Fund Administration and Use
3.0 Fund Account Representatives
KU Endowment formally identifies appropriate University employees who are authorized to recommend disbursements from KU Endowment funds in achieving the purpose of the fund. These persons are referred to as Fund Account Representatives. This responsibility is usually assigned through discussions with the appropriate KU Endowment fund-raising staff and the account donor.
KU Endowment’s philosophy in identifying the Fund Account Representative is to assign this responsibility to the faculty member or professional (unclassified) staff member who is closest to the specific work to be supported from the gift and who is also responsible for the entire unit which could reasonably benefit from the gift. For example, a department chair would likely be identified as the Fund Account Representative for a fund to benefit a specific department, and a dean would probably be identified as the representative for a fund to benefit a school.
When it is no longer appropriate for a person to serve as a Fund Account Representative, such as in the case of a retiring department chair, the retiring Fund Account Representative should provide a brief written notification to KU Endowment’s Account Services Department explaining the situation and specifying a successor to represent the University in determining appropriate uses for the fund in question.
Substitute or alternate Fund Account Representatives may be identified by the primary University contact, under the assumption that the alternate meets the spirit of the requirements discussed here. The alternate Fund Account Representative must have comparable responsibility and knowledge of the beneficiary department or unit for which the fund was intended, as well as the requirements set forth in this Handbook. Alternate Fund Account Representative designations in no way diminish the responsibility of the primary representative.
The most important responsibility of the Fund Account Representatives is to submit expenditure requests for their related KU Endowment account which are consistent with the donor’s intent for the use of the fund and which benefit the University of Kansas as best as they can. In order to fulfill this responsibility, Fund Account Representatives should be knowledgeable of the purpose of the KU Endowment account, familiar with KU Endowment policies and procedures outlined in this Handbook, and KU policies and procedures. Through its review procedures, KU Endowment will assist Fund Account Representatives as best as we can to appropriately utilize our donor contributions, but Fund Account Representatives are encouraged to contact appropriate KU Endowment personnel whenever questions arise.
Although a significant majority of KU Endowment’s spendable resources are appropriately used for the exact purpose specified by the donor, there are occasional instances where KU Endowment accounts are underutilized, or may even have become dormant. There are usually valid reasons for such inactivity, such as temporary moratoriums on spending in order to save for the acquisition of an expensive capital item, or excessively restrictive donor guidelines, etc. KU Endowment periodically reviews its accounts to ensure that they are being sufficiently used as the donors intended see section 2.0.
When KU Endowment funds are underutilized due to inattentiveness on the part of the Fund Account Representative, KU Endowment may identify another Fund Account Representative for the subject fund. Obviously, such situations represent breakdowns in the KU Endowment fund-raising/University fund-using system. In a time of shrinking public resources and increasing public scrutiny, these situations are especially troubling because of the inherent waste and negative perception to the donor. They also hamper KU Endowment’s capability to raise additional funds for the University’s use from prospective donors, when it can’t demonstrate the need, based on utilization of current funds, for future contributions.
The Fund Account Representative must be an active employee of the University, which is defined to be on the University’s payroll as a full-time employee.
An individual who personally contributes more than one-third of the total contributions to the KU Endowment account, or is responsible for directing more than one-third of the contributions to the fund, may not serve as the Fund Account Representative, regardless of whether or not s/he otherwise meets the above requirements. Generally this individual’s supervisor will serve in that capacity. In such a case, however, the business activities of the staff member/donor may still be supported from the fund. An example of this situation is when a faculty member receives an honorarium for providing professional services, which is then deposited to establish a KU Endowment account to support a research project under the general aegis of the same faculty member. The faculty member’s department chair would be identified as the Fund Account Representative in this case.
When questions arise about the propriety of a requested transaction, KU Endowment staff may involve the requestor’s supervisor or other appropriate University personnel, as necessary to handle it appropriately.
Current tax law provides for certain penalties that may be charged to “fund managers,” as well as the recipients of the funds, when payments from 501(c)(3) entities provide excessive compensation to the payee. It is possible that the IRS may consider KU employees who recommend disbursement of KU Endowment funds-the Fund Account Representatives-to be included within the definition of fund managers. The penalties can be severe. Additionally, payments which are reported on a 1099 but which IRS later determines should have been taxed as W-2 employee compensation to the recipient cannot be reclassified as employee compensation to avoid the penalty.
Additional approval will be required when a reimbursement is requested for the Fund Account Representative of the KU Endowment account which will bear the expense. Payments to third parties, such as when an airline or a hotel bill is paid for the Fund Account Representative’s benefit to attend a conference, or reimbursements to a relative of the Fund Account Representative, may also require the additional approval. This control approval will be the Fund Account Representative’s supervisor. The control approval person need not be a formal Fund Account Representative on the KU Endowment fund; the control signature is simply intended to indicate supervisory knowledge of the appropriateness of the expenditure activity. KU Endowment will ensure the purpose of the expenditure request is within the designated purpose of the specific fund account, and that there is sufficient cash in the fund account to cover the request. When a control approval is required, however, the Fund Account Representative must also still sign the request as a way for KU Endowment to ensure communication with and approval of the Fund Account Representative.
Any payment requests that a Fund Account Representative decides to pay from KU Endowment funds should be submitted to KU Endowment as soon after the invoice is received as possible. This is especially important at the end of each fiscal year, to help ensure the accuracy of KU Endowment’s financial statements. Because KU Endowment fund accounts do not have a defined fiscal year budget for expenditures, any unused expendable resources as of June 30 will be carried over for use beginning with the new fiscal year on July 1; however, it is important to recognize in the appropriate tax year expenses which have been committed, but not yet paid from KU Endowment funds. The date that KU Endowment receives and approves a Check Request is the point at which the expense is recognized by KU Endowment. After June 30th, significant expenses that were incurred by June 30 may be recorded in the previous fiscal year if noted on the Check Request. KU Endowment will record these specifically identified expenses in the previous fiscal year if the Check Request is received between July 1 and July 10 of the subsequent year.
Likewise, any contributions that are received by University departments should be forwarded to KU Endowment as soon as possible after they are received. Obviously, donors want to secure their tax receipt as soon as possible, especially at the end of each calendar year, and KU Endowment must record its contributions within the appropriate fiscal year to ensure the accuracy of its financial statements. For tax purposes, the date of gift is the postmark date if mailed, or the date the department receives the gift if personally or otherwise delivered. KU Endowment generally will recognize the gift revenue in its financial statements when the gift is received by KU Endowment.