Procedure for Appraising and Accepting Outright Gifts
Approval Date: 2015-07-09
Effective Date: 2015-07-09
Responsible Unit: Office of Development
The University accepts gifts based on a set of prescribed procedures.
1. Generally, the University accepts the following types of gifts: cash and gifts in kind (including publicly traded securities or privately held shares). In addition, where the gift is in keeping with its vision, mission and values, the University may consider accepting the following: cultural property, art, real estate and life insurance. Any or all of the following may be required in consideration of proposed gifts:
- Purpose of the gift.
- Estimated fair market value.
- Description of property or in kind gifts (e.g. real estate, shares in privately-owned companies, personal property and other property interests) where it is difficult to obtain an appraisal or market value.
- Income, expenses, encumbrances and carrying costs associated with the gift.
- Other information about the gift that might, now or at some time in the future, negatively impact the interests of donors and/or the University.
For property that is not inventory (e.g. inventory of a business, publicly traded securities, real estate or Canadian Cultural Property), the University may need to:
- Ascertain when the property was acquired by the donor.
- Ascertain how the property was acquired.
- Determine who previously owned the property.
2. A written gift agreement may be required. All gift agreements shall first be reviewed and approved by the Executive Director, Office of Development or his/her designate. The review and approval process may be delegated in certain circumstances and any such delegation must be made in writing.
3. The Executive Director, Office of Development, in consultation with the Development Advisory Committee, and where appropriate the applicable Vice-President(s), will recommend whether to accept or reject the following types of gifts in order to protect the interests of donors and the University:
- Gifts of real estate, shares in privately-owned companies, personal property and other property interests which cannot be readily appraised or marketed.
- Gifts involving trusts or interests in property.
- Gifts to which conditions are attached or which may expose the University to potential liability.
Indicators that a gift is acceptable include:
- The University has a use or need for the gift or when there is no immediate need, the gift is marketable.
- The purpose of the gift is compatible with the work/priorities of the University or the unit for whose benefit the gift is intended.
- The size and/or benefit of the gift are not perceived to be disproportionate to the work or cost required to support or sustain the gift.
- There is no physical or other hazard and/or liability concern associated with the gift.
At times, the University may choose to decline a gift. SEE PROCEDURE FOR DECLINING A GIFT.
Methods for Accepting Outright Gifts
Gifts of Cash
Gifts of “cash” (cash, cheque, money order, bank withdrawals, payroll deduction and credit card) are accepted by the University.
The University's official name for purposes of all wills and similar documents is “Memorial University of Newfoundland”.
Sample bequest language will be made available to donors and their lawyers to ensure that the bequest is appropriately designated, is deemed feasible at the time of designation, and that the proper legal title for the University is used.
A bequest of an appropriate amount can be used to create named Endowment Funds or Term Funds. Donors are encouraged to frame the designation as broadly as possible and identify in their wills their intention to create these funds. A gift agreement confirming the donor's wishes may be prepared.
Donors are invited and encouraged to provide information to the University about their bequests and, if they so choose, to send the University a copy of the relevant section oftheir will. This will allow for appropriate recognition during the donor's lifetime.
University staff do not provide professional consultation to donors in the preparation of their wills, or become involved in the execution or witnessing of a will in which the University is named as beneficiary. Neither University staff nor the University may be named as executor in such situations.
During the administration of an estate the Office of Development may engage professional expertise, as appropriate. Any professional fees associated with administration of the estate are deducted from any gift designated to the University from the estate. The net value of the bequest will be directed to the purpose specified by the donor whenever possible.
Following receipt of the designated gift, the University will issue to the estate a charitable tax receipt in the value of the gift.
Gift of Life Insurance
The University encourages gifts of life insurance. There are various methods by which a life insurance policy may be contributed to the University.
The administration of a gift of life insurance is overseen by a representative from the University’s Office of Development or designate.
This representative or designate will request a copy of the donor’s life insurance policy, confirming the University’s designation as owner and beneficiary. In cases where a donor designates the University as the irrevocable owner and beneficiary of a life insurance policy, the policy must be officially signed over to the University and the policy statements held by the University. Where a donor designates the University as the beneficiary only, the donor is encouraged to share a copy of the policy information with the University for gift planning purposes.
In the case of policies in which the University is both the irrevocable owner and beneficiary, and for which premiums are still owing, tax receipts will be issued to donors for the dollar value of the premium paid by the donor in the tax year. For a donor to receive a tax receipt for premiums paid on life insurance policies, the University must be both the beneficiary and the irrevocable owner.
If the original donor is no longer willing or able to make the required premium payments, the University may continue the premium payment or take other appropriate action. The University representative or designate may consult with an actuary, as feasible, to receive advice as to whether to continue to pay the premiums or cash in the policy. The Vice-President (Administration & Finance) will determine the action to be taken after ascertaining the type of policy.
Upon receipt of confirmation of the irrevocable transfer of a life insurance policy to the University as owner and beneficiary, or receipt of annual confirmation of the policy’s paid-up status, the University will issue a charitable tax receipt for the appropriate value.
Gift of Public and Private Securities
Under most circumstances, the University will accept gifts of publicly traded securities. The gift must be made in-kind to the University for the donor to receive the capital gains tax exemption. Donors are encouraged to identify a preferred designation for their gift of securities. A gift agreement confirming the donor’s wishes may be prepared for both the donor and the University to sign.
Where possible, an electronic transfer of securities is encouraged.
The administration of a gift of securities is overseen by a representative of the University’s Office of Development or designate in consultation with the Board of Regents’ Investment Subcommittee of its Finance Committee.
In the instance of an electronic transfer of public securities, this representative will:
- Assess, with appropriate consultation, if the gift is marketable and acceptable.
- Consult directly with the donor’s broker, if required.
- Identify immediately to the Investment Subcommittee the name of the donor; the name of the delivering broker; the name and number of delivered shares; and the Committee on Uniform Security Identification Procedures (CUSIP) code number.
- Request written confirmation of the date of transfer from the donor’s broker (normally providedby the Investment Subcommittee via its financial statement to the University).
- Once the date of transfer is confirmed, the sale of shares is at the close of business on the day that the shares are received.
The University may accept privately held securities. In the instance of a gift of private securities, the donor would sell the shares and donate the proceeds to the University.
It is the University’s practice to transfer immediately to the designated University account the funds equal to the value at donation. Instruction is given to the University’s investment broker to sell the shares as quickly as possible; normally, it is not the University’s intent to retain donated securities as part of the institution’s financial holdings.
Upon confirmation of the receipt of a gift of public securities, the University will issue a tax receipt for the value of the gift on the date the University takes ownership of the shares. The amount indicated on the tax receipt is based on the value of the shares on the market at the close of the day they are received by the University.
Gifts of Art, Manuscripts, Books or Other in Kind Publications
The University requests a written letter or form that confirms the offer of the transfer of ownership from a donor before proceeding with the establishment of a fair market value and retains the right to process donations within a reasonable time frame or to decline donations.
The University will seek at least one independent appraisal for gifts-in kind. Where the donation is $1,000 or less, CRA will accept a valuation made by a University staff member, provided the staff member is knowledgeable in the field and is qualified to establish the value of the gift.
If it is difficult to find an independent appraiser or if doing so would involve unwarranted expense, CRA will accept a valuation from a qualified staff member of the University for donations in excess of $1,000. Evidence of attempts to secure an independent valuation or evidence of excessive expense must be provided.
In the case of gifted artwork, if the artwork is accepted, the University will obtain one independent appraisal for items valued between $1,000 and $24,999. Two independent appraisals will be sought for items valued at $25,000 or more, and the average of the two appraisals will be used for the purpose of issuing the charitable tax receipt. Artwork may also require certification through the Canadian Culture Property Export Review Board.
The ongoing maintenance of the gift is the responsibility of the University. The cost of appraisal(s) and any shipping and related expenses may be donated by the donor or paid from the proceeds of the sale of the gift, if agreed upon by both the donor and the University.
With gifts-in-kind and, in particular gifts of artwork and cultural property, the University will ensure full compliance with CRA directives.
Gifts of Retirement Plan Assets
Gifts of Registered Retirement Savings Plans, Registered Retirement Income Funds, or other retirement plans can be a tax advantageous method of making a planned gift, and are encouraged, provided that the donor, upon consultation with his or her advisors, determines that this is compatible with his/her overall estate plan and philanthropic goals.
Outright gifts of assets from retirement plans will only be accepted provided the donor, in consultation with his or her professional advisor, determines that he or she can part with such assets without compromising the financial security of his or her retirement years and that the tax consequences are acceptable.
Gifts of Real Estate
The University requires an appropriate level of written appraisal of the property. From time-to-time, it may be necessary for the University to secure an additional independent appraisal in order to establish fair market value and the amount of the income tax receipt.
In addition, the University may require any or all of the following to ensure the real estate does not present a liability:
- a land survey;
- home inspection;
- an environmental assessment of the property; and
- a water test
At any time, the University may also request other appraisals or inspections to ensure there is no liability to the University in accepting a gift of real estate.
The University will also seek assurance that there is no lien on the property and the donor has full and clear title.
The University sells gifts of real estate, as soon as possible. In rare situations, and in keeping with An Act Respecting The Memorial University of Newfoundland, property may be retained for University investment purposes or for use in accordance with the vision, mission and values and plans of the University.
Canadian Cultural Property
The Cultural Property Export and Import Act encourages Canadians to keep significant cultural property in Canada by providing incentives for Canadians who give this type of property to designated institutions and public authorities.
A charitable trust may be established with cash, securities, real estate or other assets. Upon request, the University may provide a sample gift agreement. The actual gift agreement is reviewed and remains at the discretion of the University’s Board of Regents.
University staff will not provide professional consultation to donors in the preparation of their trust.
Charitable Remainder Trusts
In the instance of a gift of residual interest from a charitable remainder trust, the donor shall be responsible for real estate taxes, insurance, utilities and maintenance of the asset after transferring title, unless otherwise agreed by the University. The University retains the right to inspect the property from time-to-time to ensure that its interest is properly safeguarded.
The donor is entitled to a charitable tax receipt for the present value of the gift calculated in current dollars. This valuation, known as “discounted value”, is determined by actuarial calculations provided by the CRA.
Other Types of Gifts
Equipment, software and other types of gifts will be considered on an individual basis in consultation with the donor, Canada Revenue Agency and the Office of Development.