Exchange transaction in which the reporting organization acts as an agent, trustee, or intermediary for a donor or donee. Assets received as an agent are not revenues of the agent, nor are disbursements made as an agent expense of the agent.
Deferred giving agreement. Agreement whereby money or other property is made available to an institution on condition that the institution bind itself to pay periodically to the donor and/or donor-designated individuals(s) stipulated amounts, which payments are to terminate at a time specified in the agreement. Upon termination, the principal of annuity funds is transferred to the fund group designated by the grant or, in the absence of such a designation, to unrestricted current funds revenue and accorded the same treatment as unrestricted expired term endowments.
Trust created by a donor irrevocably transferring money or securities for the benefit of a charitable organization in exchange for a fixed dollar amount to be paid at least annually to a designated beneficiary or beneficiaries for their lifetimes or for a fixed term not to exceed 20 years. At the death of the donor or the last surviving beneficiary, the trust terminates and assets of the annuity trust are transferred to the charitable organization for which the trust was created.
Charitable Gift Annuity (See also Split Interest Agreement.)
An arrangement / contract between a donor and a nonprofit organization in which the donor contributes assets to the organization in exchange for a promise by the organization to pay a fixed amount for a specified period of time to the donor or to individuals or organizations designated by the donor. No trust is established under a charitable gift annuity arrangement. The assets received become the assets of the institution when they are received, as opposed to being placed in a trust.
Charitable Lead Trust (See also Split Interest Agreement)
An arrangement in which a donor establishes and funds a trust with specific distributions to be made to a designated nonprofit organization over a specified period. The nonprofit organization receives distributions from the trust until termination of the agreement at which time the remaining assets in the trust are paid out to the donor or other beneficiaries named by the donor. The present value of the estimated future distributions equals the gift. (Note: nonprofit does not receive the corpus.)
Charitable Remainder Trust (See also Split Interest Agreement)
An arrangement in which a donor establishes and funds a trust with specified distributions to be made to a designated beneficiary or beneficiaries over the trust's term. The nonprofit beneficiary receives its interest in the donated assets after the donor or another beneficiary has received benefits for a specified time period. Upon termination of the trust, a nonprofit organization receives the assets remaining in the trust. The value of the assets contributed less the present value of the payments to be made to beneficiaries' equals the gift.
Straight Unitrust a donor irrevocably transfers money, securities, or property to a separate trust having a charitable remainderman, with payments to be distributed to named beneficiaries at least annually in an amount equal to a fixed percentage of the net fair market value of trust assets determined annually. On the death of the last beneficiary, the trust terminates and assets are distributed to the charitable remainderman. A stated percentage of the market value of trust assets must be distributed annually regardless of whether this amount is earned by the trust in the form of interest and dividends. The payments retain their character in the hands of the beneficiaries and are taxed to them accordingly.
Net Income Unitrust is similar to a straight unitrust except that payments to beneficiaries are limited to the actual income earned by the trust up to, but not exceeding, the fixed percentage stated in the trust agreement. Once the initial investment is made, investment activity in such trusts must be executed with care in order that income payments are not reduced.
Net-Plus-Makeup Unitrust, payments are limited to ordinary earned income as in the case of the net income unitrust except that payments may exceed the stated percentage up to but not exceeding the amount required to make up any accumulated deficiencies from prior years. Usually will be chosen by younger donors seeking capital appreciation until retirement and maximum income thereafter.
Volunteer services. Should be recognized as a contribution if it meets one of the following criteria: (1) they create or enhance non-financial assets, or (2) they require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation.
Unconditional transfer of cash or other assets to an entity or a settlement or cancellation of its liabilities in a voluntary non-reciprocal transfer by another entity acting other than as an owner. Other assets include securities, land, buildings, use of facilities or utilities, materials and supplies, intangible assets, services, and unconditional promises to give those items in the future.
Action to gain relief from the impractical restrictions or to depart from the original terms to the extent necessary to make the fund useful while adhering, as nearly as possible, to the donor's original intent.
Deferred Living Agreement (See also Annuity and Life Income Funds)
Principal of funds generally cannot be expended for the benefit of the institution until the death of the donor and/or donor-designated beneficiaries and income is not available to the institution for its use. Annuity payments begin at a specified time in the future. The length of the deferral period as well as the effect of compounding determines the size of the annuity: the longer the deferral period, the greater the annuity when it does begin.
Specifies a future and uncertain event on which a contribution depends. The condition is effectively a barrier that must be overcome before a promised gift is considered a contribution.
A gift accepted with donor stipulations that (1) the principal be maintained intact in perpetuity, for a specified period, or until the occurrence of a specified event, and (2) the income earned by investing the principal can be expended.
The proceeds in a current sale between a willing buyer and a willing seller, that is, in a sale other than a forced or liquidation sale. Measured by their market value if an active market for them exists. If no active market exists for the assets transferred but a market exists for similar assets, the selling prices in that market may be helpful in estimating the fair value of the assets transferred.
Foundation (Cornell University Foundation)
The Cornell University Foundation is a "donor-advised fund." This foundation is convenient for individuals who make substantial gifts to charity and have a number of charitable interests, including Cornell.
Funds Held in Trust by Others
Represent resources neither in the possession nor under the control of the university, but paid and administered by outside trustees, with the University deriving income or residual interest from the assets of the funds. Funds held in trust by others are recognized at the estimated fair value of the assets or the present value of the future cash flows when the irrevocable trust is established or the university is notified of its existence.
Funds Held in Trust for Others
Funds that Cornell invests as custodian for others but which they do not have the rights to. Independent trustees are responsible for the funds and for the designation of income distribution.
The principal purpose of the relationship is to transfer a thing of value to the recipient to carry out a public purpose of support or stimulation authorized by a law of the United States instead of acquiring property or services for the direct benefit or use of the United States Government.
Represents income entitlement in the pool. Changes in income shares for an account in the LTIP are based on the change in permanent shares multiplied by the income allocation rate (below). Changes in income shares for an account in the STIP are based on the change in dollars multiplied by the income allocation rate (below). Income allocation rates are as follows: July 92%, Aug 83%, Sep 75%, Oct 67%, Nov 58%, Dec 50%, Jan 42%, Feb 33%, Mar 25%, Apr 17%, May 8%, Jun 0%.
Life Income Agreement
An agreement whereby money or other property is made available to an institution on condition that the institution bind itself to pay periodically to the donor and/or donor-designated individual(s) the income earned by assets donated to the institution for the lifetime of such beneficiaries. If there is no money left, Cornell is not required to continue payments.
Life Income Funds (See also Pooled Life Income Funds)
Deferred giving agreement. Contracts that provides that an income be paid to the donor, the donor's designee, or a combination thereof for the lifetime of the recipients(s) or for a fixed period of time. The income payments are based on earnings of the donated assets. At termination of the contracts, the funds become available for general institutional purposes or for any restricted purpose designated by the donor in the contract.
Living Trust Funds (See also Life Income funds and Annuity Funds)
The donated funds income is payable to one or more beneficiaries during their lifetime. On the termination of life interests, the principal becomes available for university purposes. The university's living trust agreements with donors consist primarily of charitable gift annuities, charitable remainder trust, and pooled income funds for which the university serves as trustee.
Long-Term Investment Pool (LTIP)
Similar to a mutual fund. The portfolio includes both domestic and global investments; all securities are handled by outside managers. Includes true endowment, funds functioning as endowments, and other expendable funds that are not expected to be spent for at least three years. The objective of the pool is to produce a reasonable return coupled with capital appreciation.
Master Trust Plan
The purpose of the master trust is to provide uniform reporting and enables the University to spread the investment performance and risk of multiple investment managers evenly to all plans.
Donated assets be maintained permanently or invested in perpetuity. A permanent restriction can never be removed by actions of the organization, although the restriction can be removed by court order.
A trust administered by an individual or organization other than the not-for-profit beneficiary (held by a third party). Under the terms of the trust, the not-for-profit organization has the irrevocable right to receive the income earned on the trust assets in perpetuity, but never receives the assets held in trust. The donor may restrict distributions received by the organization.
Pooled Life Income Funds (See also Split Interest Agreement)
A trust to which donors make irrevocable gifts of money or securities that are commingled with property of other donors who have made similar transfers. Each donor retains a life income interest, as do one or more named beneficiaries living at the time the gift is made. Each beneficiary is entitled to a pro rata share of the pooled fund's earnings each year for his or her lifetime. At the death of the last beneficiary of any one donor, the charitable organization severs the donor's share of the pooled fund and uses it for its charitable purposes. The value of the assets contributed, discounted for the estimated time period until the donor's death equals the gift.
Separately Invested Funds
Funds where the assets are of a type that require special handling, or if a donor requires that their funds be separately invested. Examples include unitrusts, closely held stock, certain bonds, real estate, jewelry and coins.
Short-Term Investment Pool (STIP)
Includes cash balances and other funds invested for the production of income where the funds are expected to be on deposit for less than three years. The objective of the pool is to produce a high level of income while protecting principal value. The pool is invested in marketable, prime quality debt securities, at least 50% of which mature in three years.
Split Interest Agreements
Created when a donor contributes assets directly to a nonprofit organization or places them in a trust for the benefit of the nonprofit organization, but which the organization is not the sole beneficiary.
Transfers of assets from one entity to another entity for the support of an event. Contractual agreement with a corporate, federal, or state agency where deliverables are involved rather than a gift.
Donated assets may be used only after a specified date or only for a specific purpose, or both. The restriction is satisfied either by the passage of time or by actions of the organization.
Gifts for which donors have stipulated, as a condition of the gift, that the principal must never be spent. Only the income generated from the investment of these funds may be used as directed by the terms of the gift.
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