effective date: 07/01/11
The procedures used to process a gift in kind depend upon the following factors:
- the value of the gift in kind;
- whether or not the gift in kind is an addition to an existing collection; and
- whether or not the gift in kind is accompanied by a written contract or agreement, or subject to additional external reporting requirements (such as sponsor, NCAA).
Gift in kind that (1) is valued at less than $5,000; and, (2) is not an addition to an existing collection; * and, (3) is not accompanied by a written contract or agreement or subject to additional external reporting requirements.
* Exception to Controller Review Requirement for Addition to Existing Collection. See note, below.
The organizational unit can accept this gift without consulting with the campus controller.
- The organizational unit should send the donor a thank-you letter (see related resources, below) for the gift in kind. This letter, because it is neither an official university receipt nor an acceptable IRS document, should make no mention of the value of the gift in kind. If the donor wants a gift acknowledgment stating a value or a gift receipt for tax purposes, then you must follow procedures under Section 2, below.
- The organizational unit should also contact the appropriate supporting foundation so the gift in kind can be recognized in the donor's record.
- These gifts are not recorded in the Finance System unless so required by another university procedure, e.g., Procurement Service Center (PSC) Procedural Statements Complimentary Tickets or Recognition and Training.
* Exception to Controller Review Requirement for Addition to Existing Collection GIK valued at less than $5,000 may add to an existing collection without review by the campus controller under the following circumstance: The existing collection has a goal of increasing the extent of curation so that the collection continues to add to an organizational unit's inventory, for purposes of research and specific collection development plans (e.g., improved specimen condition and collection content). In this case, determination of acceptance is the responsibility of the organizational unit's officer.
Gift in kind that (1) is valued at $5,000 or greater; or, (2) is valued at any amount and is an addition to an existing university collection; * or, (3) is valued at any amount and is attached to a written contract or agreement or subject to additional reporting requirements (such NCAA reporting).
The organizational unit cannot accept this gift without the review and approval of the respective campus controller's office (see “Approval and Acceptance of Gift in Kind” procedures described in Section B, below). If the campus controller approves acceptance 1 of the gift in kind, the campus controller's office:
When disposing of a gift in kind, the campus controller is required to report to the University Treasurer all disposals (1) for which an IRS Form 8283 was issued, and, (2) that occur within three years of the donation date. The University Treasurer must complete any reporting required by the IRS (e.g., IRS Form 8282).
- Coordinates, in conjunction with the organizational unit, the recognition of the gift in kind as a capital asset with related capital gift revenues in the investment in plant fund;
- Records the gift in kind in the campus subsidiary capital asset system;
- Coordinates with University Risk Management, as appropriate, for insurance recognition; and,
- Reports the gift in kind to the Office of University Treasurer for appropriate gift receipting.
- When an IRS Form 8283 is requested, it must be initiated by the donor and submitted to the University after acceptance of the gift in kind. The University Treasurer is the only officer authorized to sign an IRS Form 8283.
- If the University issues an IRS Form 8283 to the donor, this fact must be indicated in the campus subsidiary capital asset system.
- The University will only supply an IRS Form 8283 to donors where the gift in kind received was in at least good condition and where the receiving organizational unit has certified that it will be used for official university business for at least three years.
Approval and Acceptance of Gift in Kind
Gift in kind that (1) is valued at $5,000 or greater; or, (2) is valued at any amount and is an addition to an existing university collection (see exception note, above); or, (3) is valued at any amount and is attached to a written contract or agreement or subject to additional reporting requirements (such as NCAA reporting) must be processed according to the following procedures:
At the time the gift in kind is offered to the organizational unit and prior to taking custody, the organizational unit must complete the Gift in Kind Acceptance (GIK) form, and submit it, along with all donor correspondence, to the appropriate campus controller's office.
The University must determine the fair market value of the gift in kind via an objective and acceptable method. The appropriate campus controller must approve/select the valuation method. The most acceptable method is an appraisal provided by the donor. If the gift or grouping of gifts, such as a collection or equipment, is valued at greater than $100,000, approval of the campus controller's decision of a method other than donor-provided appraisal must be made by the University Controller. 2 If the donor is requesting an IRS Form 8283, the University will neither do, nor pay for, the appraisal.
The organizational unit must designate an employee 3 within the unit who is responsible for the ongoing custody and safeguarding of the gift in kind.
If the donor is requiring the gift in kind to be attached to a written contract or agreement, then the proposed written contract or agreement should be attached to the GIK form. If the contract or agreement is not available, then "at a minimum" an outline of the proposed conditions should be attached. Final approval of the acceptance of the gift in kind will depend upon final approval of the actual contract or agreement.
Upon receipt of the GIK form, the campus controller's office, in coordination with the campus sponsored project and other offices as appropriate, will determine if it is appropriate for the University to accept the offered gift in kind, given appropriate consideration of ongoing costs or risks to the University. Some gift in kind may not be accepted by the University.
If there is written contract or agreement attached to the gift in kind, then the campus controller's office will coordinate with campus employees authorized to sign such contracts The campus controller's office will further consult with legal counsel to ensure the contracts do not have clauses in violation of policies, laws, regulations, and rules (such as indemnification).
Gift in Kind Appraisal Standards
The following standards must be followed when an appraisal is required for gift in kind per Section B of this procedural statement.
The University will generally not do the appraisal nor will it pay for the appraisal. The University, as a recipient, is party to the gift in kind transaction and therefore is not qualified to appraise the property for the donor's tax purposes or to sign IRS Form 8283 as the appraiser. Further, the University will not pay for an appraisal used for the donor's tax purposes.
The appraisal must include the following information:
- The date and a full description of the property and, in the case of tangible property, a description of its physical condition.
- The name, address, and taxpayer identification number of the appraiser (and, if applicable, his employer or partnership), the appraiser's qualifications, and a statement that the appraisal was or was not prepared for income tax purposes.
- The date on which the appraisal was made, the appraised value of the property on the date (or expected date) of contribution, and the method of valuation use.
- The specific basis for valuation, if any, such as any specific comparable sales transactions.
- The terms of any agreement entered into by the taxpayer that relate to the use, sale, or other disposition of the property donated.
- A description of the fee arrangement between the taxpayer and the appraiser.
Note: If the donor is completing the IRS Form 8283, the IRS has set forth additional appraisal requirements. Donors should seek final authoritative guidance from a tax professional.
Unless approved by the Assistant Vice President/University Controller, there are no exceptions to this procedural statement.
1. The campus controller may delegate the process for accepting certain types of gifts, such as gift in kind made to a campus museum, to the respective museum.
2. The IRS limit for appraisal may be different from the limit used by the University. Donors should consult with their tax professional for additional information.
3. This typically will be the fiscal principal for the organizational unit.