2.8.1.3: Types of Gifts

1. Cash: Unrestricted gifts of cash are acceptable in any form. Checks shall be made payable to Spalding University. Cash, checks, or credit card transactions shall be processed through the Office of Development and should be delivered to the Vice President for Development or other Development Office personnel.

2. Tangible Personal Property: All gifts of tangible personal property shall be examined in light of the following criteria:

h. Does the property fulfill the mission of Spalding?

i. Is the property marketable?

j. Are there any undue restrictions on the use, display, or sale the property?

k. Are there any carrying costs for the property?

The University President shall make the final determination on the acceptance of tangible personal property gifts.

3. Securities: Spalding can accept both publicly traded securities and closely held securities.

h. Publicly Traded Securities: Marketable securities may be transferred to an account maintained at one or more brokerage firms or delivered physically with the transferor’s signature or stock power attached. As a general rule, all marketable securities shall be sold upon receipt unless otherwise directed by the University President. In some cases marketable securities may be restricted by applicable securities laws; in such instances the final determination on the acceptance of the restricted securities shall be made by the University President.

i. Closely Held Securities. Closely held securities, which include not only debt and equity positions in non-publicly traded companies but also interests in limited partnerships and limited liability companies, or other ownership forms, can be accepted subject to the approval of the University President. However, gifts must be reviewed prior to acceptance to determine:

i) That there are no restrictions on the security that would prevent Spalding from ultimately converting it to cash;

ii) That the security is marketable; and

iii) That the security will not generate any undesirable tax consequence for Spalding.

If potential problems arise on initial review of the security, further review and recommendation by legal counsel may be sought before making a final decision on acceptance of the gift.

4. Real Estate: Gifts of real estate may include developed property, undeveloped property, or gifts subject to a prior life interest. Prior to acceptance of real estate, Spalding shall require an initial environmental review of the property to ensure that the property has no environmental damage. In the event that the initial inspection reveals a potential problem, Spalding shall retain a qualified inspection firm to conduct an environmental audit. The cost of the environmental audit shall generally be an expense of the donor.

When appropriate, a title insurance binder shall be obtained by Spalding prior to the acceptance of the real property gift. The cost of this title binder shall generally be an expense of the donor.

Prior to acceptance of the real property, the gift shall be approved by the University President, with the advice of legal counsel. Criteria for acceptance of the property shall include:

h. Is this property useful, for the purposes of Spalding?

i. Is the property marketable?

j. Are there any restrictions, reservations, easements, or other limitations associated with the property?

k. Are there any carrying costs, which may include insurance, property taxes, mortgages, or notes, associated with the property?

l. Does the environmental audit reflect that the property does not pass a liability to the University?

5. Remainder Interests in Property: Spalding will accept a remainder interest in a personal residence, farm or vacation property subject to the provisions of paragraph 4 above. The donor or other occupants may continue to occupy the real property for the duration of the stated life. At me death of the donor, Spalding may use the property or reduce it to cash.

6. Oil, Gas and Mineral Interests: Spalding may accept oil and gas property interests, when appropriate. Prior to acceptance of an oil and gas interest, the gift shall be approved by the University President, with the advice of legal counsel. Criteria for acceptance of the property shall include:

h. Gifts of surface rights should have a value of $25,000 or greater.

i. Gifts of oil, gas and mineral interests should generate at least $5,000 per year in royalties or other income (as determined by the average of the three years prior to the gift and evidence that no known factors prevent future income from being similar).

j. The property should not have extended the liabilities or other consideration that would make receipt of the gift inappropriate.

k. A working interest may only be accepted when there is a plan to minimize potential liability and tax consequences.

l. The property should undergo an environmental review to ensure the absence of current or potential exposure to environmental liability.

7. Bargain Sales. Spalding will enter into a bargain sale arrangement in instances in which the bargain sale furthers the mission and purpose of Spalding. All bargain sales must be reviewed and recommended by the University President, with the advice of legal counsel. Factors used in determining the appropriateness of the transaction include:

h. In the event Spalding determines that it must obtain an independent appraisal substantiating the value of the property, the cost of the appraisal will be borne by the donor.

i. Spalding will not assume any debt attached to a property which it acquires as a result of a Bargain Sale.

j. Spalding must determine that it will use the property, of that there is a market for sale of the property before acceptance of the Deed.

k. Spalding is responsible for the costs to safeguard, insure, and manage the property (including property tax, if applicable) during the holding period, or until the property is sold.

8. Life Insurance: Spalding must be named as both beneficiary and irrevocable owner of an insurance policy before a life insurance policy can be recorded as a gift. The gift is valued at its interpolated terminal reserve value, or cash surrender value, upon receipt. If the donor contributes future premium payments, Spalding will treat the entire amount of the additional premium payment as a gift in the year that it is made.

If the donor does not elect to continue to make gifts to cover premium payments on the life insurance policy, Spalding may:

h. Continue to pay the premiums;

i. Convert the policy to paid up insurance; or

j. Surrender the policy for its current cash value.

9. Charitable Gift Annuities:

h. Spalding may offer charitable gift annuities which begin payments within one year of the gift date, as well as deferred payment gift annuities, whose initial payment is at least a year after the gift date. The deferral period will be at the discretion of the donor. The minimum gift for funding is generally $10,000, but the University President may make exceptions to this minimum. The minimum age for life income beneficiaries of a gift annuity is 65. Where a deferred gift annuity is offered, the minimum age for life income beneficiaries is 55. Spalding may accept annuity gifts for one life, two lives in succession, or joint and survivor annuity agreements. Gift annuity agreements will be limited to one life or two lives in being at the time of the gift. No more than two life income beneficiaries will be permitted for any gift annuity.

i. Annuity payments may be made on a quarterly, semi-annual, or annual schedule. Annuity payment amounts will be rounded upward to ensure that each payment will be exactly the same amount. Annuity payments will be mailed in time to arrive on the payment due date.

j. Gift annuity assets will be limited to cash and securities for which a ready market exists. Closely held stock will not be accepted. Effective with the date of this policy, Spalding will note accept real estate and/or tangible personal property or any other illiquid asset in exchange for charitable gift annuities.

k. The maximum annuity rates offered will be the current schedule adopted by the American Council on Gift Annuities. Spalding may establish a maximum annuity rate chart that is lower, but never higher than the Uniform Gift Annuity Rates of the American Council on Gift Annuities. To conform to the federally mandated “Clay-Brown Rule,” the annuity rate offered will generate a charitable deduction of more than 10 percent of the fair market value of the assets given, or the annuity rate will be reduced to qualify for the deduction. This policy recognizes that the monthly changing Applicable Federal Rate (AFR) affects the calculate deduction.

l. To conform to various state laws, Spalding will always offer the maximum annuity rate to each potential donor/annuitant, based on the actuarial age of the annuitants, but Spalding may suggest that if the potential donor/annuitant is willing to accept a lower rate, a larger charitable deduction would be obtained for the same size gift.

m. To conform to various state laws, Spalding will operate the gift annuity fund so that identifiably separate investments may be maintained not part of any other investment or endowment fund of the institution. The full annuity gift will be admitted to the gift annuity fund and will be maintained until the demise of the last annuitant in the agreement. Once those payments have terminated, the funds representing the remaining principal contributed in exchange for the gift annuity shall be transferred to Spalding’s general endowment funds, or to such specific fund as designated by the donor.

n. A policy or methodology will be established to identify the changing market value or each agreement, so that an appropriate amount may be withdrawn from the gift annuity fund at the termination of the agreement.

o. To conform to various state insurance laws, Spalding may elect to reinsure any annuity agreement above the minimum $100,000 Required Legal Reserve amount with an “A” rated commercial insurance company, registered to do business in Spalding’s state of domicile. Spalding recognizes that certain state laws permit reinsurance only through a “treat” (negotiated) agreement with a registered insurance company, and that if the insurance company fails, Spalding will be liable for the payments.

p. The gift annuity will be effective on the postmark date on the envelope that brings it to Spalding or the date it is given to Spalding’s representative.

q. Spalding will make an effort to be aware of the investment and reporting requirements of Spalding’s state of domicile as well as those states that have statutes regulating gift annuity funds, and be guided by input from legal counsel and staff as to the necessity for filing for a permit to write annuity agreements in those States.

r. Spalding will maintain separate record keeping for its gift annuity fund; so that appropriate fund records can be maintained to permit appropriate reporting of gift annuity fund activity to those states that require it by statue, should Spalding late obtain a permit in any state that requires it.

s. Spalding will maintain investment and administrative records of its gift annuity fund and program to ensure that questions can be answered appropriately.

10. Charitable Remainder Trusts: Spalding may accept designation as remainder beneficiary of a charitable remainder trust, with a minimum gift of $50,000 generally required to establish the trust. Spalding will not act as trustee of a charitable remainder trust. Spalding, its administrative officers, employees, and board members shall not accept appointment as trustee of a charitable remainder trust of which the University is a beneficiary.

11. Charitable Lead Trusts: Spalding may accept designation as income beneficiary of a charitable lead trust with a minimum gift of $250,000 generally required to establish the trust. Spalding will not accept appointment as trustee of a charitable lead trust.

12. Retirement Plan Beneficiary Designations: Donors and supporters will be encouraged to name Spalding as beneficiary of their retirement plans such designations will not be recorded as gifts until the gift is irrevocable. When the gift is irrevocable, but is not due until a future date, the present value of that gift may be recorded at the time the gift becomes irrevocable.

13. Bequests under Wills: Donors and supporters of Spalding will be encouraged to make bequests under their wills and trusts. Such bequests will not be recorded as gifts until the gift is irrevocable. When the gift is irrevocable, but is not due until a future date, the present value of that gift may be recorded when the gift becomes irrevocable.

14. Life Insurance Beneficiary Designations: Donors and supporters of Spalding will be encouraged to name Spalding as beneficiary or contingent beneficiary of their life insurance policies. Such designations shall not be recorded as gifts until the gift is irrevocable. When the gift is irrevocable, but is not due until a future date, the present value of that gift may be recorded when the gift becomes irrevocable.