Foundation Terminology

1023 Form

This form is our application for 501(c)(3) tax exemption.

1042S

An IRS form used to report certain income of foreign persons, including nonresident aliens, foreign partnerships, foreign corporations, foreign estates, and foreign trusts.

1099 MISC

An IRS form used to report various types of income other than wages, salaries and tips to non-corporate payees.  An example would be amounts paid to independent contractors for services performed.  We are required to report these transactions when the total amount for the calendar year is $600 or more. These forms are mailed by January 31st each year based on the prior calendar year’s payments.

1099 R

An IRS form used to report annuity payments.

501(C)(3)

 

Section of the Internal Revenue Code that designates an organization as charitable and tax-exempt.

 

990 Form

This is the annual IRS filing form for non-profit corporations. If you need a copy of this form for grant proposals please contact us.

Account (or Project)

All financial transactions through the USM Foundation - gifts and other revenues, disbursements, and investment earnings and fees - are tracked through accounts (also known as projects in our accounting software). An account must be established before activities can be recorded. Unrestricted donations can be comingled in one account. If a donor places a restriction on the use of a contribution, a separate account must be established.

Account Administrator

Those individuals who are assigned to oversee accounts. Their responsibilities are a key element of our donor stewardship as it relates to reassuring our donors that their gifts are being used as they intended. Specific responsibilities are ensuring that gifts are posted to accounts timely and accurately, disbursement requests from an account match the purpose defined in the account agreement or MOU, and available spendable income is used in full to support the students, faculty, or programs defined in the account agreement or MOU.

Account Agreement Form

This form is used to establish a new account at the USM Foundation. It identifies the name of the account, the campus, school, and department that the account benefits, the purpose of the account, the type of account, and the administrator and authorized signers for the account.

Account Agreement Update Form

This form is used to make administrator or authorized signer changes for an existing account/project.

Account Code

Account codes are similar to sub-codes or object codes used to classify expenses, revenues and other activities.  The expense code list with descriptions of the various expenses can be found in our Policies and Procedures Guide under Expense Code Definitions  (Note the ones specific to grants).  The revenue code list can be found under Revenue Codes (Note the ones specific to gifts).

Accountable Plan

IRS terminology for an expense reimbursement plan that must meet certain requirements to ensure that reimbursements will not be treated as taxable income to the payee. To be non-taxable, expenses must have a business connection, must be reported in a reasonable period of time, and any excess reimbursements must be returned within a reasonable period of time.

ACH

This stands for Automated Clearing House.  This is a form of a bank transfer.  An ACH transfer usually takes 2 days to be processed by the bank.  The foundation can receive ACH transfers for items such as grants, stock, gifts, membership fees and sponsorship for events.  ACH transfers can also be used to make payments to vendors or other payees. Please contact the USM Foundation Business Office via our Support e-mail every time you have an incoming or outgoing ACH transfer for correct transfer instructions.

Acknowledgement

Correspondence sent to a donor expressing gratitude for the gift.

Advance

This is the software used by the USM Foundation to process gifts, pledges, bequests and so forth and to keep track of all donors. Account giving history as well as market values and spendable income amounts are also available in the Advance database.

Advocacy

Support for an idea or cause. The USM Foundation Board of Directors has an Advocacy committee whose purpose is to engage key board members in outreach to the Maryland community to support public understanding of the value and impact of higher education in Maryland.

Annual Report

A report that highlights and summarizes the investment performance, financial results, and strategic accomplishments of the Foundation for the fiscal year. Often times grant proposals require a copy of the annual report be submitted with the proposal package. A PDF version of the report is available for download from the "About the Foundation" page of the website.

Annuitant

An individual who receives annuity payments under a gift annuity arrangement.

Annuity

The series of payments that an annuitant receives under a gift annuity arrangement.

Audited Financial Statements

The presentation of financial results in accordance with Generally Accepted Accounting Principles (GAAP) which have been verified by an independent accounting firm in order for the firm to provide reasonable assurance to users of the statements that they present a true and fair representation of the results of an organization. The audited financial statements are often needed for grant proposal submissions and a PDF version of the statements are available under Corporate Documents on the "About the Foundation" page of the website.

Authorized Signers

Individuals given the authority to approve disbursement requests for a particular account, request transfers, or authorize other limited changes to an account. Since authorized signers have spending authority over their assigned accounts they are not allowed to make contributions to those accounts.

Batch

Is a word to describe work grouped together.  The Foundation has batches from Advance to Financial Edge (FE) which group gifts together.  Other transaction batches in our Financial System include but are not limited to non-gifts receipts, journal entries (JE), transfers, accounts payable (i.e., disbursement requests), payroll entries, invetsment earnings and fees, and various other financial transactions.

Bequest

A gift of property by will. Because a will can be changed a bequest is not considered an unconditional promise to give and therefore notification of a bequest is not considered a gift. It is not until a will is probated that a gift can be recorded for the bequest.

Board of Directors

A body of appointed members who jointly oversee the activities of theFoundation. The board’s activities are determined by the powers, duties, and responsibilities conferred on it through the Foundation’s bylaws.

Board of Regents (BOR)

The Board of Directors for the University System of Maryland. Certain BOR policies and procedures may impact the operations of the USM Foundation.

Bylaws

Rules governing the operation of the Foundation including matters of governance such as election of directors, creation of committees, and conduct of meetings.

Capital Campaign

An organized program to solicit and accumulate substantial monies to finance major initiatives.

Carryover

Used in referring to Spendable Income. Any unspent spendable income from the prior two fiscal years is the carryover spendable income for the current year.

CASE – Council for the Advancement and Support of Education

A professional organization serving educational institutions and the advancement professionals who work on their behalf. CASE provides standards and an ethical framework for the profession, many of which have been adopted into the policies and procedures of the USM Foundation.

Cash Deposits

The foundation does not accept cash.  If you have a situation where cash is involved, please convert to money order or personal check and use that for the deposit.

Charitable Gift Annuity (CGA)

A gift vehicle that falls under the category of Planned Giving. It involves a contract between a donor and a charity whereby the donor transfers cash or property to the charity in exchange for a partial tax deduction and a lifetime stream of annual income from the charity. When the donor dies, the charity keeps the remaining funds.

Combined Federal Campaign (CFC)

Similar to the Maryland Charity Campaign. This is a fundraising campaign that allows federal employees to designate donations to any USM Foundation account via payroll deductions. Monies are deducted from each paycheck. All deductions for all employees are accumulated and sent to a CFC administration office for processing, reporting, and disbursement back to the designated donee organizations.

CRAT – Charitable Remainder Annuity Trust

A CRAT is a gift vehicle that entails a donor placing a major gift of cash or property into a trust.  The trust then pays a fixed amount of income each year to the donor or the donor’s specified beneficiary.  When the donor passes away, the remainder of the trust is transferred to the charity.

CRUT – Charitable Remainder Uni Trust

A unitrust or CRUT, is a gift vehicle similar to a CRAT except instead of the annual annuity payment being a fixed amount it requires that a fixed percentage (minimum 5%) of the annual market value of trust assets be paid to the income beneficiary. 

Current Use Account

Also known as an Operating Account. This is an account whose funds can be used in totality at anytime.

Custodial fees

Administrative fee charged by the Foundation’s investment bank.  This fee is allocated to endowment accounts.  The bank may not provide an invoice every month - therefore you may not see this fee monthly.

CY- Current year

We use CY to refer to our current fiscal year which runs from July 1 – June 30.

Dashboard

An electronic tool for our clients to view current and active account information directly from our financial software via a remote access connection to a Foundation server.

De Minimis rule

An IRS rule related to fringe benefits that essentially says that considering the value and frequency with which an item is provided, it may be so small as to make accounting for it as income to the recipient unreasonable and impractical. The rule further states that a cash or cash equivalent payment (giftcards) can never be considered a de minimis benefit and must be reported as income to the recipient.   

Determination Letter

Issued by the IRS, the Determination Letter verifies our status as a 501(c)(3) organization under the Internal Revenue Code. Grant submissions often require a copy of the Determination Letter with a  proposal package. A PDF version of our IRS Determination Letter is available for download from the Corporate Documents area on the "About the Foundation" page of the website.

Disbursement Request Form (DRF)

Form used to request checks from the Foundation to make payments to vendors or other payees or to reimburse campus accounts. 

Discretionary Fund

An account from which money can be expended, without restrictions, at the discretion of a designated person or group of people such as a University President or College Dean.

Donee

An organization that receives a charitable gift.

Donor

Person or organization who donates or gives to a charity.

Endowment

Funds donated to an institution, to be held in perpetuity, and invested so as to generate a source of income to be used to fund expenditures outlined in the fund agreement (MOU).

Endowment Assessment fee

Each endowment is assessed an annual fee by the Foundation for the purpose of funding the USMF Business Services and Advancement activities.

Fair Market Value (related to Fundraising Events)

The estimated value of an event ticket that represents the non-gift portion of the event ticket. This is not necessarily the cost but the value that someone would put on what they are receiving as part of the event ticket price. For instance, if a fundraising event includes dinner and a speaker and the event ticket is $300, the fair market value of the non-gift portion might be $100 and would represent the value of the dinner and the speaker, and the gift portion would be $200. A Fair Market Value Worksheet should be submitted with event literature if a fundraising event will have both a gift and non-gift component in the ticket price.

Fees

In reviewing your monthly reports you may see various fees charged to your project.  Fees include but are not limited to: investment manager fee, custodial fee, endowment assessment fee, investment service fee, and institutional assessment fee.  Please see each fee definition for a description of each individual fee. There are also fees associated with credit card, stock, and charity campaign gifts.

Fellowship

A financial award, typically to a graduate student, that usually includes a stipend and payment of tuition and fees.

Fiduciary

A person who acts on behalf of another, usually in a financial matter. In an organization, a person such as a board member or key employee who stands in a relationship of trust, confidence, and responsibility to others. 

Fiduciary Responsibility

The obligation to handle financial matters of an organization, for the benefit of all its constituents, with care, trust, and prudence.

Financial Edge or (FE)

This is the name of our financial software.

First-in/First-out

How expenditures are applied against the spendable income carryover and current year spendable income. Expenses are always applied to the oldest portion of your spendable income first.

Fiscal Year or (FY)

Refers to the accounting cycle of July 1 – June 30. The year used to describe the fiscal year is the year of the fiscal year end date. For example FY14 or FY2014 refers to the year that ends June 30, 2014.

Fixed Asset

An equipment or other tangible asset purchase which has a useful life of more than one year and a value exceeding policy minimums which is recorded as an asset in the financial records instead of as an expense. The expense for the asset is then recorded as an annual depreciation or amortization expense over the defined life of the specific asset category. Some fixed assets such as land and art are considered non-depreciable and remain in the financial records at their original cost until sold or adjusted for fair value increases or decreases.

Fund

Another term for account or project.

Fundraising Event

A function whose main purpose is to raise money through event ticket sales and/or donations. Expenses for a fundraising event are netted against revenues for the event to get to the realized revenue from the event. There are various policies and procedures regarding fundraising event announcements and breakdown of ticket revenue between gift and non-gift.

Gift

Describes donations to the foundation for the benefit of our clients.  A gift is bestowed voluntarily and without receiving anything in return. Gifts can come in the form of check, money order, credit card, stock, or other tangible property.

Gift-in-kind

 

Non-cash contributions such as real estate, equipment, and art.

 

Governance

 

The act of running or managing an organization. The USM Foundation Board of Directors has a Governance Committee which provides oversight of the Foundation’s structure, and reviews policies and processes to insure compliance with the Foundation’s bylaws, mission, and best practices.

 

Grant

Money received to fund a particular project or program, usually as a result of a proposal submitted to the granting organization. There are various policies and procedures related to whether the Foundation can be awarded grant funds, and also various monitoring and reporting requirements related to grant awards and unique to individual grants that must be followed.

Historical Cost

Applies to endowments. Also known as Historical Gift Value (HGV). This is the total value of all gifts given to a particular account.  This value is used in conjunction with the market value to determine if an endowment is underwater.

I-9

An IRS form required for all Foundation employees as part of the new hire packet which verifies an employee’s eligibility to work in the United States.

 

Independent Contractor

An individual performing services for the benefit of a campus unit or program who is not by common law or IRS regulation considered an employee. There is a long list of considerations outlined in the 20 questions section of the Policy and Procedure Guide to help differentiate an independent contractor from an employee. If it is determined that an independent contractor relationship will exist then an Independent Contractor Agreement must be completed and signed before any work can begin.

Institutional Assessment Fee

This is the annual fee that supports Advancement Office activity at each campus.

Investment

Term used to describe the commitment of money or capital for the purchase of financial instruments or other assets so as to gain profitable returns in the form of interest, income (dividends), or appreciation (capital gain) of the value of the investment. The Foundation invests its holdings to generate income and growth via a variety of financial instruments.

Investment Manager Fees

Endowed funds are invested with a variety of Fund Managers.  Each Fund Manager has its own fee schedule. The endowment pool pays fees to fund managers monthly. The total fees from all fund managers are allocated monthly to each account based on the account’s share of the endowment pool. This fee covers the cost of investing with the Fund Managers.

Investment Service Fee

This annual fee supports the budget of the USM Foundation’s Investment Office.

Invoice

A document issued by a seller to a buyer, indicating products, quantities, agreed upon pricing,  and payment terms for goods or services the seller has provided the buyer. An invoice from a vendor may be used as supporting documentation with a Disbursement Request Form to pay a vendor or reimburse an individual or a campus account. An invoice can also be sent from the USM Foundation or campus unit on behalf of the Foundation to bill an individual or organization for goods or services provided by the Foundation. This typically would be done for a non-gift transaction. An invoice should never be used to solicit a gift but may be used for a fundraising event that has both a gift and non-gift portion.

Journal Entry or (JE)

 

Is the form used to make entries within the accounting software. A journal entry may be used to transfer funds between Foundation accounts or to move expenses to correct miscoded transactions.

 

Legacy

Another term for a bequest.

Market Value

This is the price at which an asset would trade in a competitive auction setting. For example, investments in publicly traded securities have market values set by the markets in which they are traded such as the New York Stock Exchange or NASDAQ. The market value of the USM Foundation Operating and Endowment pools is the total market values of all of the underlying investments in the pool. And the market value of an individual account in the pool is that account’s proportionate share of the total pool’s market value.

Maryland Charity Campaign (MCC)

A fundraising campaign that allows employees at the various system campuses and offices to designate donations to any USM Foundation account, or other MCC affiliated charity, via payroll deductions. Monies are deducted from each paycheck by the Central payroll office. All deductions for all employees are accumulated and sent to the MCC administration offices for processing, reporting, and disbursement back to the designated donee organizations.

Matching Gift

A gift received, typically from a donor’s employer, which matches in whole or in part, the value of the donation originally given by the donor. It is the donor’s responsibility to request or apply for a matching gift based on his/her employer’s matching gift program guidelines. The USM Foundation typically would verify the original gift receipt to the matching gift donor before the matching gift is awarded.

Memorandum of Understanding or (MOU)

Form used to direct how a donor wants a gift to an endowment managed.  This form is usually completed by the Development Officer with the Donor and reviewed by the Foundation before finalized.  The web site has both an MOU worksheet and a Sample MOU to aide in the completion of the agreement.

Memorial Gift

A gift made to honor and perpetuate the memory of a deceased individual.

Monthly Ledger

 

A newsletter distributed by the Business Service Office of the Foundation each month to inform Foundation constituents of various deadlines and training schedules, report on new initiatives in the office, and provide an educational piece on a topic of interest.

 

Non-Gift Deposits

 

Describes funds received for such activity as auctions, raffles, memberships, selling T-shirts, event registrations, etc. (A payment cannot be considered a gift if something of value is received in return and in all of these examples something is being given in return for the payment). The Non-Gift Deposit form is used for sending non-gift checks to the Foundation for deposit.

 

Non-Resident Alien (NRA)

A non-US citizen that does not pass the Green Card or Substantial presence test. There are various IRS rules and regulations regarding payments to NRA’s.  Prior to agreeing to compensation/payment to a non-resident alien please refer to our Policy and Procedures Guide for our policy regarding Disbursements to Foreign Nationals. This policy outlines various documentation requirements for all foreign nationals.  It is important that you know and understand these requirements before you contract the foreign national for their services and that you obtain all required documentation before their departure.

Non-Spendable Project Activity Report

Contains the activity for the Non-Spendable portion (new gifts, investment activity, and fees) of your Endowment accounts. These reports are distributed by the last day of the month for the prior month-end activity.

Operating Account

Also known as a Current Use Account. Donors may specify that their gifts be spent entirely for a designated objective or program as opposed to being held in perpetuity like an endowment. In addition, departments sell merchandise, sponsor conferences and seminars, and hold special fundraising events to support their activities. This money is deposited in these accounts and used for current operations.

Payee

Person or entity receiving payment from the Foundation. Also known as a vendor.

Payroll Deductions

This is a fundraising process that allows employees at the various system campuses and offices to designate donations to any University System of Maryland affiliated foundation account, via a reduction from a payroll check. Monies are deducted from each paycheck by the Central payroll office. All deductions for all employees are accumulated and sent to the USM Foundation offices for processing, reporting, and disbursement back to the designated donee Foundations.

PDIP or Private Donor Incentive Program

A program offered by the State of Maryland that ended in 2008 to encourage investment into endowments.  Qualifying endowments could apply for matching funds.  It was not necessarily a one to one match. PDIP accounts operate under the same MOU as the parent account.   

Per Diem

An amount used in lieu of reimbursement of actual meal expenses while traveling.

Philanthropy

A voluntary action for the public good usually expressed by an effort to enhance the well-being of others through personal acts of kindness or financial support.

Planned Gift

Various legal and tax defined giving mechanisms. Planned gifts are referred to as such because they require more planning, negotiation and counsel than outright gifts of cash or property. They may result in immediate income to a charity, income to the charity over time, or income deferred for the life of the donor or some other time period. There are various state and federal regulations associated with planned gifts.

Pledge

A written, signed, and dated promise to fulfill a commitment to pay a specified amount over a specified period of time.

Pre-PY

Refers to the spendable income from two years back.  It represents those spendable income dollars which have been carried forward for two years as unspent. Any Pre-PY Spendable income not spent in the current year will return to the non-spendable category at year-end. For example, in FY13, Pre-PY spendable income is unspent dollars from FY11.

Project

Another term for account. In our accounting system the accounts are called projects.  

Project Activity Report

 

A financial system report that shows a beginning balance, transactions for a defined period, and ending balance for a particular account.

 

Proposal

A written plan and request for private financial support which typically outlines the goals and objectives of the program to be funded, and the benefits to accrue as a result. Proposals are typically associated with grant applications.

PY or Prior Year

This refers to the FY prior to the one you are currently in.  For example, in FY13, PY would be referring to FY12.

Quasi-endowment

This is a hybrid of an Operating Account and an Endowment. It functions as an operating account but is invested in the endowment pool.

Quid Pro Quo Contribution

This is a payment a donor makes to a charity partly as a contribution and partly for goods or services. For example, if a donor gives the Foundation $100 and receives an event ticket valued at $40, the donor has made a quid pro quo contribution. Only $60 is considered a gift for tax purposes. 

Realized Gains/Losses

Realized gains result from selling investment assets at a price higher than original cost. Realized losses result from selling investment assets at a price lower than original cost. Underlying investments in the endowment pool are being bought and sold by our investment managers on an on-going basis so each month the endowment accounts will have an allocation of their proportionate share of the Realized Gains/Losses from the entire pool.

Restricted Gift

Generally used in regard to endowments, it refers to stipulations or requirements set forth by the donor in the MOU. Operating projects can also be restricted to a particular purpose.

Sales and Use Tax Exemption

As a non-profit corporation the USM Foundation is exempt from paying sales and uses taxes on purchases in the state of Maryland. The Sales and Use Tax Exemption Certificate can be provided to vendors to verify our exemption.

Spendable Income

Available funds to be spent each year on activity as stated by the MOU and based on the spending rate.  Spendable income is determined by the MOU if specifically defined in the MOU or by a formula using the spending rate and the December 31 market value.  For example, the spendable income for FY 14 would be determined by the spending rate for FY14 and the December 31, 2012 market value.  Foundation policy allows unused spendable income to be carried forward for two years from the year of allocation.   

Spendable Income Project Activity Report

For Operating accounts, this report shows the beginning and ending balances, and all activity for a given time frame. For endowment accounts this report shows the beginning and ending Spendable Income balance, and all expense activity applied to an endowment’s Spendable Income for a given time frame. 

Spending Rate

 

The rate set by the Foundation Spending Policy Committee to determine each FY’s spendable income allowance.  The spending rate is applied to the appropriate December 31 market value to determine Spendable Income.

 

SS-4 Form

The IRS Application for Employer Identification Number. This form is submitted by the Foundation to the IRS whenever a new trust is established in order to obtain a taxpayer ID for the trust.

Stock Gift

Stocks, bonds, or other securities can be transferred to the Foundation as gifts. Giving the gift of stock can have a two pronged tax benefit for the donor. First, they get a tax deduction for the value of the stock on the date of the transfer, and they can avoid paying capital gains tax on any increase in value of the stock since its original purchase.

Taxpayer ID number

An identification number issued by the IRS for any individual or organization that has or may have reporting or other requirements with the agency. Vendors or grantors may ask for the Foundation’s taxpayer id number – this is usually given by providing a copy of our W-9 form.

Trust

An arrangement whereby one or more persons or institutions holds and manages property for the benefit of another. The person establishing the trust is the grantor, the person or institution holding the property is the trustee, and the person or institution to be benefitted by the trust are the beneficiaries.

Underwater

 

When the market value of an endowment account is less than the historical gift value of the endowment account the account is considered to be underwater.

 

Unitization

This is the methodology used to allocate earnings and fees from the endowment pool as a whole to the individual accounts in the pool. The Endowment pool functions like a mutual fund in that any additions and income to an account buys shares or “units” based on the unit market value as of the beginning of the month. And disbursements from an account cause shares or “units” to be sold to cover the disbursement. Unrealized Gains and Losses adjust the per unit value but don’t result in a unit increase or decrease for an account.

Unrealized Gain or Loss

Represents the difference between the current market value of a held investment and its original cost. If the current market value is higher than the original cost there is an unrealized gain. If the current market value is lower than the original cost there is an unrealized loss. Unrealized gains and losses exist on paper only – they become real when the investment is sold. Unrealized gains and losses are allocated each month to accounts based on their proportionate share of the endowment pool in order to adjust the market value of the accounts.

Unrestricted

Refers to an operating project and the fund can be used for any purpose within the guidelines of the Foundation.

W-4

An IRS tax form that is part of a Foundation employee’s new hire packet which identifies the employee’s federal payroll tax filing status and number of exemptions and is used to determine the amount of federal income tax withholdings from each pay check.

W-9

The W-9 form serves two purposes. First, it identifies whether a vendor is subject to 1099 reporting requirements. And second, the information on the W-9 – name, address, and taxpayer id – along with the payment information accumulated through the year - is the basis for the data reported to the IRS on the 1099 form. We require W-9 forms for all new vendors whom we will be paying for goods or services.

We also provide our W-9 form to outside organizations to verify our tax id number and organization structure.

Wye Herd

A herd of Angus cattle donated to the University of Maryland which became the founding gift of the USM Foundation. The Wye Angus program still operates as part of the College of Agriculture & Natural Resources at the University of Maryland, College Park.

Our Vision

Our vision is to attract broad resources that transform the USM and its institutions, create a network of advocates to embrace the USM’s role as an educator and economic engine, and to grow a long-term, sustainable culture of philanthropy across the University System of Maryland.

Learn More About USMF