Ongoing management of donation accounts

Topics covered in this section are:

• Balances to be maintained in credit
• Investing balances
• Surpluses on specific donations/endowments
• Reporting to donors
• Transferring donations

Year end

At the year-end the Finance Division will ensure that unspent balances on specific endowments and specific donations will be rolled forward and will be available for spending in the following financial year.

Balances to be maintained in credit

The standard Summary Report by Source of Funds that is issued monthly by the Finance Division, to most departments, will show whether the donation accounts are being maintained in credit. In addition to showing a summary of the income and expenditure year to date it also details the amounts invested on both the Deposit Account and within the cambridge University Endownment Fund (CUEF) for each source of funds.

The Source of Funds - Long Report is another version of the same report. Both reports are available to departments from the Cognos reporting tool. It shows the same information but further broken down by cost centres. This enables you to identify the performance of individual departmental accounts and identify specifically where any potential overspends may be.

Additionally, the Central & Research Accounting Team within the Finance Division will issue regular Trust Fund Statements to help you with the management of your trust funds.

Where potential overspends/deficits are identified departments should:

1. Check that only appropriate expenditure has been allocated to the donation. Use the standard UFS reports: Transaction Code Balances and for specific information on individual transactions use the Account Analysis 3 report.
2. If the account has money on deposit and/or CUEF holdings consider whether the shortfall will be made up by the anticipated income from interest/ monthly distributions for the remainder of the financial year.
3. If is still forecasted to be in deficit, consider taking money off deposit and potentially selling CUEF units.
4. If this is not possible, transfer expenditure (using the transfer transaction code) to another departmental account which is in surplus.

Further details on how to use transfer codes are given in the Best Practice Guide No.3

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Investing Balances

All five sources of funds noted in section Sources of Funds for Donations are eligible for investment in the CUEF Fund and / or the Deposit Account, thus enabling unspent balances to earn investment income as expected.

A temporary benefaction, that is sums donated for expenditure in under 5 years, are usually placed in the University deposit account which pays a rate of interest but does not attract any capital appreciation.

Only funds being held for long term investment (e.g. at least five years) are suitable for investment in the CUEF because the capital value of this type of investment can go down as well as up, especially in the short term.

Type of Donation	Source of Funds begins	Eligible for CUEF	Eligible for Deposit Account	Deposit Account Interest Rate
General donation	EF to EX			lower
Specific donation	H			lower
Trust Fund	K			higher
Other specific endowment	I			lower
Building fund	P			lower

Procedures for investing balances are set out in a separate chapter of the Financial Procedures Manual (Chapter 12 - Investments).

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Surpluses on Specific Donations/Endowments

Occasionally a permanent unspent balance will arise on a specific donation/endowment account, where further spending in accordance with the donor's conditions is not possible. In these cases the University has a legal duty to contact the donor, or the donor's representative, to seek consent to vary the conditions or to refund the unspent balance. Departments should contact the Development Office for advice in discharging this obligation.

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Reporting to Donors

At the outset arrangements must be established to enable reports to be provided to each donor in line with their requirements. CUDAR provides guidance and details of University procedures on reporting to donors within 'Procedures for Handling Donations'.

Reporting will normally be based on transactions and balances recorded on UFS, and separate record-keeping will not normally be required. Standard reports are available on Trust Funds, details of which can be provided by Central & Research Accounting in the Finance Division.

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Transferring donations

Transfers of donated funds to other institutions must always be approved by the Head of Department and be in accordance with the terms of the gift and the University's general charitable purposes. Transfers shall not be made until the receiving institution has confirmed in writing that the terms of the gift will be observed. Where the transfer relates to the Head of Department's research, the Director of Finance's prior written consent must be obtained.

Donations can not be transferred to individuals, except where the individual is the donor and the University is unable to meet the terms of the original gift. In such cases the donation may be returned. However, no adjustment may be made for interest accrued or for any anticipated increase in the value of the donation unless the University accepted this condition when the donation was made.

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