Restricted Gifts

What is a restricted gift?

Restricted gifts are resources whose use is restricted by donors (as opposed to resources over which the organization has complete discretion). A donor may restrict a gift for a specific use (purpose restriction) or period of time (time restriction). Restricted gifts may be permanently restricted (as in endowments) or temporarily restricted. Generally there are two types of temporarily restricted gifts where spending occurs:

  1. The spendable portion of endowment gifts.
  2. Restricted gifts where the donor has designated that 100% of the gift may be used for a specific purpose or over a specific period of time. These gifts generally begin with an “SP”.

How does the spendable side of an endowment receive money?

See Endowment Gifts for information.

How do SP gifts receive money?

A SP gift is created when a donor or group of donors give a gift for a restricted purpose. As with all contributions, the gift is directed to the Advancement Office where it is processed and then fed to the general ledger. Once the gift is in the general ledger, it may be used for the donor’s intended purpose. Please note, SP gifts are meant for donor restricted gifts only. Such gifts must be processed by the Advancement Office and may not be deposited through the Cashier window in Reynolda Hall.

How is money spent from endowments and SP gifts?

When a qualifying purchase, expense, or award is made, that item is charged directly to the endowment – FD6100 and SP – FD2400. All expenses charged to the fund must meet Wake Forest University Accounts Payable standards and must meet the business purpose specified in the gift agreement. See Invoices and Reimbursements for a complete list of policies and procedures surrounding payment. Transfers to and from endowments and SPs are not allowed except by prior approval from the Provost Office and FS Office. This is to ensure that gifts are used in accordance with donor stipulations and to provide audit support for the specific use of the gift. Please note that effective March 1, 2012, most contributions to SPs will incur an 8% associated program cost when used. This cost, also known as APC, is booked via a monthly journal entry. See Associated Program Costs for more information.

What happens if all gifts to an endowment or SP are not spent within the fiscal year?

Accounting guidelines stipulate that a restricted gift must be used to pay for an expense for which it is earmarked, before any unrestricted money is used for the same purpose. With this in mind, every effort should be made to use all available restricted dollars before using unrestricted dollars. However, if the donor restriction has not been met, the restricted gift obviously may not be spent. In this case, the gift money will remain in the endowment or SP until the donor restriction has been satisfied.  It may be necessary to roll the gift balance over from one fiscal year to the next.

What happens if an endowment or SP is “overspent”?

SP gifts should not be spent until a gift is received and processed. Endowments may not spend more than their beginning balance plus their expected distribution for the fiscal year. The Gift Manager of the endowment (generally the Department Head) is responsible for ensuring that the gift is not overspent. To the extent that a gift is overspent as of June 30, money will be taken from another unit/department funding source to make the gift whole.

How does an endowment or SP share an expense with another gift?

Money from an endowment or SP gift may be used to support the activity of another department as long as the use of the gift satisfies the donor restriction. However, gifts may not be directly transferred to an unrestricted department. Instead, a specific invoice or part of an invoice should be coded directly to the restricted gift.  If all invoices and associated transactions have occurred, then the restricted gift may be charged through a journal entry. In this case, a copy of the processed invoice being charged to the gift as well as a copy of the ledger showing where the invoice was initially charged should be included with the journal entry. The journal entry should credit the account where the invoice was initially charged and debit the restricted gift in the same account.