UT Foundation Policies

EFFECTIVE: 8/13/2012 · REVISED: 7/8/2022

Introduction

The University of Tennessee Foundation (UTFI), in light of its mission and responsibilities to maximize private giving to the University of Tennessee (UT), to qualify at all times as an organization to which deductible contributions may be made pursuant to Sections 170, 642, 2055, and 2522 of the Internal Revenue Code, and to operate in an open and transparent manner, establishes the following Gift Acceptance Policy.

The purpose of this policy is to define the policies governing the acceptance of gifts by UTFI and to provide guidance to prospective donors and their advisors when making gifts to UTFI, so as to facilitate the gift-giving process. See also Policy 6.3 Gift Management.

The scope of this Policy is limited to acceptance or rejection of proposed gifts; it is not intended to cover disposition of property owned by UTFI. See Policy 5.9 Disposition of Gifted Personal Property and Policy 5.20 Real Estate Disposition.

Definition

A gift is a voluntary transfer of assets from an individual or non-governmental organization made without consideration (that is, the donor does not expect to and does not in fact receive any goods or services from UTFI or UT in consideration of the gift). The following criteria generally identify a gift:

1. A gift is motivated by charitable intent.
2. Except in the case of Charitable Lead Trusts, a gift is an irrevocable transfer of assets.
3. Except in the case of life income payments made to donors or other life income beneficiaries of Charitable Trusts or Annuities, a gift is not subject to an exchange of consideration or other contractual duties between UTFI/UT and the donor.

General Policy

UTFI will accept unrestricted gifts and gifts restricted for specific UT programs and purposes, provided that:

1. Such gifts are consistent with UTFI’s and UT’s stated missions,
2. Such gifts do not violate the terms of the UTFI corporate charter or this policy, and
3. Any restrictions or conditions imposed on the use of such gifts are approved by UT.

Compliance With Affiliation and Services Agreement

The Affiliation and Services Agreement between UTFI and UT provides that UTFI may receive and manage grants from state or federal agencies as the University President and the UTFI Board of Directors may agree to accept even though these funds are not considered gifts. Such grants are not covered by this policy.

Pursuant to the terms of the Affiliation and Services Agreement between UT and UTFI, UTFI will not:

1. Accept gifts that create a direct or indirect financial liability for UT (e.g., a gift that would require UT to assume another entity’s debt) without prior written approval of the UT President.
2. Accept gifts of encumbered real property, a going business, leveraged endowments or partnerships without first discussing the proposed gift with the UT President and Chancellor of the involved campus.

Types of Gifts

The following types of gifts may be accepted:

Cash or Cash Equivalents

Including currency, money orders, checks, credit cards, and electronic transfer (wire transfer, ACH, or other electronic form of transfer).

Securities

1. Publicly Traded: Securities traded on a public stock exchange, which may be physically delivered to UTFI’s office or electronically transferred to UTFI’s brokerage account.
2. Closely Held: Closely held securities, including debt or equity positions in non- publicly traded companies, interests in limited partnerships and interests in limited liability corporations or other ownership funds.
   • Gifts of closely held securities must be approved in advance by UTFI’s Executive Committee. When considering gifts of closely held securities the committee shall consider any restrictions that might prevent converting the security to cash, marketability and potential for undesirable consequences to UTFI.

Real Estate

Real property, whether developed or undeveloped

1. Gift Annuity: If a gift of real property is offered to fund a gift annuity the gift must be approved in advance by UTFI’s Real Estate Committee in accordance with that committee’s charter, policies and procedures. See Real Estate Gift Acceptance policy.
2. Carrying Costs ≥$10,000: If the projected carrying cost of a gift of real property or real property subject to a life interest equals $10,000 or more per year, then the gift must be approved in advance by UTFI’s Real Estate Gift Acceptance Committee in accordance with that committee’s charter, policies and procedures. See Real Estate Gift Acceptance policy.
3. All other gifts of real property or real property subject to a life interest must be approved in advance by the UTFI President.

Bargain Sales

The sale of property to UTFI for less than the property’s fair market value. Bargain sales must be approved in advance by UTFI’s Real Estate Committee in accordance with that committee’s charter, policies and procedures (see Real Estate Gift Acceptance policy), and by the UTFI Board of Directors.

Oil, Gas, Mineral & Water Rights

Gifts of oil, gas, mineral & water rights must be approved in advance by UTFI’s Real Estate Committee in accordance with that committee’s charter, policies and procedures (See Real Estate Gift Acceptance policy), and by the UTFI Board of Directors.

Tangible Personal Property (Gifts in kind)

1. Related Use: If the tangible personal property will be retained by UT or UTFI for use in UT’s or UTFI’s programs then a gift of tangible personal property may be accepted subject to these terms and conditions:
   1. The gift must not be subject to any conditions on the use, display or possible sale of the property.
   2. If the value of the donated property is $5,000 or more, the donor must provide a copy of an appraisal, obtained at the donor’s expense, qualified under the terms of the Internal Revenue Code and Regulations governing gifts of this type.
   3. The Chancellor, Dean or department head of the campus, college, department or other unit that will receive and use the property must agree to be responsible for any carrying costs associated with the gift (e.g., the cost of insuring a gift of art for a museum).
2. Unrelated Use: If the tangible personal property will not be retained by UT or UTFI for use in UT’s or UTFI’s programs then the gift will not be accepted unless:
   1. The property is readily marketable at a price that provides UTFI with a return in excess of the costs incurred to accept and dispose of the property. This determination shall be made by the Treasurer and Chief Financial Officer (CFO).
   2. UTFI advises the donor that UTFI intends to sell the property, such sale could limit the amount of any charitable deduction to the donor’s cost basis, and the donor should seek professional advice concerning the tax consequences of the proposed gift.

Intellectual Property

Patents, copyrights, royalties, performing rights or other similar intangible property.

1. Gifts of intellectual property must be approved in advance by UTFI’s Executive Committee.
2. Proposed gifts of intellectual property shall be routed through the CFO who, in consultation with the UTFI President, shall conduct due diligence appropriate to the type of gift offered and make a report to the UTFI Executive Committee before that committee acts on the proposed gift.

Other Property

1. Gifts of property not otherwise covered above must be approved in advance by UTFI’s Executive Committee
2. Proposed gifts of property not otherwise covered above shall be routed through the CFO who, in consultation with the UTFI President, shall conduct due diligence appropriate to the type of gift offered and make a report to the UTFI Executive Committee before that committee acts on the proposed gift.

Life Insurance

UTFI only accepts gifts of life insurance if approved in advance by the CFO.

Trusts

All trust agreements must be reviewed in advance of presentation to the donor(s) by the Assistant Vice President for Planned Giving, who may elect to forward on to the UTFI General Counsel and/or BNY Mellon for additional review.

Charitable Lead Trust

An irrevocable trust; the trust makes periodic payments to UTFI for a term of years after which the principal is transferred back to the donor or other designated beneficiary.

Charitable Remainder Trust

An irrevocable trust created during the life of the donor or through the donor’s will; the trust makes periodic payments to the donor or other named income beneficiaries for a term of years or life and then transfers all or part of the trust principal to UTFI.

1. Charitable Remainder Unitrusts:
   1. The trust must pay a fixed percentage of the fair market value of the trust assets, determined annually, to the income beneficiaries
   2. The donor may make additional contributions to the trust during the donor’s lifetime or by bequest.
2. Charitable Remainder Annuity Trusts
   1. The trust must pay an amount (usually a fixed percentage of the fair market value of the trust assets at the time the trust is created) to the income beneficiaries
   2. The donor may not make additional contributions to the trust once created
   3. If the income beneficiaries are to receive payments for a term of years, that term may not exceed 20 years

Charitable Gift Annuity

A contractual agreement pursuant to which UTFI accepts cash or publicly traded securities from a donor in return for periodic payments to the donor and/or one other named beneficiary for life; upon the death of the income beneficiaries, the balance of principal is retained by UTFI.

1. Gift annuity contracts must comply with the board’s January 18, 2008, Resolution Establishing a Gift Annuity Program and the parameters in Policy 6.2 Gift Annuity Program Parameters.
2. If the gift annuity is funded in full or in part by a gift of real property, then the gift must be approved in advance by UTFI’s Real Estate Committee in accordance with that committee’s charter, policies and procedures.
3. The gift annuity contract must be approved and signed by the UTFI President, or in his absence the Treasurer.
4. Any deviation from the requirements of this section on Gift Annuities must be approved in advance by the UTFI Board’s Audit & Finance Committee.

Minimum Gift Levels

Depending on the purpose of the gift, there may be minimum gift levels required, as follows:

Honorary Naming

Gift minimums and requisite approvals for naming a UT college, school, department, institute, center, bureau, building, classroom, laboratory or other physical space are established by the UT Board of Trustees and shall be followed by UTFI. See the UT Board of Trustees Policy BT0008, Policy on the Naming of Facilities and Other Assets of the University of Tennessee.

Endowments

The minimum gift required to establish an endowment depends on the type and purpose of the endowment created.

1. The current UTFI Schedule of Minimum Endowment Levels is available on the UTFI web site.
2. Minimum endowment levels are subject to change by action of the UTFI Board.

Current Funds

The minimum initial gift required to create a current (expendable) fund that is separately identified on the UTFI books is $10,000.

1. The minimum gift may be given in installments so long as the $10,000 minimum is reached within one year of the date the fund is established.
2. Gift Agreements (see below) are not required for creating current funds; however, Gift Agreements can be a useful tool to provide guidance on the proper use and stewardship of the funds (e.g., to provide scholarships for students enrolled in a particular program).
3. Gifts of less than $10,000 shall be posted to an existing current fund whose purpose is most consistent with the donor’s wishes.
4. At the discretion of UTFI, and in consultation with the appropriate UT administrator, current fund accounts with low balances for an extended period of time may be eliminated and the remaining funds combined with another existing current fund account with a similar purpose.

Plant Funds

The minimum initial gift required to create a plant fund that is separately identified on the UTFI books depends on the nature and estimated cost of the construction project to be supported and will be determined jointly by the appropriate UT official and the CFO. At the discretion of UTFI, and in consultation with the appropriate UT administrator, plant fund accounts with low balances for an extended period of time may be eliminated and the remaining funds combined with another existing current or plant fund account with a similar purpose.

Memorial And Honorary Funds

Memorial and Honorary funds are created by a gift (or gifts) given in memory of (or in honor of) an individual.

1. A memorial or honorary fund may be established as an endowment or as a current fund, as determined by the family or the donor.
2. Endowed memorial and endowed honorary funds must comply with established endowment minimums.

Gift Agreements

All gifts and pledges of $25,000 or more must be documented in a written Gift Agreement signed by the donor(s) and the UTFI President. Exceptions:

1. Charitable Remainder & Lead Trusts: If UTFI is provided with the original or a legible copy of the legal instrument creating charitable remainder and lead trusts then no additional written gift agreement is needed.
2. Charitable Annuities: The contract creating a charitable gift annuity suffices in lieu of a written gift agreement.

In the absence of the UTFI President, the CFO is authorized to sign gift agreements. Pre-approved gift agreement templates are available on the UTFI website.

Estate Planning

UTFI encourages alumni, donors and other supporters of UT and UTFI to make UTFI a beneficiary of their estate plans. As a general rule, gifts will be recorded when UTFI receives the actual funds; however, UTFI will record estate plans and recognize those who make UTFI a beneficiary of their estate plans under the following provisions.

Bequest

Donors who list UTFI as a beneficiary in their will or living trust will be recognized if:

1. The donor provides UTFI with a copy of the will or living trust (or the portion of the will or living trust that pertains to UTFI).
2. The bequest is for a specific amount or, if the bequest is for a percentage or residual amount, the donor provides documentation of the estimated amount UTFI will realize signed by the donor or donor’s legal representative.
3. Payment of the bequest is not subject to any conditions precedent.

Retirement Plan

Donors who make UTFI a beneficiary of their IRA, qualified pension or profit sharing plans, or other retirement plans will be recognized if:

1. The donor provides UTFI with a copy of the beneficiary designation (or the portion of the beneficiary designation that pertains to UTFI) or other documentation showing UTFI’s interest.
2. Current statement of value from the account or a statement of value signed by the donor or the donor’s legal representative.

Life Insurance

Donors who make UTFI a beneficiary of their life insurance policies will be recognized if:

1. The donor provides UTFI with a copy of the beneficiary designation (or the portion of the beneficiary designation that pertains to UTFI) or other documentation showing UTFI’s interest.
2. Current statement of value from the insurance carrier or a statement of value signed by the donor or the donor’s legal representative.

IRS Forms 8282, 8283

The CFO is authorized to execute the Donee Acknowledgment on IRS Form 8283 (Noncash Charitable Contributions) and IRS Form 8282 (Donee Information Return) on behalf of UTFI.

Gift Acceptance Committee

The Gift Acceptance Committee shall be comprised of the UTFI President, who shall serve as committee chair, the CFO, who shall serve as committee secretary, and five staff appointed by the UTFI President from among the following: one Vice Chancellor for Development, one senior development officer (Associate or Assistant Vice Chancellor, Executive or Senior Director), two development officers (Director, Associate or Assistant Director, Major Gift Officer), and one Advancement Services staff.

1. The Gift Acceptance Committee shall review proposed gifts that are not covered by this policy and any questions or issues relating to gifts that are not covered by this policy. After review the committee shall recommend a course of action to the UTFI Executive Committee, which shall have final authority to accept or refuse the gift in question.
2. The Gift Acceptance Committee shall review this Gift Acceptance Policy at least once every five years and make recommendation for revisions to the UTFI Executive Committee.

EFFECTIVE: 6/21/2012 · REVISED: 7/1/2022

Introduction

The treasurer or the appropriate committee of the University of Tennessee Foundation’s (UTFI) governing board must approve any exceptions to the parameters in advance.

• The minimum dollar contribution required to set up a gift annuity will be $25,000.
• The UTFI will follow the rates (payout percentages) suggested by the American Council on Gift Annuities but donors may choose a lower payout.
• The minimum age for annuitants at the time annuity payments commence shall be 60.
• The UTFI will offer the four types of gift annuities – Immediate, Deferred, College Annuity and Flexible Deferred.
• Payout frequency will be quarterly.
• Quarterly payments will follow the calendar year with payouts made on the last day of March, June, September and December.
• If a donor makes a gift after, the 10th of the payment month (March, June, Sept, Dec), then he or she will receive the partial payment with the first regular payment for the next quarter.
• The Board of Directors has determined the gift annuity reserve is adequately funded; therefore, effective July 1, 2022, at the termination of a Gift Annuity and after all income payments have been met, 4.5% of the residuum will be added to the reserve fund, and 95.5% of the residuum will be used as directed by the donor.
• Donors may designate a gift annuity to create a named endowment but original funding of the gift annuity should be three times the amount currently required to create a named endowment. For example, a current $25,000 naming opportunity would require the gift annuity be funded with $75,000. The American Council on Gift Annuity rates has an underlying assumption that the residuum at the termination of a contract will be 50% of the original contribution. This assumption is based on life expectancies, expenses for administering the gift annuity and annual total returns. It is important to note that historically many gift annuity programs have a residuum more in the 70-90% range because of above average investment returns.
• Donors who choose to make a gift annuity under $75,000 will be advised that if in the event at the termination of the contract there is sufficient residuum because of favorable investment returns a named endowment will be created. If not, then the monies will be given to the campus, college, institute, department or program designated by the donor. The donor may designate the monies be added to an existing endowment or used at the discretion of the administrator in charge of the designated area.
• All gift annuity agreements must be reviewed in advance of presentation to the donor(s), by the Assistant Vice President for Planned Giving, who may elect to forward on to UTFI General Counsel and/or BNY Mellon for additional review.
• The president or treasurer of UTFI will sign all gift annuity contracts.

6.3.1 Introduction

The University of Tennessee Foundation (UTFI), in light of its mission and responsibilities to maximize private giving to the University of Tennessee (UT), to qualify at all times as an organization to which deductible contributions may be made pursuant to Sections 170, 642, 2055, and 2522 of the Internal Revenue Code, and to operate in an open and transparent manner, establishes the following Gift Management Policy.

The purpose of this policy is to maximize the value and impact of every gift to UTFI for the benefit of UT or UTFI by ensuring each gift complies with donor intent, applicable laws, regulations and standards of gift acceptance, management, and stewardship.

6.3.2 Endowment Funds

Endowments are established by those who wish to make a permanent commitment to support UT or UTFI. Endowment gifts may establish or be added to an endowment fund.

Endowments Funded Through Current Gifts and Pledges

An endowment may be funded through outright gifts or by a written pledge payable over a period not to exceed five years.

1. A written gift agreement is required in order to establish a new endowed fund. For more information on gift agreements see Policy 6.1 Gift Acceptance.
2. The minimum gift required to establish an endowment depends on the type and purpose of the endowment created.
   1. The current UTFI Schedule of Minimum Endowment Levels is available on the UTFI web site.
   2. Minimum endowment levels are subject to change by action of the UTFI Board.
3. If the endowment minimum is not reached within the time frame set forth in the gift agreement or, in the absence of such a time frame, then within ten years from the effective date of the gift agreement, UTFI has the option to transfer the balance of the fund to:
   1. An existing endowment fund with a complementary purpose, or
   2. Another UTFI fund specified by the donor and/or appropriate UT authority (i.e., dean, chancellor or president). Endowment funds cannot be converted to spendable funds, but must remain in an endowment.

Endowments Funded Through Deferred Gifts

An endowment may be funded through deferred gifts such as bequests, charitable remainder trusts, charitable gift annuities and other similar instruments.

1. The value of the gift at the time the proceeds are received by UTFI must meet the then-current required endowment minimums for the donor-designated purpose.
   1. The current UTFI Schedule of Minimum Endowment Levels is available on the UTFI web site.
   2. Minimum endowment levels are subject to change by action of the UTFI Board.
2. Donors wishing to provide for UTFI through their estate plans or other deferred gifts may use a Tiered Fund Agreement to designate different levels of use for the fund depending on totals funds received (e.g., faculty support then professorship then chair as the required minimums are met).

Consolidated Investment Pool

Except when circumstances require or warrant separate investment, gifts for endowment funds will be co-mingled with and invested in the UT Consolidated Investment Pool.

6.3.3 Current and Plant Funds

Current (non-endowed) funds provide support on an “as requested” basis for current spending.  Plant (non-endowed) funds provide support on an “as requested” basis for the construction of buildings, classrooms, laboratories or other physical space.

University beneficiaries may spend current gift funds through a UT account set up to parallel the UTFI account where the funds are actually deposited.  Pursuant to Article II, Section 2(c) of the Affiliation and Services Agreement between UT and UTFI, UTFI will review expenditures from the UT parallel account for compliance with the gift agreement or other restrictions on use of the funds and, on June 30 of each year, transfer funds from UTFI to the university to cover complying expenditures from the University parallel account.

6.3.4 Accounting Treatment of Gifts

For accounting and administrative purposes, gifts are classified into two categories: without donor restriction and with donor restriction.  The Financial Accounting Standards Board governs the revenue recognition of gifts as follows:

Without Donor Restriction

Gifts on which the donor has not placed restrictions as to the purpose of the funds, leaving the UTFI to determine the appropriate use of the funds.

• Generally accepted accounting principles (GAAP) require these gifts be accounted for as revenue in the Without Donor Restriction Fund.

With Donor Restriction

Gifts that have donor-imposed restrictions.  UTFI can use or expend the donation as specified, and the restriction is satisfied either by the passage of time or by actions of UTFI.

• GAAP requires these gifts to be accounted for as revenue in the With Donor Restriction Fund.

All expenses are recognized in the without donor restriction fund.

To ensure appropriate accounting treatment and administration of the gift in accordance with the gift agreement, UTFI will, along with the appropriate development office and/or UT Office of Treasurer, maintain a copy of the gift agreement.

6.3.5 Investments

The investment of all gift fund types – endowed, current and plant – shall be handled in accordance with Policy 8.1 Endowment Investment and Spending and Policy 8.2 Short Term Investment.

6.3.6 Endowment Earnings and Distributions

Earnings in excess of the amount distributed, and losses, are allocated to the endowment account on a quarterly basis.

1. For fully funded endowments, upon request by the donor expressed in the gift agreement, UTFI will allow reinvestment of 100% of net earnings (after payment of any management fees) into principal for a period not to exceed ten years from the date the fund is established and must be documented in the agreement.
2. For endowments funded through pledges, no transfers will be made from the Earnings Account to the University until the minimum funding level is reached for that type of endowment through gifts.
   • Reinvestment into principal cannot be applied to meet the minimum gift amount required for that type of endowment.

Distributions to endowment earnings accounts are posted quarterly.

1. The amount distributed is governed by Policy 8.1 Endowment Investment and Spending.
2. No transfers will be made from the earnings account to UT until the gifts received meet the minimum funding level for that type of endowment.

6.3.7 Endowment Fees

UTFI assesses a fee on endowed funds for accounting and development services. Pursuant to the Affiliation and Services Agreement between UT and UTFI, the fee is 100 basis points.

6.3.8 UPMIFA

UTFI follows the endowment management guidelines set forth in the Uniform Prudent Management of Institutional Funds Act as adopted by the State of Tennessee, TCA §35-10-201, et. seq.

6.3.9 Gift Annuities

All gift annuity agreements must be reviewed in advance of presentation to the donor(s), by the Assistant Vice President for Planned Giving, who may elect to forward on to UTFI General Counsel and/or BNY Mellon for additional review.

Each gift annuity will be assessed a 4.5% fee upon termination, to offset costs incurred by the Foundation. The fee will be reviewed annually for adjustments as needed.

Pursuant to the January 18, 2008, UTFI Board 6.5 Resolution Establishing a Gift Annuity Program, UTFI maintains a gift annuity reserve fund.

Acting in lieu of a formal Investment Committee, the UTFI Executive Committee shall oversee investment of the gift annuity reserve fund assets.

The full amount of all gift annuity contributions shall be credited to the fund, along with all earnings on assets attributable to the fund.

The CFO is authorized to make disbursements from the fund for the following purposes:

1. To make annuity payments.
2. To pay for the costs associated with investing and managing fund assets and administering the gift annuity program.
3. To make available to UT and UTFI for their charitable purposes the amount of fund assets attributable to a particular annuity obligation upon satisfaction of that obligation.
4. Disbursements for any other purposes must be approved by the UTFI Board of Directors.

6.3.10 Charitable Trusts

All trust agreements must be reviewed in advance of presentation to the donor(s), by the Assistant Vice President for Planned Giving, who may elect to forward on to UTFI General Counsel and/or BNY Mellon for additional review.

The Foundation will consider serving as trustee or successor trustee of a charitable trust. The decision to accept the trusteeship or successor trusteeship of a planned gift shall be subject to approval by the Foundation’s President and Chief Executive Officer (CEO) and to the terms and conditions outlined in this policy.

• The Foundation may serve as trustee of a charitable remainder trust (unitrust or annuity trust) if it is the sole remainder beneficiary.
• The Foundation may serve as trustee of a charitable lead trust if it is the sole income beneficiary.
• The Foundation may serve as trustee of a charitable trust described in Code section 4947(a)(1) if it is either the sole income beneficiary or the sole remainder beneficiary.
• The President and CEO has the discretion to accept or reject the proposed appointment of the Foundation as trustee of a charitable trust.
• The Foundation will not serve as co-trustee of a trust unless the other co-trustee is selected or approved by the Foundation as a third-party fiduciary.
• The Foundation will not serve as trustee of a revocable trust for a living donor.
• The minimum amount needed to fund a charitable trust of which the Foundation will serve as trustee is $100,000. Trusts initially funded with less than $100,000 will need prior approval by the President and CEO.
• Trust investment assets shall be managed under discretionary portfolio management services provided by the trust administrator. The Foundation Executive Committee shall monitor and review the administrator’s investment performance. If a donor wishes to direct or restrict the investment of a charitable remainder trust’s assets, the donor should serve as his or her own trustee or secure the services of another trustee or administrator.
• The Foundation will seek guidance from the trust administrator on a preliminary finding of appropriate rates for each trust. The Foundation may as needed make adjustments, with consideration of, among other things, prior and potential support, and other prior, current and future value added by the donor.
• Trusts will be reviewed and approved by counsel for the Foundation’s trust administrator.

The following assets may be accepted as funding for a charitable trust, subject to the terms and conditions below:

• Gifts of cash or equivalent (check, wire, etc.) for a charitable trust shall be deposited directly into the appropriate trust account.
• Marketable securities. Marketable securities (including mutual fund shares) contributed to fund a charitable trust shall be transferred to the appropriate trust account. Donated securities may not be held without prior approval.
• Charitable trusts funded by will, or by other testamentary arrangements, is permitted.
• Gifts of closely held or restricted stock, partnership interests, or cryptocurrency to fund charitable trusts must receive prior approval from the Executive Committee
• Real property. Real property may be accepted into a charitable trust subject to the prior approval of the CEO or Foundation’s Real Estate Committee in accordance with policy 6.4 Real Estate Gift Acceptance. Mortgaged real property will not be accepted. The preferred arrangement to be used when an illiquid or non-income producing asset is contributed to a charitable remainder trust is a net income unitrust with a “flip” provision. A gift of real property will be subject to the following requirements:
  • Personal inspection by staff (which may be performed by video if in-person inspection if not practicable)
  • Title search
  • Minimum of level one environmental audit unless the property is a residence inspected by staff and for which an environmental audit was deemed unneeded;
  • Marketability review including estimate of holding costs to be incurred;
  • Qualified appraisal obtained by the donor unless overriding factors require this to be obtained after acquisition by the trust;
  • Written agreement by the donor to provide additional funds to the trust, if necessary, to provide for ongoing expenses and maintenance of the property until sold;
  • Acceptance by the Foundation’s Real Estate Committee if required by policy 6.4 Real Estate Gift Acceptance.
  • Depending on marketability review, donor may be required to contribute liquid assets on a timely basis in order to cover holding costs incurred by the trust (this should be documented in a letter of agreement signed by the donor and the Foundation).
  • The Foundation will recover post sale, all due diligence, management and other pursuit outlays for real estate gifts before transferring administration to the Foundation’s overall trust administrator.

Charitable trusts will be administered under the following fee policy:

• Each charitable trust will be assessed a 4.5% fee upon termination to offset costs incurred by the Foundation (oversight, accounting, gift procurement and ongoing stewardship).
• Fees for asset management and trust administration services will be charged to the trusts.
• If the Foundation serves directly or hires a third-party fiduciary as its agent, the acting trustee may charge the trust a fee for its services and may pay the fees of any third-party fiduciaries or other professionals from the trust as needed.

The UTFI President and Treasurer are authorized to contract with 3rd party vendors to serve as co-trustee as circumstances warrant to manage/administer charitable trusts on behalf of the Foundation.

Subject to the terms and conditions of the trust instrument, the administrator or CFO is authorized to make disbursements from the trust for the following purposes:

1. To make payments to income beneficiaries.
2. To pay for the costs associated with investing and managing trust assets.
3. In the case of remainder trusts, after the lives of the income beneficiaries (or expiration of the trust term of years), to transfer the remainder of the trust to the Foundation.
4. In the case of lead trusts, to transfer the remainder of the trust to the creator of the trust (or to other remainder beneficiaries designated in the trust instrument).

6.3.11 Estate Executor

The Foundation will consider serving as personal representative of an estate that benefits the Foundation. The Foundation will serve only if

1. the President and CEO approves;
2. the Foundation (or the University of Tennessee, its campuses or institutes) is the sole beneficiary of the estate or is the sole residuary beneficiary with only modest bequests to others;
3. the Foundation has the right to resign in favor of an alternate personal representative; and
4. the Foundation may hire a third-party fiduciary or other professionals as needed to act as its agents, which agents may be paid by the estate.

In addition, each estate will be assessed a 4.5% fee at completion to offset costs incurred by the Foundation (oversight, accounting, gift procurement and ongoing stewardship).

Revised: April 2023

Purpose

Applicability

Real Estate Gift Acceptance Committee

Due Diligence

• Market conditions for resale or the ultimate disposability of the property
• The condition of any improvements located on the property
• Current and potential zoning, land use and concurrency issues
• Any costs associated with holding the property for resale
• Environmental assessment
• Appraisal information, as provided by donor or otherwise available
• Title review to determine any encumbrances or other restrictions on the property
• Whether the property carries risks or potential liabilities of sufficient amount or likelihood that it should be isolated in a separate or new single-member LLC, and
• Any other considerations specific to the property

Acceptance by the UTFI President

1. Due diligence reveals environmental issues as noted in Phase I study,
2. The real estate is offered as a gift to fund a charitable gift annuity,
3. The annual financial obligations incurred by UTFI to as owner of the property are projected to exceed $10,000, or
4. The President determines in his discretion that the Real Estate Committee should be consulted with respect to the decision to accept the gift.

Acceptance by the Real Estate Committee

1. Due diligence reveals environmental issues as noted in Phase I study,
2. The real estate is offered as a gift to fund a charitable gift annuity,
3. The annual financial obligations incurred by UTFI to as owner of the property are projected to exceed $10,000,
4. Any unusual risks or potential liabilities, or
5. For any other reason the UTFI President refers a potential gift to the Real Estate Committee then the Real Estate Committee may authorize the UTFI President to accept gifts of real estate after a review of the due diligence information as recited above and any of the following that are pertinent to the property in question:
   1. Deed to the property.
   2. Any condominium agreements, restrictive covenants, leases and/or management agreements.
   3. Current real estate appraisal information.
   4. Property tax statements and insurance policies.
   5. Any follow-up environmental reports, a completed questionnaire regarding environmental issues if the donor agrees to complete the document, and such additional environmental information as is indicated to assess any environmental risk.
   6. Estimated or actual carrying costs for the real estate. These costs include property taxes, insurance and maintenance, and, depending on the type of property, utilities, grounds care, snow removal, caretaker fees and condominium fees.

Title and Use of Separate Legal Entities

Appraisal and IRS Form 8283

Title Search and Insurance

Survey

Real Propery Taxes and Other Carrying Costs

Mortgaged Property

• A clearly established method for the payment of the debt must be determined
• An MAI appraisal is required, and
• The loan-to-value ratio must be not more than 50%.

Leases

University Approval Required

Environmental Requirements

Unsolicited Deeds

Restricted Special Acquisitions

1. Charitable Gift Annuities: The Real Estate Committee shall decide, on a case by case basis, whether or not to accept a gift of real property to fund a charitable gift annuity. Gifts of real property to fund charitable gift annuities must also comply in full with 6.5 Resolution Establishing a Gift Annuity Program and 6.2 Gift Annuity Program Parameters.
2. Timeshare units: UTFI shall not accept timeshare units.

Management of Real Property

Download a PDF of the resolution.

Introduction

• Undergraduate Scholarship: $25,000
• Graduate Fellowship: $250,000
• Professorship: $500,000
• Chair: $1,000,000

Schools, Colleges, Departments, Programs

EFFECTIVE: 1/1/2020 · REVISED: 4/1/2020

Introduction

This is the Advancement Assessment Policy (Policy) of the University of Tennessee Foundation, Inc. (UTFI). The purpose of the Policy is to establish advancement assessment fees (Assessment) that UTFI will assess on charitable contributions received. The Assessment assessed by UTFI will be used to support UTFI’s mission including, without limitation, administrative and fundraising costs.

Policy

UTFI supports the university through fundraising, engagement and stewardship. To continue this work and reduce the dependency on university funds, UTFI has implemented an advancement assessment. UTFI is committed to administering funds (both endowed and non- endowed) in compliance with all relevant Foundation by-laws, organizational concerns, industry standards and federal and state laws and regulations. No policy will supersede any provision of federal or state law or regulation.

In determining the Assessment charged on gifts, UTFI will act in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances and shall consider, as applicable and as required under laws or regulations, the following factors:

• The purposes of the Foundation and the gifts
• General economic conditions
• The possible effect of inflation or deflation
• The expected total return from income and the appreciation of investments
• Other resources of UTFI
• The investment policy of UTFI

UTFI will in good faith make information concerning the Assessment available to donors and potential donors.

Assessment Calculation Method

UTFI has considered the prudence of an Assessment on new gifts received by UTFI, and has determined that the Assessment will be as follows:

• Four point five percent (4.5%) on non-endowed gifts
• Four point five percent (4.5%) on new endowments
• Cap on the advancement assessment of $225,000 per gift

Any Assessment will be calculated as of the date of receipt by UTFI and will be transferred to UTFI’s appropriate operating funds as soon as practical. For assets requiring liquidation, the Assessment will be calculated of the date of receipt and transferred to operating funds as soon as practical following liquidation.

The assessment will be applied to new endowments. One half of the annual spending earnings will be used to reduce the assessment payable in year two, with one half of the spendable earnings applied to the fee in the following years until the entire assessment has been fulfilled.

Exemptions from the Assessment

The Assessment will not be assessed on:

• Gifts for capital projects
• Annual gifts to campus athletics
• Gifts to endowments funded at the minimum level as of December 31, 2019
• Gifts/grants from foundations that have by-laws preventing payment of fees
• Gifts to UT Chattanooga
• Gift annuities

Exceptions

All exceptions to this Policy must be approved by the president of UTFI and vice chancellor for advancement at the respective campus(es). Exceptions to this Policy should be granted in only the rarest of circumstances.
>> Complete the Assessment Exclusion Request Form.

Applicability

Except as otherwise provided, this Policy applies to all gifts received by UTFI.

Enforcement and Interpretation

It is the responsibility of all employees to uphold this Policy.

Effective Date

This Policy is effective January 1, 2020 and replaces and supersedes any proceeding policy concerning this subject matter. Gifts made on or after January 1, 2020 will be subject to the advancement assessment, excluding gifts received within year end giving deadlines for 2019.

Introduction

Criteria

• Working with departmental development officer (or UT Foundation) to establish the gift agreement (or administrative provisions) per the normal gift acknowledgement and recording process.
• Ensuring that the funds are spent per the donor’s wishes and in accordance with the appropriate university fiscal policy on receipting, safekeeping and disbursing of funds.
• Reconciling the monthly ledger.

If it becomes impossible or impractical to use the gift for the purpose designated by these administrative provisions, or if these provisions are determined to be in conflict with any federal, state, or local law, regulation, or ordinance, the Foundation’s Board of Directors, in consultation with the donor (if possible) or with the President of the University, will direct the use of this gift in the best interest of the University and in a manner as close as possible to the original intent of the donor as expressed in these provisions.

Gift Size

Third Party Funds: Student Organization Private Account

Third Party Funds: Agency Account

Gifts made from Political Action Committees (PAC) or as a result of a PAC matching program are not considered or counted as gifts to UT/UT Foundation. Monies received will be considered non-philanthropic and recorded as such in ANDI. Organizations and individuals will not receive legal or recognition credit for any monies received and no fundraising campaign or proposal credit shall be granted as a result of this non-philanthropic transaction.

A Political Action Committee is considered a 527 organization under Section 527 of the U.S. Internal Revenue Code (26 U.S.C. § 527). A 527-group is organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function. The exempt function of a political organization is influencing or attempting to influence the selection, nomination, election, or appointment of an individual to a federal, state or local public office or office in a political organization.

Tax-exempt charitable organizations (also known as 501(c)(3) organizations) are specifically prohibited from attempting to influence legislation or participating in political campaigns. For an organization to be tax-exempt it cannot “participate in or intervene in (including the publishing or distributing of statements) any political campaign on behalf of (or in opposition to) any candidate for public office.” Charities, educational institutions, and religious organizations, including churches, are among those tax-exempt organizations restricted. Contributions from PACs cannot be classified as charitable and political donations cannot be treated the same way as tax-deductible contributions.

Federal law prohibits companies from donating directly to political candidates, which is why individual employees must voluntarily fund corporate-sponsored political action committees. Companies use matching programs to attract PAC support. PAC Matching Programs will “match” employees’ donations with contributions to charities of their choosing in the same amount that the employee supported the PAC.

The Federal Election Commission has held that corporate PAC matching programs are legal because they “do not provide any tangible benefit to the contributing employee.” Neither the employee nor the company receives a tax-deduction for such gifts. The charitable contribution is not deductible by the corporation because the corporation is receiving a quid pro quo in the form of a contribution to the political action committee. The employee does not receive either property or an economic benefit because of the contribution.