The following policies concerning the valuation of gifts closely follow the CASE Campaign Standards. In regards to valuation of assets transferred to CWRU, CWRU will adhere to current IRS regulations for the protection of our donors. As IRS regulations change, our gift valuation procedures may also require modification.
I. Pledges of Cash
Pledges of cash should be written and should commit to a specific dollar amount that will be paid according to a fixed time schedule. The pledges payment period, regardless of when the pledge is made, should not exceed five years.
II. Cash/Checks
Cash/checks will be reported at full value as of the date received.
III. Marketable (Publicly Traded) Securities
Marketable securities will be counted at the average of the high and low quoted selling prices on the date the donor relinquished dominion and control of the assets in favor of CWRU (or the average of the bid/ask in the case of certain securities). When dominion and control has been relinquished by a donor depends upon the method of delivery of the securities to CWRU. For example, stock electronically transferred to CWRU is valued as of the date of transfer. Stock in the name of the donor which has been mailed to CWRU is valued as of the latest date of postmark of either the stock certificate or signature guaranteed stock power. Stock directed by the donor to be registered in the name of CWRU on the books of the corporation is valued as of the date such stock is so registered. Stock hand delivered to CWRU by the donor in negotiable form is valued on the date received by CWRU.
IV. Closely Held Stock
Gifts of closely held stock, approved by the Vice President for Development and exceeding $10,000 in value, will be reported at the fair market value placed on them by a qualified independent appraiser as required by the IRS for valuing gifts of non-publicly traded stock. Gifts of $10,000 or less may be counted at the value determined by a qualified independent appraiser (including an independent CPA who maintains the books for a closely held corporation) or at the per-share cash purchase price of the most recent bona fide transaction involving such stock (which must have occurred within the 12 months preceding such gift) or at the price such stock is redeemed during the campaign period.
V. Gifts of Property
Gifts of real and personal property, approved by the Vice President for Development, for which donors qualify for a charitable deduction, will be counted at their full fair market value as substantiated by a qualified appraisal and/or I.R.S. Form 8283 by the donor. Gifts-in-kind, such as equipment and software, will be counted at their educational discount value, which, for purposes of these standards of reporting, shall be deemed to be fair market value. When no educational discount value can be determined, especially in the case of donated software, a value of 50% of retail will be deemed fair market value and so counted for campaign purposes.
VI. Irrevocable Life Income Gifts
Charitable Remainder Trusts, Pooled Income Funds, Gift Annuities (Current and Deferred). Irrevocable life income gifts to CWRU having a remainder value equal to or greater than 25% according to the I.R.S. tables shall be counted at full market value for campaign purposes.
Example: Donor makes a gift of $100,000 to a charitable remainder unitrust. CWRU’s remainder interest is calculated under the IRS tables to be $50,000, or 50%. Donor’s gift is thus counted for campaign purposes at its fair market value of $100,000. Campaign credit will be given for charitable remainder trusts administered outside of CWRU, provided CWRU's interest in such trust is irrevocable and verifiable. With respect to all life income arrangements, whether or not administered by CWRU, campaign credit shall only be given only to the extent CWRU remainder interest is irrevocable.
Example: CWRU is presently the sole charitable beneficiary of an otherwise qualifying charitable remainder trust but the donor has given the trustee the right to divert 50% of the principal to other charities. The donor will thus receive campaign credit for only 50% of the full fair market
VII. Remainder Interests in a Residence or Farm
A gift of a remainder interest in a residence or farm shall be counted for campaign purposes at full fair market value of the residence or farm. An appropriate discount shall be applied where the remainder value is under 25% according to the I.R.S. tables in accordance with the provisions relating to Irrevocable Life Income Gifts.
VIII. Irrevocable Charitable Lead Trusts
Campaign credit shall only be given to the extent a charitable lead trust is verifiable and CWRU's interest therein is irrevocable.
A. Irrevocable Charitable Lead Annuity Trust: The aggregate amount of the anticipated annuity payments to be received over the first five years of the trust shall be counted at full value. Anticipated annuity payments to be received in year six and beyond shall be counted at their discounted present value.
Example: Donor establishes a $1,000,000 CLAT having a seven year term and a 10% payout rate. The annual payments to Case will be $100,000, for a total of $700,000 payable over the term of the trust. Donor will receive campaign credit for the first five years of payments -- $500,000 -- at full value. For years six and seven, donor will receive credit equal to the discounted present value of the remaining income stream based on a then current AFR of 7.6%, which is $124,330. Donor thus receives total campaign credit of $624,330 ($500,000 + $124,330).
B. Irrevocable Charitable Lead Unitrust: The aggregate amount of the anticipated unitrust payments to be received over the first five years of the trust, after applying the AFR for the month the trust was established as an anticipated income return, shall be credited to the campaign at full value. Anticipated annuity payments to be received in year six and beyond shall be credited to the campaign at their discounted present value.
Example: Donor establishes a $1,000,000 CLUT having a seven year term and a 10% payout rate. The growth rate of the trust principal is based on the then current AFR rate, 7.6% for purposes of this example. Based on the above assumptions, the estimated annual payments from the trust over the 5 year period are projected to be: (1) $100,000; (2) $97,600; (3) $95,258; (4) $92,972; and (5) $90,740 -- or a total of $476,570 over the five year period. The discounted present value of the income stream to be received in years 6 and 7 based on the then current AFR is computed as $108,827. Donor thus receives total campaign credit of $585,397 ($476,570 + $108,827).
IX. Realized Bequests and Other Testamentary Distributions
A. Bequests and Revocable Testamentary Gifts: All amounts received by CWRU by bequest or pursuant to other revocable testamentary plans during the campaign shall be credited at the value received, provided that if such amount was previously credited for campaign purposes as an expectancy, only such amount received in excess of the previously credited expectancy amount shall be counted.
B. Amounts received from Life Income Plans: Amounts received from life income plans during the campaign of which CWRU had no prior knowledge shall be counted at the value received. In cases where CWRU receives amounts from life income plans established with CWRU’s knowledge during the campaign, only those amounts in excess of the previously credited amount shall be so counted for campaign purposes.
X. Testamentary Intentions
Confirmed provisions for CWRU in wills, revocable trusts or other revocable instruments (including, but not limited to, individual retirement accounts, qualified plan and life insurance beneficiary designations), and revocable beneficiary designations of CWRU in otherwise irrevocable charitable remainder trusts by donors age 70 or older during the course of the campaign, shall be counted for campaign purposes at their face value. To be counted, such expectancies must be in the form of a specified amount or a percentage of the donor's estate or relevant asset pool, as appropriate, based on a credible estimate of the future value of such estate or asset pool at the time the commitment is made. In the case of individual retirement account, qualified plan or other similar arrangement where the pool of assets will be depleted over time by mandatory distributions, the donor’s Will must contain a provision to the effect that any shortfall in the anticipated amount passing to CWRU be made up from the donor’s estate. For verification purposes, at a minimum, there must be written acknowledgment of the commitment by the donor or the donor's attorney with a copy of the relevant legal provisions. The execution by the donor of a Charitable/Deferred Pledge Agreement would be a preferred method of confirming the donor's commitment. The discounted present value of verifiable expectancies shall be calculated as follows:
A. Specific Dollar Gifts: A gift of a specific dollar amount shall be entered into the system at face value after giving consideration to the full range of circumstances preceding CWRU’s receipt of the gift.
B. Percentage Gift: If a donor specifies that a percentage of his/her estate will come to CWRU upon their death, and a specific amount or estimate is not provided by the donor, the Will Commitment will be entered at the value of $1,000..
C. Miscellaneous: If the value of a donor’s estate can not be reasonably estimated, the Will Commitment will be entered at a value of $1,000.
XI. Life Insurance
To count gifts of life insurance, CWRU must be the owner and irrevocable beneficiary of the policies.
A. Paid-up Life Insurance Policies: Paid-up life insurance policies will be counted at the cash surrender value, and reported as a current outright gift.
B. Existing Policies Not Fully Paid Up: A life insurance policy that is not fully paid up on the date of contribution, which is given to CWRU during the period of the campaign, will be counted at the existing cash surrender value and recorded as an outright gift. A pledge of continuing premium payments will be counted at the aggregate of the remaining projected premiums over said five-year pledge period at full value.
C. Paid-up Life Insurance Policies: Paid-up life insurance policies will be counted at the cash surrender value, and reported as a current outright gift.
D. Realized Death Benefits: The insurance company’s cash settlement amount for an insurance policy whose death benefit is realized during the campaign period, whether the policy is owned by the institution or not, will be counted in campaign totals, provided no gift amounts in connection with said policy (cash value of gifted policy or cash premiums received) were previously counted in campaign totals. To the extent any cash value or premium amounts were previously counted in the campaign period, appropriate adjustments will be made so that only the excess of the settlement amount over the previously counted amounts will be counted.
XII. Wholly Charitable Trusts Administered Outside CWRU
In the case of a wholly charitable trust administered outside of CWRU, the fair market value of the trust assets, or such portion thereof, representing CWRU's irrevocable income interest therein shall be credited as a current gift in the year in which the trust is established. All income from the trust will be treated as endowment income and, thus, will not be counted for campaign purposes. The face value of the trust will be counted during the year in which the trust was made known to CWRU.
In the case of a wholly charitable trust administered outside of CWRU where the principal of the trust was never entered into the gift system, all income from the trust will be entered as a gift for each fiscal year.
XIII. Non-Government Grants and Contracts
Grant income from private, non-government sources (a.k.a. Private Research Support) will be reported; all contract revenue will be excluded. The difference between a private grant and contract is judged on the basis of the intention of the awarding agency and the legal obligation incurred by CWRU in accepting the award. A grant, like a gift, is bestowed voluntarily and without expectation of any tangible benefit in return. It is donative in nature. A contract carries an explicit "quid pro quo" relationship between the source and the institution.
XIV. Gifts Associated with Direct Benefits to Donors (Tickets, Memberships, Auctions, Raffles, Contests)
In accordance with IRS requirements, invitations, reply cards, tickets, letters and other printed materials produced for any fund raising event sponsored by any unit of the University must clearly reflect the fair market value of any benefit to the donor. This applies to all fund-raising events, including those that are underwritten. The following definitions should be kept in mind when reviewing this guideline:
Fund-Raising Event: An activity sponsored by CWRU for the purpose of fund raising to benefit the University. In exchange for the price of admission, the donor generally receives a benefit or privilege.
Auction: A fund raising event at which guests pay the University or for goods and services donated by third parties.
Benefit: The fair market value of a ticket to any event, of any good or service purchased at an auction, or of consideration associated with membership. In relation to an event, the term benefit applies, but is not limited, to the fair market value of a meal or other food and beverage service, entertainment, performance, or sporting event. The benefit associated with a purchase at an auction is equal to the fair market value of the good or service bought. In relation to memberships, benefit refers to the fair market value of gifts and privileges associated with the level of membership. If the membership results in favorable seating consideration at on-campus athletic events, where no tangible value can be assigned, the IRS requires that donors only claim 80% of the "gift" as a charitable deduction.
Raffle: A means of raising funds in which each participant buys a ticket for an article put up as a prize with the winner being determined by random drawing. Amounts paid for chances to participate in raffles or similar drawings, and amounts paid to participate in contests for valued prizes, are not regarded as gifts under IRS regulation and do not qualify as deductible charitable contributions.
The concept of benefit, as defined above and as applied to all fund-raising activities, is applied even if the donor does not attend the event but receives a ticket, or does not exercise rights associated with membership.
Questions in regard to acceptable language on tickets and promotional literature should be referred to the Assistant Director, Donor Records or the Executive Director of Advancement Services. Care must be taken, however, to ensure that when any benefit is associated with a contribution, applicable literature can not characterize the full face price of the ticket or membership to be a donation, contribution, or gift, nor may such items state the cost of the ticket or membership as being "deductible to the extent provided by law".
Fair market value of tickets should be determined in relation to comparable events. For example, concerts, theatrical and athletic performances should be related to the price normally charged for admission. Dinner and dinner/dances should be related to total expenses before underwriting. A reception or dinner plus performance should take both elements into account. If the event has no counterpart by which fair market value can be measured, then the benefit amount is determined by reasonable estimate by a Case Western Reserve University staff member knowledgeable in such affairs, with such estimates well documented.
In the case of auctions, the fair market value of the items sold shall be printed in a program or announced to the participants before the bidding begins. Only the total paid above and beyond the documented value of items auctioned will be recognized as gifts and processed as such through the Gifts Processing unit. All amounts equal to or below fair market value will be treated as non-gifts and processed as such by the area conducting the auction. Be advised that the actual item sold, if previously donated, has already resulted in Gift-In-Kind credit (see following policy) to a donor. Giving the purchaser of the item credit for the full amount would not only be incorrect in accordance with IRS regulations, but would result in double counting of the gift value.
XV. Gifts of Non-Monetary Items
Gifts of non-monetary items generally can be regarded in one of four ways with only the Gift-In-Kind and Out of Pocket expenses category being eligible for counting in Case fund raising totals:
Gifts-In-Kind: Donated tangible and intangible assets and property such as real estate, notes, mortgages, limited partnership interests, royalty or copyright interests, art, books, equipment, automobiles, inventory, personal property, and other physical assets or materials which represent value to the University. See the following Gift Acceptance Policy for additional specifics.
Out of Pocket Expenses: Payments made by a donor to a vendor for material or services utilized on behalf of CWRU. This includes un-reimbursed expenses paid by a person while volunteering time to the University. For example, the expenses incurred by a donor sponsoring a dinner party to promote the University, is such a gift.
Services: This term includes professional or personal services or time which is freely given and which easily can be valued by their usual market cost. Gifts of Services may be recognized by the University but are not recognized by the IRS as being tax deductible. Example of Services is legal services provided by an attorney. Since acts of services are not recognized as charitable donations by the IRS, it will not be entered into the system and the entity will not be given a charitable tax receipt.
Limited Use of Private Property: The right to rent-free use of a home, office, piece of equipment or commercial property owned by a donor for a specific event for a specific period of time. Such gifts are only occasionally recognized by the University, but are generally not recognized by the IRS as being tax deductible. Examples include the rent-free use of office space, or the rent-free use of a vacation home to host a University event.
Typically, the only non-monetary gift considered for gift recognition purposes are the above referenced gift-in-kind and Out of Pocket Expenses. Gifts-in-kind must be reviewed with special care to ensure that acceptance will not involve financial commitments in excess of budgeted items or other obligations disproportionate to the usefulness of the gift. Consideration should be given to the cost of maintenance, cataloging, delivery, insurance, display, and any space requirements for exhibiting or storage. All gifts of real estate or unusual items of questionable value must be presented to, and approved by, the Vice President for Development prior to acceptance. The University Treasurer and the Office of University Attorney should also be notified.
-Advancement Services Orientation Manual