Trust Funds

A new trust fund is established when the University receives a donation or donations which need to be kept separately due to donor’s restrictions. The donors’ terms and conditions are communicated via bequests, wills, agreements or letters of intent. For assistance in the drafting of agreements with potential donors, please contact Senior Legal Counsel, Office of the Vice-President, Advancement and Office of the Vice-President, University Operations. For donations associated with a bequest or a will, divisions should contact the Estates & Securities Officer SDO, who will liaise with lawyers and executors to facilitate timely settlement of the estate.

In addition, divisions may decide to establish a new trust account to raise funds towards a divisional priority. In these cases, estimated donations should be reasonably large to warrant the set up of a new account. Unrestricted donations can be deposited into existing departmental discretionary trust funds. Small restricted donations can be deposited into existing trust funds with similar restrictions.

Summary Sheet
Divisions requesting the set up of a new trust fund must complete the preliminary summary sheet. The summary sheet contains donors’ terms and conditions with respect to the usage of the fund as well as other information concerning internal management of these funds. Fund managers should always refer to the summary sheet prior to the disbursement of funds.

Sample summary sheet

Summary sheet instructions

For assistance in completing the summary sheet, contact Donations Management.

Donations Management will review the request and the terms and conditions of the intended donations for compliance with University guidelines. A new fund can be set up in AMS when the minimum requirements have been met.

Please note that it is extremely important to determine whether the new fund is to be an endowment or an expendable account. The timely set up of an endowment will reduce the risk of investment losses and avoid complex administrative work involved when subsequent adjustments are required.

When a donation is received before the terms and conditions of a new trust fund are finalized, send the donation to Donations Management for deposit. A TEMP fund can be set up in AMS by Donations Management if the fund has already been determined to be an endowment or an expendable fund. The TEMP fund will allow donations to be recorded, but no spending will be allowed until the terms and conditions of the trust fund are finalized.

Donations should only be deposited in the pending allocation fund when a donation is received with no indication from the donor whether it is to be endowed or expendable. Prompt action should be taken to resolve this so that a TEMP account can be created and donations moved to the appropriate fund. Delays can result in loss of investment earnings and increased administrative cost.

Donations Management will work with Divisions and the Estate & Trust Officer to finalize the terms and conditions of the fund and to prepare a final summary sheet. Donations Management will distribute the final summary sheet to the Financial Services Department and to the Division requesting the fund.

 

Pledges and donations for trust funds are processed in the same way as any other donation. For details, please go to GTFM section Fundraising and Donations – Monetary Donations.

 

Budgets (funds available for spending) are set up when expendable donations are received or when investment income from the LTCAP or EFIP are distributed annually in April. For questions or assistance with budgets, please contact the Trust Accountant in Financial Services. See Fundraising and Donations – Monetary Donations for more information and other processing details.

 

Trust funds are set up with the sole purpose of receiving donations to be used for donors’ designated purposes. Other income or revenues must not be deposited in trust funds. Miscellaneous grants with restrictions should be deposited into their own separate accounts to ensure that the restrictions of each are complied with. For further information please refer to Non-Research Grants and Contracts. Miscellaneous grants without restrictions can be deposited into the University’s operating funds.

Incidental small revenues resulting from trust fund activities can be deposited as an expense recovery. However, these revenues should not be significant in comparison to expenses incurred. The University solicits donations because we require the additional funding to fulfill a priority. Revenue generating activities should be part of divisional income and should not be recorded in trust funds. Where an activity is partly funded by donations and partly funded by other income, the donations are recorded in the trust fund and the other income in the operating fund. Expenses for the activities can be allocated between the two funding sources.

The fund manager is the fund signing authority, and has the primary responsibility to:

• plan so that funds are used effectively and as expected by the donor. This includes full awareness of funds available and specific knowledge of donor expectations with respect to use of the funds, i.e. terms and conditions.
• ensure compliance with all applicable University policies and regulations.

Delegated responsibilities
Where fund management responsibilities have been delegated, there must be reporting and review procedures in place to provide assurance that the delegated responsibilities are being effectively discharged.

Transfer of Funds, Internal Revenues and Expense Recoveries
Transfer of funds is the movement of funds from one account to another. Internal revenues are buy/sell transactions for services and/or supplies within University’s divisions. Expense recoveries are allocations of expenses among various funding sources for payments made to external parties. See the section Internal Revenues and Internal Expense Recoveries for a more detailed explanation of these types of transactions.

Restricted funds are governed by external restrictions and the University is entrusted with the responsibility to ensure that the funds are used in accordance with the terms set out in the trust. Therefore, transfers of funds between restricted funds are limited only to those that do not contravene donors’ terms and conditions, or are explicitly permitted by donors. Furthermore, transfers between restricted funds and another fund group (operating, capital and ancillary operations), referred to as interfund transfers, require Business Board approval when they have not been approved within the annual budget process. However, due to increased fundraising initiatives where operating funds have been committed to these initiatives, the Provost has been authorized to approve transfers of operating funds to restricted funds up to $1 million per instance.

Transfers should be kept to a minimum since they provide poor accountability to donors. Fund managers are strongly encouraged to disburse directly from the restricted fund to reduce the need for fund transfers. When a transfer is required, please send your request to the Supervisor, Trust Accounting in the Financial Services Department.

For internal buy/sell transactions, trust funds can only “buy”, not “sell”, since trust funds should not receive other deposits. The internal revenue/expense recovery transaction in FIS can be used to charge the trust fund for the services/supplies bought. Ensure that the appropriate GL is used and that a complete description is included in the transaction for appropriate accountability.

When a payment is funded from various sources, the expense can be split among the funding sources, eliminating the need for an expense recovery. However, divisions can use the internal revenue/expense recovery transaction when it is administratively more efficient to recover expenses after the payment has been made. In these cases, ensure that the same GL account is used for both the debit and credit lines of the transaction so that this transaction is eliminated for total University reporting. In addition, ensure the recovery is processed only after the disbursement has occurred. For proper accountability, a thorough description should be included in the transaction.

Review and account reconciliation
Departments should review and reconcile their accounts on a regular basis to ensure that transactions recorded in the fund are appropriate and disbursements are made in accordance with donors’ wishes. Trust funds operate on a cash basis and do not have overdraft privileges; therefore, should a deficit occur, it should be investigated immediately. Trust fund deficits are the responsibility of the division and they should be eliminated promptly. Expenses in excess of donations and investment income can be moved to another funding source where these expenses are eligible. A variety of financial reports are available in AMS to facilitate the review process. For more information on AMS reporting, refer to the appropriate reference guide for reporting in FIS. Courses specific to non-research (trust) funds analysis and reporting are also available. For information on the course and course materials (available for download), refer to the FIS Training Schedule and Course Summary.

Financial Reporting to Donors
The University prepares annual Donor Financial Reports for endowments over $95,000 and for other funds when they are specifically requested by donors. The Donor Financial Report, together with other information (i.e. the list of award recipients) are sent to donors as part of the University’s accountability efforts. Central and divisional offices all participate in this endeavour.

Fund managers are asked to participate in annual information training sessions in early May. During May and June, fund managers are asked to review and sign off for disbursements as reported in the draft Donor Financial Report to ensure that funds have been spent in accordance with donor’s conditions and that they are accurately classified in the report. Regular reviews and reconciliations of accounts will reduce or eliminate the need for any adjustment in the financial report. Fund managers also participate by providing narrative information of activities or accomplishments made as a result of donor funding.

Donations Management reviews the accuracy of donations and matchings recorded in the fund; Financial Services reviews for the accuracy of the overall report focusing on the endowment values and the distribution of investment income. Once the Donor Financial Report is finalized, the report, together with additional information, is sent to donors by central or divisional development officers.