acceptance of the personal property.

    1. Restrictions or conditions which may impact acceptance by the University:
    • Gifts involving significant University expense,either directly or indirectly, for their present or future use, display, maintenance or administration unless approved by the Board of Visitors or its designee.
    • Gifts where the donor has asked to be indemnified. The University cannot legally bind itself to indemnify the donor from liability arising in the course of the University using the property.
    • Gifts of personal property (such as books and paintings) made on the condition that the items will be loaned back to the donor or persons designated by the donor for life or extended periods of time to be determined by the donor.
    • Gifts to the University of personal property such as paintings, other works of art, furniture, or collections generally should not be accepted if made on the condition or expectation that the items will be permanently exhibited, or that the collections will be maintained and shown as such.
    1. Valuation:
      Valuation refers to the value placed on the personal property gift for University gift crediting, It is the responsibility of the donor to be able to substantiate to the IRS the gift value used on his/her tax return.

    • Small gifts of personal property with an apparent worth of less than $250 may be unofficially valued by the University personnel with expertise related to the gift.
    • University personnel with particular expertise in the personal property may provide informal assistance (including suggesting an appraisal) to the donor in valuing an individual gift or group of gifts with an apparent value of up to $5,000.
    • Personal property gifts with an apparent value of over $5,000 requires an appraisal (performed within IRS time requirements) from a qualified third party appraiser for gift recording valuation purposes. The IRS requires donors to obtain an appraisal to substantiate their charitable tax deduction for gifts valued at over $5,000. The cost of the appraisal will be the responsibility of the donor. In cases where the donor is not obtaining an appraisal, documentation should be submitted with the deed to support the valuation placed on the gift. Please contact the Director of Gift Accounting in these cases.
    • Gifts involving the direct payment of expenses for a University event must be substantiated by both the event receipts and payment documentation as to who incurred the expenses.
    • Property received from the manufacturer will be valued at the cost to the University if the University were to purchase the equipment on the open market. In some cases, including the educational discount, if applicable, would be appropriate in determining the valuation to be used.

The Gift Accounting Department reserves the right to evaluate the reported valuation for reasonableness before recording and to seek Gift Policy Committee approval in unusual instances.

  1. Recording, Reporting and Receipting:

    • Property gifts will be recorded by the Office of University Advancement after acceptance of the gift and upon receipt of a completed Deed of Gift.
    • Property gifts whose value cannot be verified at the time of gift will be recorded with an undetermined value.
    • Gift Accounting will report property gifts each month to the University’s Fixed Assets Accounting department. In the case of property gifts to the University Medical Center, property gifts will be reported each month to Medical Center Finance.

Gift Accounting will issue a receipt for the property; gift in accordance with Internal Revenue Service Requirements, and return a copy of the fully executed Deed of Gift to the donor.

  1. Disposition of Tangible Gifts:
    The University accepts gifts of property with the expectation that they will be used or held for a minimum of three years from the date of the gift. If the gift is given with the intent of being sold within three years of receipt, the donor should be advised to discuss the tax implications of this action with their tax advisor prior to making the gift. The University may sell a gift of property and place the proceeds in a specific fund of the University as requested by the donor or as approved by either the Director of Gift Accounting or the Comptroller. The Comptroller must approve exceptions to this policy. The University area responsible for disposing of the gift must dispose of the tangible property in accordance with appropriate University policies, prepare a final report on the property, and document the net proceeds to be received from the sale. This report is to be distributed to the Director of Gift Accounting, Fixed Assets Accounting, or Medical Center Finance, and to the area benefiting from the gift. This information will also be filed in the donor central file (if applicable).

    Gift Accounting is responsible for filing IRS Informational Form 8282 for gifts of personal property valued at $500 or more sold by the University within three years of the date of gift.

  1. Authorized University Agents:
    A gift of real or personal property may be recommended for acceptance by any of the following authorized agents or their designees:

    President
    Executive Vice Presidents
    Senior Vice President
    Vice Presidents
    School Deans
    Vice President and CEO of the Medical Center
    Assistant and Associate Vice Presidents for Development, Office of University Advancement
    University Librarian
    Associate University Librarian
    Director, Special Collections
    Associate Director, Special Collections
    University Archivist
    Director, University Art Museum
    Director of University Gift Planning
    Director of Corporate and Foundation Relations
    Director of Regional Development
    Directors of Development for Schools and Units, and University-Related Foundations
    Associate Vice President for Health System Development
    CEO, University of Virginia Foundation
    Executive Director, Virginia Athletics Foundation
    Executive Director, Darden Foundation
    President and CEO, Law School Foundation
    Executive Director, University of Virginia Alumni Association
    Executive Director, Medical Alumni Association

Procedures:

Gifts of Life Insurance [link to be added]
Deed of Gift Preparation Procedures
Gift in Kind Processing Procedures [link to be added]

Related Information:

FIN-001, Determining if an Award is a Gift or Sponsored Project
FIN-036, Signatory Authority for Executing University Contracts

Deed of Gift - Intangible
Deed of Gift - Tangible

Major Category: External Relations
Next Scheduled Review: 12/01/2018
Approved by, Date: Policy Review Committee, 09/26/2013
Supersedes (previous policy):
IX.A.4, Solicitation and Acceptance of Certain Types of Gifts; IX.A.11, Gift in Kind Policies