Donations

Definition

A donation is a transfer of money in the form of a gift. For clarification, a donation is not the same as a grant or a contract and definitions of all three terms are provided below:

A gift is a voluntary transfer of money by a donor, made with philanthropic intent. After receipt, the gift must be owned in full by the receiving institution, and the recipient institution must retain complete ownership of any resultant work or project. The donor may not retain any explicit or implicit control over a gift after acceptance by an institution.

A grant is a financial assistance mechanism a sponsor uses to award funds for specific research studies. The responsibility for the performance of the project rests primarily with the grant recipient, who commits resources to fulfil expectations of the sponsor under specified constraints.

A contract is an award establishing a legally binding procurement relationship between the sponsor and the recipient. It obligates the recipient to furnish a project outcome or specific service that is defined in detail in the written contract, and it binds the sponsor to pay for it.

 

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Accounting for donations

In principle, all donations are treated as being for general purposes and credited to the relevant departmental account in the year in which they are received, unless there is evidence that the donation is for a restricted purpose and it will not be spent before the end of the financial year in which the donation was received. Where these two conditions are met, the donation can be held centrally, either in the general ledge or on the projects module, and released to departmental accounts to match expenditure.

The process of matching donation income to expenditure for general ledger donations is run centrally by the Financial Reporting Team.

The process of matching donation income to expenditure for project donations is done using the projects module auto-accounting. This process is owned by the Departmental Projects team.

Defining Donation Type – Restricted or Unrestricted

Underlying the distinction between restricted and unrestricted donations is the concept of the general purposes of the University. The general purposes are teaching and research and, by extension, the provision of ancillary services such as the Bodleian Library, the museums and student support. Donations made available for the general purposes of a department, division or the University as a whole, are treated as unrestricted and taken directly to income. Unrestricted does not mean that a donation can be spent anywhere in the University, only that it is available for expenditure on general purposes.

Donations that are not for general purposes are restricted. A donation will be regarded as being restricted if:

  • the donor sets out in writing the particular purpose for which the funds are to be used and this is more restricted than the funds being made available for the general purposes of the University; or
  • the donation made is for a named member of staff or a sub-unit of a department as set out in writing by the donor; or
  • the donation is, or is one element of a number of donations, made in response to a public appeal for donations to contribute towards a particular cause and there is documentary evidence that such a public appeal has been made.

Please note that where the donation has been made for a named member of staff, it will only be restricted if the donor has set out, in writing, the purpose on which the gift must be spent and this is more restricted than the funds being made available for the general purposes of the University.

Notwithstanding the above, a donation will be regarded as being unrestricted and credited to income if the donation falls below a de minimis level of £10,000, or can be spent within the financial year.

In order for a restricted donation to be set up as a project donation it must also meet a £25,000 minimum limit.

Where a donation is unrestricted, the process for accounting for deferred donations is not applicable because the full amount is recorded as income in the year in which it is received.

All restricted donations must be identifiable by a unique source of funds code or a project code and must be supported by written confirmation from the donor of the purpose of the gift.

Choose whether to account for donations via the general ledger module or the projects module. You may find the donations decision tree helpful.

Identify the Restricted Donation on Oracle: General Ledger

The Financial Reporting Team should be informed of the receipt of a restricted donation in order for it to be added to the monthly process of releasing the income in line with spend. This can be done in two ways:

  1. If a new source of funds code is required for the donation, send a copy of confirmation from the donor of the purpose of the gift with the form requesting the new code. The Financial Reporting Team will allocate a code so please leave this box empty.
     
  2. If the source of funds code to be used already exists on Oracle (if you are using a code set up by the Gift Registry, for example), notify the Financial Reporting Team by email and attach the supporting paperwork.

When selecting a source of funds code, please consider the following:

  1. Donations should be accounted for on a source of funds code beginning with C but C0000 and C9999 are not suitable for use in this process as they are too generic.
     
  2. Do not use the same source of funds code for donations for more than one purpose as this creates problems for the University’s financial statements.
     
  3. Do not re-use source of funds codes which have previously been used to account for a restricted donation without notifying the Financial Reporting Team as this can lead to errors in the way the new gift is accounted for.

Where a gift has been received through the Gift Registry, the Financial Reporting Team may be able to source supporting paperwork directly from the Gift Registry records but still need to be made aware of the existence of the gift and the source of funds code to be used to account for it by the relevant department.

Identify the Restricted Donation on Oracle: Projects

Complete and submit a Departmental Project Setup form to the Finance Department Projects team. Include written confirmation from the donor of the purpose of the gift with the completed form.

Inform the University of Oxford Gift Registry (UOGR) of the intention to use the projects module for this donation.

Refer to the Managing Departmental Projects process for additional information and guidance.

All donations should be received via the UOGR as they are required to verify the source of all donations over £20,000. If for some reason a department receives a donation directly from the donor then a 'direct to department' form must be completed. This form will be provided by the UOGR and must be completed prior to a donation being set up on the projects module.

Once the donations project has been set up, the Department Projects team will inform the department of the projects number.

General Ledger Donations

To spend the donation, code the costs relating to the use of the gift to the relevant source of funds code and the Financial Reporting Team will release income to match expenditure on a monthly basis. Please note that the income release is calculated on working day 5 and is based on information on Oracle at the end of working day 4. Any further costs coded to the donation on working days 5, 6 or 7 will be matched with income the following month, except at year end when the process is run twice.

Project Donations

To spend the donation, code the costs relating to the use of the gift to the relevant project number on the projects module. The auto-accounting rules in the 'projects module' will ensure that revenue is recognised on costs on a daily basis, and that unspent balances are deferred on the University's balance sheet.

Further details of the year-end processes are made available in June each year as part of the general guidance on year end.

Please note that if expenditure exceeds the income available, the income released will be limited to the funds available. Donations will not be moved into a deficit position even if further funding is anticipated in the future.

Oracle Financials reports are available to support the process of accounting for restricted donations.

General Ledger Donations

For general ledger donations, the key reports are:

The purpose of the report is to enable users to report on in-year income and expenditure relating to donations, together with unspent balances deferred for restricted donations. This information will enable you to check that income has been correctly matched to expenditure during the year and to inform those responsible for using the donations how much they have left to spend. The information in this report is summarised and the UO GL Transaction Listing report should be run for more detailed analysis.

This report should be run to provide details of the transactions relating to a particular donation for the purposes of checking that the costs are valid and in line with the purpose of the gift as set out by the donor.

Project Donations

The reports currently used to support the financial management of research projects can also be used for donations. For example, the UO Projects Status and Activity Report can be run for both research and non-research projects, and distributed using the same distribution macro available online here.

For more information, click here.

The controls that are embedded in the donation accounting process are listed below. When following the process, staff should ensure that all of these controls are in place.

For General Ledger Donations

  1. It is the responsibility of the department to notify the Financial Reporting Team of the receipt of a restricted donation and to provide paperwork from the donor which confirms the purpose of the gift.
     
  2. Following notification from the department, the Financial Reporting Team will confirm whether or not the gift is restricted and if it is, add the details to the list of donations to be included in the deferral process.
     
  3. Expenditure must follow the University's Purchase to Pay and Pay Expenses processes and it is the responsibility of the department to monitor expenditure against the funding available.
     
  4. Any general ledger journals should be appropriately reviewed and authorised, and actioned on a timely basis in line with all accounting procedures. A full audit trail of posting should be maintained.
     
  5. Departments must ensure that all expenditure is reviewed and is in line with the wishes of the donor.

For Project Donations

  1. For project donations it is the responsibility of the department to notify the Department Projects team of the receipt of a restricted donation and to provide paperwork from the donor which confirms the purpose of the gift.
     
  2. Following notification from the department, the Department Projects team will confirm whether or not the gift is restricted and if it is, set up the donation on the projects module including the project tasks requested on the 'Departmental projects' form. The budget will be the amount received (not the total pledged) with any further instalments received added via a budget uplift. This will avoid any possibility of spending against donation income pledged but not actually received.
     
  3. Expenditure must follow the University's Purchase to Pay and Pay Expenses processes and it is the responsibility of the department to monitor expenditure against the funding available.
     
  4. Any project journals should be appropriately reviewed and authorised, and actioned on a timely basis in line with all accounting procedures. A full audit trail of posting should be maintained.
     
  5. Departments must ensure that all expenditure is reviewed and is in line with the wishes of the donor.

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 : Financial Reporting
      Finance Division
      University of Oxford
      23-38 Hythe Bridge Street
      Oxford OX1 2ET
 financial.reporting@admin.ox.ac.uk

 
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