To accommodate the goals of donors who wish to make contributions to the University to support the work of specific individuals, while identifying and complying with relevant legal issues associated with private benefit rules.
May, 2023Responsible Office
A charitable gift may be defined as a gift that occurs when a donor makes a voluntary transfer of funds or other assets to a non-profit organization motivated by philanthropic intent. Any charitable gifts that instead arise from a donor’s desire to support the efforts of a particular individual (e.g., a physician whose research a grateful patient wants to fund) must be reviewed carefully. The University may only accept contributions: a) which support specific purposes within the University, b) where the donor’s intent is to benefit the University rather than an individual recipient, and c) where the University has full control over the funds.
As a public charity, the University must use gifts received only to advance its charitable mission and may not provide more than “incidental” private benefits to individuals. Gifts made in violation of this rule are not deductible for income tax purposes, can subject the University to penalties, and jeopardize the University’s tax-exempt status under applicable IRS rules.
As a non-profit charitable organization, the University must operate in such a manner as to serve public rather than private interests. All gifts to the University must be made for charitable purposes, for purposes that are consistent with the University’s mission, and without benefitting private individuals, except incidentally. Gifts, commitments or understandings for the specific benefit of a designated person (for example, a faculty member, researcher, physician or student) create a private benefit, which is strictly prohibited. Notwithstanding this strict prohibition, and with careful structuring, it is possible to make a gift to support specific work at the University currently being carried out by a certain individual, subject to certain written terms, restrictions and conditions as set forth in a gift agreement between the University and a donor, subject to the guidelines below.
The following guidelines, created to comply with current law, must be followed for proposed gifts which may be motivated in any way by the donor’s relationship with a particular individual (e.g., a faculty member at the University) because of potential private benefit issues. Gifts are generally acceptable if:
made to a particular school, department or program,
made for a defined purpose,
expenditure authority is defined by position or title rather than by individual name, and is held by reference to a position a level above the individual (e.g., the director of a unit or a dean),
there is no provision for the return or transfer of unused funds for any reason, including if a particular individual leaves the University (rather the funds remain with the University to be used for the same or similar purposes),
for a professorship gift, the professorship is not named for a current faculty member, and
for a professorship gift proposed to be funded by a current employee, family member, disqualified person or other related party, the funds are not used to pay items such as the professor’s salary, travel, conference expenses, or office furniture, unless review by the Office of General Counsel has determined that no self-dealing or private benefit issue exists based on the specific facts of the proposal.