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NC State University Foundations Accounting &Investments. Introduction to FAI. Agenda. Who is Foundations Accounting & Investments (FAI)? How is a foundation different from “the University”? Types of revenue received in the foundation Miscellaneous Issues. Relationships. NC State University.

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  • Who is Foundations Accounting & Investments (FAI)?
  • How is a foundation different from “the University”?
  • Types of revenue received in the foundation
  • Miscellaneous Issues


NC State University

Treasurer’s Office

Foundations Accounting & Investments

Associated Entities

(each have separate governing board and their own development office)

University Advancement

Advancement Services

NC State Fdn


Alumni Assoc

Tobacco Fdn

Vet Med Fdn

Ag Fdn

Nat. Res. Fdn

Engineering Fdn


who are we
Who Are We?

Foundations Accounting and Investments (FAI)

Finance and Business – Treasurer’s Division

FAI provides accounting, investment and financial reporting services to seven (7) University-related foundations, the NC State Alumni Association, Inc., the Endowment Fund of North Carolina State University and the NC State Investment Fund, Inc. Additionally, FAI also provides similar services to 3 LLC’s, including the Lonnie Poole Golf Course.


what entities do we manage
What entities do we manage?
  • The North Carolina Agricultural Foundation, Inc.
  • NC State Alumni Association, Inc.
  • NC State Engineering Foundation, Inc.
  • North Carolina State University Foundation, Inc.
  • North Carolina State University Physical & Mathematical Sciences Foundation, Inc.
  • NC State Natural Resources Foundation, Inc.
  • North Carolina Tobacco Foundation, Inc.
  • North Carolina Veterinary Medical Foundation, Inc.
  • The Endowment Fund of NC State University
  • NC State Investment Fund, Inc.
  • NC State Executive Education, LLC
  • NC State Centennial Development, LLC
  • NC State Residence, LLC
what services does fai provide
What services does FAI provide*?
  • Set up new funds
  • Deposit gifts and other income receipts
  • Record all deposits, EFT’s, wires, etc.
  • Manage cash and investments
  • Assist Foundation Office customers
  • Other routine accounting services (e.g., bank reconciliations, manual checks)

* For the entities FAI serves, including all foundations (except the Textile Foundation), the University Endowment Fund, NC State Investment Fund, and various LLC’s

additional services
Additional services
  • Operating budgets for foundations
  • Periodic review of funds
  • Unitization of endowments
  • Endowment spending budgets
  • Special analyses and reports
  • Annual audit process and financial statements
  • Preparation of IRS forms – 990, 1099’s
  • Board materials and presentations
  • Q&A sessions and other training opportunities
what is a foundation
What is a foundation?
  • Separately incorporated legal entities, IRS 501(c)3 classification, with governing boards, ‘associated’ with the University, but NOT part of the University
  • University Treasurer and VC-Finance & Business serve as Treasurer, Assistant Treasurer
  • Fundraising support to NC State University primarily through private and corporate gifts, including scholarships, fellowships, professorships, and other activities (e.g. research)
where are foundation funds recorded
Where are foundation funds recorded?
  • University Financials system
  • Projects* begin with ‘6’
    • Foundation funds are often called “Ledger 6”
  • Individual funds monitored via Wolfpack Reporting System (WRS) Report #1
    • Fiscal Year-to-Date Financial Status
  • Expenses paid through University systems (A/P, payroll, student financial aid, etc.)

* Projects are also interchangeably referred to as “funds”

types of foundation funds
  • Restricted Funds
    • Regular
    • Endowment income
    • Building to endowment (BTE)
  • Endowments


restricted funds regular
Restricted Funds - Regular
  • Restriction is based on donor-specified purpose for which it can be spent
  • No restriction on when it is spent (unless specified by the donor); can all be spent at once, or over period of years
  • Balances automatically carryover from year-to-year
restricted funds building to endowment bte
Restricted Funds – Building to Endowment (BTE)
  • Funds are building to a minimum endowment level
  • Considered a restricted fund during the “building period”
  • Once minimum is reached, will become an endowment fund
  • May not spend from a restricted BTE fund unless the donor gives money to be used for spending while the fund is building
restricted funds endowment income
Restricted Funds – Endowment Income
    • Also referred to as ‘Spending Accounts’ or ‘Income Accounts’
  • Restricted by purpose specified by donor in an endowment agreement
  • Budget is determined by the foundation’s spending policy, subject to any additional donor stipulations
  • Balances automatically carryover from year-to-year, with option to return unspent funds to principal
  • A gift that is intended to last in perpetuity. Unless allowed by the donor, the corpus (historical gift amount) can never be spent
  • Value grows over time through investment returns
  • A portion of earnings is allocated for spending to support the endowment purpose as specified by the donor (e.g., scholarship, fellowship, professorship)
  • Endowments provide a steady income stream for support of NC State University.]
  • Most colleges/units have endowments in a Foundation as well asthe University Endowment Fund
what is a gift
What is a Gift?
  • A gift is a voluntary and non-reciprocal donation provided by a non-governmental donor for which no goods or services are expected or provided.
  • A gift is a charitable contribution, and has IRS implications (must provide gift receipt).
  • Gifts are captured in the donor database system – referred to as ADVANCE.
  • Gifts may be restricted to a specific purpose or may be unrestricted in nature.
gift flow chart
Gift Flow Chart

University Gifts

Foundation Gifts

Complete BA-151 and submit to tAdv. Services for prcoessing in ADVANCE. Check deposited directly with Cashiers Office

Fdn Business Office will complete a Gift Transmittal Form and submit to Adv. Serv.

gift issues
Gift Issues
  • In addition to distinguishing a gift from other income, you must also determine whether the gift belongs to the foundation or to the University
  • Must look at how the gift was solicited
  • Non-specific ‘grants’ (i.e. there are NO deliverables) are treated as gifts. Many result from a proposal submitted to the funding entity – in order for the gift to be deposited into a foundation project, the proposal MUST be in the name of the foundation, NOT the University, College, or department

Refer to Gifts, Grants, Contracts 3D memo recently published

gift issues cont d
Gift Issues, cont’d
  • Gifts in odd dollar amounts must provide backup documentation supporting the fact that it is a gift.
  • Gifts must be processed through ADVANCE, via a Gift Transmittal Form (for foundation gifts) or a BA-151 (for University trust funds).
  • Non-endowment gifts are subject to a 5% assessment fee (to be used for fundraising activities only).
how should gift checks be completed
How should gift checks be completed?
  • Checks MUST be payable to the foundation to be deposited in the foundation.
    • For example, to be deposited in the NC State Engineering Foundation, payee should read “NC State Engineering Foundation” rather than “NCSU”
  • Checks payable to NC State University* and submitted for deposit in a foundation require sufficient written back-up from the donor to support intent the funds were for the foundation.
    • Checks without sufficient donor documentation will be deposited to clearing until documentation is provided

*Or a college, academic or administrative department of the University (e.g., CALS, CHASS Dean’s Office, Biomechanical Engineering Department)

what is other i ncome
What is Other Income?
  • Distinguishable from a gift because the person/entity receives something of value in return
  • Examples of Other income include money received from fundraising events (e.g., football game tailgate event) or the sale of merchandise, for which there is no charitable deduction
  • FAI deposits and records other income received by the foundations
  • Other income receipts go to FAI directly, and do not need to be sent to Adv. Services, unless there is also a gift component. The other income receipts should be sent along with a completed “Other Income Transmittal” form

other income issues
Other Income Issues
  • Activity generating other income MUST be in the name of the foundation – if the marketing materials only indicate the University, the College, or a department they MUST be deposited in a University fund. If in the name of the foundation, must make sure adequate insurance coverage – University insurance will not cover foundation events.
  • Must provide support/documentation that the other income receipt belongs in a foundation project – this would include marketing materials, such as a flyer, brochure, weblink, etc.
  • Associated expenses must be paid from the same fund where the receipts are deposited.
other income issues cont d
Other Income Issues, cont’d
  • An activity could have both a gift and an other income component. For example, a $100 fundraising dinner, with a meal valued at $30 would have both components - $70 gift and $30 other income.
  • A Gift Transmittal form must be completed for the gift portion.
  • A Other Income Transmittal Form must be completed for the other income portion.
  • The check(s) should be sent to Adv. Services if there is a gift component, or if no gift component then it can be submitted directly to FAI.
other misc comments
Other Misc. Comments
  • The primary point of contact for Foundation funds is generally someone in your college business or development office
  • New Fund Requests: must include documentation supporting the fund request
  • Funds cannot be transferred from a university project to a foundation project (transfers can occur in the other direction, because the Foundation exists to support the College)