Stanford benefits from a dedicated community of donors who support students, drive groundbreaking research and advance solutions to address societal challenges. This page provides information on how to distinguish different types of donor gifts, how gifts should be received, when and how gifts should be used and who is responsible for them. For information about the concept of a fund and all fund types, refer to Fund Types.
About Donor Gifts
A donor gift is defined as any item of value given to the university by a donor who expects nothing significant of value in return, other than recognition and disposition of the gift in accordance with the donor's wishes. A gift fund is created to hold the gift. Gift funds are also called “expendable gift funds,” in contrast to “endowment gift funds,” which are called “endowments.”
For information about the concept of a fund and all fund types, refer to Fund Types.
Examples of Donor Gifts:
- General support of a school or department
- Support of a specific school or departmental event
- General support of an individual faculty member's research program or of a specific research activity
- An institutional allowance to cover costs related to administering a grant from a non-governmental agency
For more information about gift policies see:
- Administrative Guide Policy 4.1.1: Gift Procurement Policies
- Policy: IRS Requirements for Tax Deductions on Charitable Donations
University gift funds must be handled and spent according to donor and university-approved terms and restrictions. Financial managers must be able to explain how donor funds were used, for both financial audit and donor reporting purposes. All use of funds is guided by a common set of principles as described in Policy: Proper Use of Funds.
Types of Donor Gifts
Donor Gifts is an award type which has two sub-types (expendable and endowment). Additionally, there are occasions when a donor may gift items such as equipment and art. Gift funds are also called “expendable gift funds,” in contrast to “endowment gift funds,” which are called “endowments.”
- Expendable Gift (Award Type starts with GIF) – A gift to the university that is immediately usable. Gifts often stipulate how the money may be spent.
- Endowment Gift (Award Type starts with END) – An endowment is established by a donor gift that has additional restrictions requiring that the initial funding not be spent directly but instead be placed in a principal fund and invested in perpetuity to produce appreciation that can be transferred as payout to an income fund where it can be spent. The income and appreciation are maintained in an Endowment Income Fund, which is maintained separately from the endowment principal. For details, refer to Topic Overview: Endowments.
Restricted versus Unrestricted Funds
When a donor makes a gift to the university, the donor may provide terms for the use of that gift. If the terms specify a particular purpose, the funds are “Restricted” to that purpose. If donor terms allow a gift to be used broadly within a school or unit, it is deemed “Unrestricted” at the unit level, but "Restricted" by central university administration. Income and appreciation produced by restricted endowments is also restricted as per the terms of the endowment.
There are multiple restricted definitions. Internally, Stanford refers to three levels of restriction––"Restricted," "Unrestricted," and "Designated". Refer to Administrative Guide Policy 3.1.2: University Funds.
Sponsored Projects versus Donor Gifts
For information about what defines sponsored projects and how they are distinguished from gifts, student aid and other supported activities, find guidance related to making these distinctions in DoResearch Policy 13.1: Gift vs. Sponsored Projects and Distinctions from Other Forms of Funding and in the job aid on that page, “Determining Whether Funding is a Gift or Support for a Sponsored Project.”
Fundraising and the Office of Development
Any proposed fund-raising activities should be cleared with the Office of Development (OOD) in advance to ensure compliance with tax laws and regulations. When donors receive something in exchange for their contribution, additional considerations and processing are required. Additionally, OOD manages all direct contact with donors, in part to avoid donor fatigue, so all outreach needs to be cleared with them first.
Timely Use of Donor Gift Funds
Donors may have expectations that expendable gifts will be used within a certain period of time and that payout from endowed funds will generally be used on an annual basis. Units may access the OBI Revenue and Fund Management Dashboard > Endowment Financial Dashboard Report to identify funds that are accumulating income, perhaps due to restrictions that make it difficult to spend, or endowments that are underwater due to market fluctuations. Schools and units can work with their Development Donor Relations officers to determine the appropriate steps.
Adding New Gifts to Existing Awards
Gifts with different restrictions may not be commingled in a common fund. Typically, named funds should only contain gifts from the primary donor(s). Named funds are usually defined as funds that include the name of a donor(s) in the award title (e.g., The John Donovan Fund for Asteroid Research or the Mary Smith Undergraduate Research Fund).
Particular attention should be paid to make sure that expendable gifts are not deposited into endowments. If a gift arrives where the donor designates a specific purpose, and you are unsure whether it can be deposited into an existing fund, request a new award via the Gift Transmittals system and/or contact your Fund Accountant or Development Donor Relations officer.
Changed Terms of a Gift or Endowment Award
New, changed or revised terms must be reflected in an award's fund authorization. When you receive a document or other communication from a faculty member, staff member or donor, requesting that the terms of a gift or endowment award be changed, either temporarily or permanently, contact your Fund Accountant immediately. They will contact the Restricted Funds group in the Office of Development (OOD), which can ensure that the modified terms are valid and determine if a new signed agreement is required with the donor. Documentation that changes the fund names or terms should be saved in the appropriate file for the funds, which can be facilitated by Fund Accounting.
When Fund Managers Become Unavailable
When a faculty member retires, leaves or passes away, and there are gifts or endowments under their management, contact the unit's Associate Dean for Faculty Affairs. They will work with the school's Donor Relations staff to help identify awards that need to be repurposed. Donor Relations, in turn, will work with the Restricted Funds group in the Planned Giving department of the OOD to perform outreach to donors when necessary. If a unit anticipates a departure, to the extent appropriate and feasible, steps should be taken to use funds that are restricted to that faculty member's use before their departure.
In the School of Medicine (SoM), contact the Director of Finance and Administration for the department; they will work with the SoM Controller's Office to determine the most appropriate assignment. If no reassignment can be made, they will work with Medical Center Development to perform outreach to donors when necessary.
Net Investment Income Excise Tax Charges
The net investment income (NII) excise tax was introduced by the Tax Cuts and Jobs Act of 2017 and applies to investment income (dividends, interest, rents, etc.) and realized gains (including gains on appreciated gift securities). The tax became effective September 1, 2018.
Stanford Financial Management Services manages the tracking and charging of NII excise tax charges on gifts of securities. Schools and units who receive gifts of securities subject to the NII excise tax will see charges to the applicable awards on a monthly basis, in alignment with the month-end close timeline.
Designated budget officers and finance managers have access, which is granted through Authority Manager, to view these charges in the Other Financial Reports section on the Financial Report Directory. Gifts of other types of Investments, for example stocks being held or Limited Liability Partnerships received, may produce an NII excise tax event, though this type of excise tax is not included in the report.
For information about revenue and fund management reporting, including detail on fund statement, journals, transfers, fund trend, trial balance, fund variance, budget variance, budget transaction, endowment and pledge, refer to OBI Revenue and Fund Management Dashboard.
To view information about pledges and pledge payments, use OBI Revenue and Fund Management Dashboard > Pledge Report.
For information about OBI, refer to OBI Financial Reporting.