EXT-006: Solicitation and Acceptance of Gifts of Real Property, Life Insurance, Personal Property, and Fine ArtsDate: 09/26/2013 Status: Final
- Gifts of Real Property
- Gifts of Life Insurance
- Gifts of Tangible and Intangible Personal Property (other than Fine Art)
- Gifts of Fine & Decorative Art
- Compliance with Policy
The University strives to ensure that (1) gifts support the University’s mission of teaching, research, public service, and healthcare; and (2) 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
- gifts are promptly and properly recorded and acknowledged.
Pledges, outright contributions received from private sources, or activities supported by an external party (i.e., donor) 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.
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, archival material, 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 estate, including residential, commercial, industrial and undeveloped land.
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. Only certain offices may accept gifts of real and personal property, life insurance, and fine and decorative arts because of the special nature of these gifts.
All gifts-in-kind must be solicited, accepted, processed, recorded, and acknowledged according to the following provisions:
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, farm 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 Vice President for 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 costs shall be determined as part of the gift evaluation. Any gift of real property must meet Internal Revenue Service (IRS) regulations that 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 Vice President for 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.
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 Operations, Gift Processing Services, appropriate stewardship officers, development officers and deans, as well as the Vice President for 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 Processing Services.
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. The Vice President for Finance and the Assistant Vice President for Financial Operations, in consultation with the Vice President for 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.
Gifts of Tangible and Intangible Personal Property (other than Fine Art):
An offer of a personal property gift may be recommended for acceptance 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 accepted 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 Processing Services is authorized to accept gifts with a value of less than $1 million. For gifts of greater value, acceptance must go through the Assistant Vice President for Financial Operations. 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.
- 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, paintings, and archival material) 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, books, archival materials, 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.
- Desire or need for gift by the receiving unit.
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 Processing Services 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.
Gift Processing Services reserves the right to evaluate the reported valuation for reasonableness before recording and to seek Gift Policy Committee approval in unusual instances.
- Recording, Reporting, and Receipting:
- Property gifts will be recorded by Gift Processing Services 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 Processing Services 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 Processing Services will issue a receipt for the gift in accordance with Internal Revenue Service requirements and return a copy of the fully executed Deed of Gift to the donor.
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 Processing Services or the Assistant Vice President for Financial Operations. The Assistant Vice President for Financial Operations 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 Processing Services, 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 Processing Services 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.
- Restrictions or Conditions which may Impact Acceptance by the University:
Gifts of Fine & Decorative Art:
This section relates to the acceptance, recording, maintenance, and disposition of works of fine and decorative art by the University community, with the exception of the University Art Museum, Albert and Shirley Small Special Collections Library, and the Kluge-Ruhe Aboriginal Art Collection, which have separate guidelines established.
Fine and Decorative Art:
Fine and decorative art includes the following types of items that could have considerable monetary or historical value or are of special significance to the University:
- Examples of 2-D works include, but are not limited to, paintings, photographs, drawings, prints, and maps.
- Examples of 3-D works include, but are not limited to, sculpture, rugs and carpets, ceramics, china, silver and silver plate, metal ware, lamps, candelabra, glassware, textiles, object d'art (miscellaneous items), antiques, and furniture.
Items such as posters would not generally be included unless it is rare, and therefore valuable, or interpretively significant to the University. In general, fine arts objects possess a quality that makes them worth more than their utility value.
Acquisition of Works of Art:
The receiving unit must have a desire or need for the gift and be able to accept the financial obligations that are associated with accepting such a gift. Departments may contact the director of development or registrar at the Fralin Museum for assistance in determining the financial costs associated with a work of art that is being considered for acceptance, including conservation and restoration costs.
Works of art should be considered for acceptance only if they are unrestricted, i.e., a work of art will not ordinarily be accepted with the provision that it be kept permanently or exhibited permanently, and a collection of works of art will not ordinarily be accepted with the provision that it be kept intact. A work of art considered for acquisition must include a provenance and clear title for the object. Additionally, gifts of works or collections of art should be noted as unrestricted in the accompanying Deed of Gift form. Works of art offered to the University with restrictions are accepted only with the approval of the University of Virginia Gift Policy Committee.
Works of art of museum-quality should first be offered to the Fralin Museum. Proposals for additions to the Fralin Museum’s collections shall be addressed to the Director of the Museum. If the Director should determine that the work is significant to the Museum’s permanent collection and enhances the Museum’s teaching mission, the Director and the Curator of Exhibitions shall present the proposal to a quorum of the Collections Committee, which meets regularly to consider for acceptance works offered as gift, bequest, or transfer. By majority vote, the Committee accepts or refuses the object on behalf of the Rector and Visitors of the University.
The Museum applies the following criteria to such decisions: 1) Acquisitions are weighed in terms of artistic merit, support of the Museum's mission, and teaching and research potential. 2) Works are acquired that can be properly cared for and that contribute to the Museum's programmatic objectives. 3) Only objects with satisfactory provenance and clear legal title are acquired. 4) Objects with restrictions relating to use, attribution, value, disposal, or other social or legal encumbrance are accepted only with the approval of the University of Virginia Gift Policy Committee.
If the work is not deemed significant to the Museum's collections, it may be accepted by the Office of the Architect for the University’s fine and decorative arts collection, or a school or other unit in accordance with stringent collection care and management policies.
In order to issue a receipt to any area, a Deed of Gift form should be completed by the receiving unit and forwarded to Gift Processing Services to be recorded. For gifts of art accepted by areas of the University other than the Fralin Museum of Art, a copy of the executed Deed of Gift, along with supporting documentation, will be forwarded to Fixed Assets Accounting, who will affix an asset tag to the piece, if feasible, and enter the gift into the fine and decorative arts database.
Fine Art Valuation:
A gift-in-kind of fine art valued over $5,000 must have a qualifying appraisal in order to be properly valued. The appraisal should be obtained by the donor. Gifts of art are subject to the same IRS regulations as gifts of tangible property, and therefore the stipulations included in sections 3b Valuation and 3d Disposition of Tangible Gifts apply to gifts of fine and decorative art as well and must be carefully followed. Only in extenuating circumstances will the University consider obtaining an appraisal for donated fine art, although the University’s museums are not permitted to do so in adherence to guidelines established by the American Alliance of Museums. If the University decides to obtain an appraisal for donated fine art, it would do so in order to use the information for internal insurance purposes only, and not to share with a donor for tax purposes.
Guidelines for an Appraisal of Works of Art:
The term "qualified appraisal" means an appraisal prepared by a professional, independent appraiser no earlier than sixty days before the contribution of the appraised property, and no later than ninety days after the contribution date.
The appraisal must be signed and dated by an appraiser who charges an appraisal fee. An appraisal of a collection, or a work of art, must include the following:
A detailed description of the object(s), including title, size, subject matter, medium, name of the artist, physical condition, approximate date created, and interest transferred;
The name, address, and taxpayer identification number of the appraiser;
A detailed description of the appraiser’s background and qualifications;
A history of the item, including proof of its authenticity and a record of any exhibitions at which the particular art object was displayed;
A statement of the factors on which the appraisal was based. This statement should include:
- The specific basis for the valuation, such as any specific comparable sales transactions, particularly sales of other works by the same artist on or around the valuation date;
- The appraised fair market value of the property and the method used to determine the fair market value, particularly with respect to the specific property;
- Quoted prices in dealers' catalogues of works by the artist or comparable artists;
- The appraised fair market value of the property and the method used to determine the fair market value, particularly with respect to the specific property; and
- A statement as to the standing of the artist in the profession and in the particular school, time, or period in which the work was produced.
Guidelines for Requesting a Transfer of Copyright for a Work of Art:
Ownership of the copyright in a work of art is distinct from ownership of the material object. Whenever possible, the receiving unit should request a transfer of the copyright to the work of art.
Under federal law, copyright protection is available to all works of authorship that have been fixed in a tangible medium (this includes pictorial, graphic and sculptural works, photographs, prints and art reproductions, maps, globes, charts, diagrams, models, technical and architectural drawings).
Owners of copyright have the following exclusive rights: to reproduce the work, to prepare derivative works, to distribute copies to the public, to perform/display the work publicly.
Federal copyright law has a provision pertaining exclusively to visual artists. All questions on the complex issues of copyright should be referred to the Office of the University Counsel and the Fralin Museum of Art.
University of Virginia units that accept works of art or contemplate purchasing a work(s) of art, have a responsibility to care properly for these works. This responsibility entails the proper display (including climate stability, location, and security), long-term care (insurance fees, possible conservation and/or reframing costs), and records management (object history files, location, and inventory accountability) of these objects.
Guidelines for Deaccessioning Works of Art Acquired as Gifts:
Works of art considered for deaccession anywhere in the University should first be reviewed by the director and curators at the Fralin Museum of Art to determine whether they are of museum quality.
Works of art purchased with University funds become the property of the Commonwealth of Virginia; therefore, disposition must comply with state law. All University units must follow the procedures established by Facilities Management/Surplus Property when disposing of a work of art.
Donations of works of art are automatically insured by the University of Virginia once the work of art and its value has been reported to Fixed Assets Accounting. All departments should report new acquisitions to Fixed Assets Accounting as soon as possible.
Accountability for Works of Art:
Each unit is responsible for reporting/confirming the condition and location (or changes of location) of all its works of art annually to Fixed Assets Accounting, and maintaining a file for each work of art.
Loan Agreements for Works of Art:
Except for the Fralin Museum of Art, the Albert and Shirley Small Special Collections Library, and Kluge-Ruhe Aboriginal Art Collection, which have established loan policies for lending works of art to other entities for educational purposes or public benefit, any external loan of artwork to the University and any request to borrow works of art from any University of Virginia department or unit, must be memorialized in a loan agreement signed by an authorized signatory in the Office of the Vice President for Finance in accordance with its established procedures for processing art loan agreements.
Any change of location for a work of art on grounds or on loan outside the University must be reported to Fixed Assets Accounting.
Transfer of Works of Art to the Fralin Museum of Art:
Any University of Virginia department or unit may formally transfer a work of art to the Fralin Museum of Art (or to another department or unit) with the permission of the Fralin Museum’s director, curators, and Collections Committee.
Because all works are the property of the Commonwealth of Virginia and the University, one area of the University may transfer works to another area, including the Museum, but no area may purchase works or collections from another area of the University.
Compliance with Policy:
Failure to comply with the requirements of this policy may result in disciplinary action up to and including termination or expulsion in accordance with relevant University policies.
Questions about this policy should be directed to the Office of University Advancement.
Gifts of Life Insurance [link to be added]
Deed of Gift Preparation Procedures
Gift-in-Kind Processing Procedures [link to be added]