Board of Visitors minutes :: June 13, 1997 :: University of Virginia Library

I. Introduction
A. Purpose
B. Philosophy
II.Planned Gifts Addressed by this Policy
A. Types
B. Common Aspects Applicable to all Deferred Gifts
C. Charitable Remainder Trusts
D. UVa Pooled Income Fund
E. Gift Annuities
F. Charitable Lead Trusts
G. Life Insurance
III. Related Planned Gift Policies
A. Gift Annuity Policy Appendix I
B. Real Estate Policy Appendix II

PLANNED GIFT ACCEPTANCE POLICY

I. Introduction

A. Purpose

The purpose of this policy is to provide guidelines for development officers working with prospective donors interested in making a deferred gift to benefit the University of Virginia and its related foundations.

B. Philosophy

Through the Office of University Development and its Office of Planned Giving, the University seeks to encourage its alumni and friends to make deferred gifts which will provide financial support to meet the needs of the University and of its related foundations. The objective is to work with prospective donors to enable them to make a deferred gift that is consistent with their overall financial and estate plans. Because most planned gifts are relatively complex and irrevocable in nature, it is important to work with the donor's legal and financial advisors and to insure that disclosure about every aspect of the gift and its administration is made prior to closing the gift.

II. Planned Gifts Addressed by this Policy

A. Types

1. Charitable Remainder Trusts

a. Annuity Trusts

b. Unitrusts

2. Pooled Income Fund

3. Gift Annuities

a. Current

b. Deferred

c. Commuted Payment

4. Charitable Lead Trusts

5. Life Insurance

B. Common Aspects Applicable to All Deferred Gifts

1. Role of the Office of Planned Giving

The role of the Office of Planned Giving is to cultivate and solicit planned gifts for the University and its related foundations; lead negotiations of any planned gifts; serve as a resource to prospective donors, their advisors, and development officers; review the gift transaction to be sure that it is appropriate to the donor's objectives and situation; review the gift transaction to be sure that it is in keeping with University policies and procedures; and to maintain records of all planned gifts held by the University and its related foundations.

2. Role of the School/Unit Development Officer

In order to insure that a planned gift is appropriate and consistent with policy, the school/unit development officer will notify the Office of Planned Giving when the officer has met with an individual whom he/she believes is a prospect for a planned gift. This notification may be in the form of a telephone call, e-mail, or contact report. Depending on the role that the development officer chooses to play, the Office of Planned Giving should be involved or informed of the information gathered; the selection of gift options prior to presentation to the donor in order to insure that they will accomplish the stated objectives using the proposed assets and that the gift options are based on sound analysis; the assessment of input from the donor's legal and financial advisors; and the execution of the gift transaction. Throughout this process, it is the development officer's responsibility to communicate that he/she is not able to provide legal or tax advice and that the prospective donor should see his/her advisors for this purpose.

3. Disclosure

Each development officer is responsible for providing the donor with appropriate and full disclosure regarding an irrevocable gift transaction prior to closure. The objective is to insure that the prospective donor understands the nature of the planned gift. Depending on the gift vehicle, the development officer is responsible for providing the donor with written communication as to how the transfer of assets will occur, how the assets will be invested and administered, relevant performance data, how distributions of principal and income will be determined and paid, what type of reporting can be expected, and how fees are to be assessed and when they will be taken.

4. Spousal Consent

Changes brought about under Augmented Estate rules in Virginia, New York, and other states may impact gifts made to charity without the consent of the spouse. As a result, it will be standard practice for the development officer, particularly when working with a planned gift, to seek written consent of the spouse of the prospective donor. This should be accomplished by adding a signature line to the gift agreement. Although an effort should be made to obtain this consent, the development officer should suggest, not require, that the spouse's signature be added to the gift agreement.

5. Crediting and Recognizing the Planned Gift

All deferred gifts, whether revocable or irrevocable, should be reported to the Office of University Gift Accounting for recording on the University gift system.

a. Crediting Documented Irrevocable Deferred Gifts - Whether a gift is held by The Rector and Visitors, one of the University related foundations, or by an outside individual or financial institution, it will be credited and accounted for based on the published "Campaign Standards" of the Council for Advancement and Support of Education (CASE) approved by the CASE Board of Trustees on April 18, 1994.

If The Rector and Visitors is not named as trustee, the Office of University Gift Accounting will record the gift through an entry to a deferred gift holding account without the corresponding general ledger accounting entry.

If The Rector and Visitors is named as trustee, the Office of Financial Analysis and the Office of University Gift Accounting will establish a "0- 69X= account on both the gift system and FAS (University General Ledger) until the trust terminates and the proceeds are distributed according to the terms of the trust agreement.

b. Crediting Documented Revocable Gifts - The University uses an approach that is more conservative than the CASE Standards when crediting revocable gifts such as bequests, gifts through retirement plans, and term (non paid-up) life insurance. When the donor states in writing or provides written documentation to show that he/she has made a bequest or has taken out a term life insurance policy to benefit the University or its University related foundations, the expectancy will be recorded at the current fair market value in the category of "Future Support." These revocable commitments are reported separately from the totals for the Capital Campaign and are clearly identified as "Future Support." These commitments are not recorded on the University accounting system, but are noted on the donor's gift record as expectancies.

c. Crediting Documented Irrevocable Expectancies - In some cases, a donor may wish to make permanent his/her revocable commitment. These gifts are normally gifts under will such as a bequest or a gift of retirement plan assets. To do this, the donor must provide written documentation of the gift designation, e.g., copy of the bequest language or copy of the beneficiary designation form and a written statement approved by the Office of Planned Giving to indicate that the commitment is to be considered irrevocable and should be treated as a debt of the donor's estate. These will be recorded as "Irrevocable Expectancies." These irrevocable expectancies are reported separately from the Capital Campaign totals and clearly identified as "irrevocable expectancies."

d. Recognition of Donors - Accounting for deferred gifts will be based on the face value and the present value of the donated assets. The Office of University Development will be liberal in its public recognition of deferred gifts and will publicly acknowledge gifts based on the value of the assets transferred, e.g., on the amount placed in a charitable remainder trust. Invitations to join various University or school/program gift clubs or societies, i.e., Lawn Society, may be extended to donors of irrevocable deferred gifts based on that group's membership criteria. All deferred gift donors (revocable and irrevocable) will be invited to join the Cornerstone Society. Since the gifts made through deferred vehicles do not affect the annual fund, these gifts will not be eligible to be counted toward membership in the Rotunda Society.

For donors who have provided for the University and/or its related foundations through a deferred gift but who have chosen not to provide documentation, these individuals will be invited to join the other documented deferred gift donors as members of the Cornerstone Society.

6. Gift Agreements

The Office of Planned Giving will maintain specimen gift agreements, e.g., trusts, which have been approved by University Office of the General Counsel. These agreements will be made available to a donor's legal counsel to facilitate the gift transaction. The Office will maintain similar sets of documents for use with gifts to be held by the University of Virginia Alumni Association, and the University of Virginia Real Estate Foundation, each having been approved by its respective legal counsel.

Before closing on a charitable remainder or lead trust, the Office of Planned Giving will provide a copy of the gift agreement to the Office of the Treasurer for review. If any substantive changes have been made to the specimen document, a copy will be sent to the designated representative from the University Office of the General Cornel for approval prior to execution by the donor. The Office of Planned Giving will also notify the Treasurer's Office of the anticipated transfer of assets, as well as the investment objectives of the donor (to facilitate appropriate asset management).

Immediately after assets are received for a gift annuity, the Office of Planned Giving will notify the University of Virginia Real Estate Foundation (UREF) and provide information needed to open an account.

7. Record Keeping

The Office of Planned Giving will maintain an inventory listing all planned gifts established to benefit the University and its University related foundations. Development officers will provide the Office of Planned Giving with originals (in the case of The Rector and Visitors or the UREF) or copies (in the case of University related foundations) of all relevant gift agreements and valuation information as soon as is practicable after a deferred gift closing. The Office of Planned Giving will send an original gift agreement or a copy, as appropriate, to University Development's Central File; record the deferred gift in its Master File of planned gifts; and notify appropriate departments of the gift including: University Gift Accounting, Financial Reporting, Office of the Treasurer, Cornerstone Society, Stewardship, Faculty-Staff Campaign Director (when appropriate), and those units which have a beneficial interest in - the gift.

8. Planned Gift Advisory Group

If questions arise as to the acceptability of a planned gift, the Director of Planned Giving will convene a conference with appropriate members of the Planned Gift Advisory Group. This group is comprised of the University Treasurer, the Associate Vice President for Development, the Assistant Vice President for Finance, and a representative designated by the Office of the General Counsel. Depending on the gift asset and/or the choice of vehicle, the Executive Directors of the University of Virginia Alumni Association and/or the University of Virginia Foundation may be asked to participate. Group members are to review the gift in question and make a recommendation to the Director of Planned Giving as to its acceptability which he/she can later document to the Executive Vice President. In cases where discriminatory terms are proposed by a donor, the development officer will consult the Office of the General Counsel. If there are suspicious circumstances which suggest inpropriety in the proposed gift, such as terms and conditions which lack fair or adequate consideration or information bearing on the competency of affected individuals, the Planned Gift Advisory Group will be convened to discuss the matter.

9. Fees

a. For Administrative Services - In order to cover the administrative expenses associated with a life income arrangement or charitable lead trust, the trustee or contractor (in the case of a gift annuity) will assess fees consistent with policies approved by the Board of Visitors. The prospective donor will be made aware of the fees in the appropriate disclosure statement presented to the donor by the development officer prior to the gift closing. The fee will be taken from the principal portfolio of the account which is consistent with the Trust Fee Policy approved by the Board of Visitors on June 1, 1996.

b. For Investment Management - The management fees charged by subcontracted investment or fund managers will be charged against the income of the portfolio.

c. Donor Hesitation - In some unusual cases, a donor may refuse to complete the gift if fees of any type are to be taken from the corpus of the gift. Rather than allowing the prospective gift to fail for this reason, the planned giving officer will ask the proposed UVa beneficiary(-ies) (including University related foundations) if it/they will be willing to cover or share in the onetime and/or annual costs associated with accepting and managing the gift property. In rare cases where the beneficiary school/unit cannot or is unwilling to pay these costs, the University or the UVa Real Estate Foundation may choose to assume responsibility for these costs. The amount of these costs will be deducted from the plan at the time of distribution. The funding agreement will be documented and the planned giving officer will move to close the gift.

10. Donor Legal Expenses

The University's policy is not to pay for any of the prospective donor's legal expenses or appraisal expenses associated with the gift transaction. Because there is an inherent conflict of interest, the prospective donor should be so advised of the policy. In some unusual cases where the donor refuses to cover the legal fees associated with the gift and it is likely that the gift may fail as a result, the development officer should do his/her best to negotiate fees to the lowest level possible and then ask the unit that is expected to benefit from the gift if it is willing to pay for the donor's legal expenses. If an agreement is reached, invoices for the legal services will be forwarded to that unit for immediate payment. The development officer will advise the donor in writing that payment of the legal expenses by the charitable organization constitutes a "quid pro quo" arrangement and that the Internal Revenue Service will expect that the amount of the charitable deduction taken by the donor for the gift will be reduced by the amount of the legal expenses paid in conjunction with the gift.

11. Naming Opportunities

Naming opportunities are governed by the Names Committee Policy Statement. The University has the discretion over which existing unnamed buildings are available for naming opportunities. An irrevocable deferred gift may be used for this purpose. However, a deferred gift may not be used to name a proposed building since outright gifts are needed to provide for new construction. All policies and procedures with respect to review and approval by the Names Committee and the Board of Visitors will apply.

C. Charitable Remainder Trusts

1. Acceptable Forms

a. Charitable Remainder Annuity Trust (CRAT)

b. Charitable Remainder Unitrusts (CRUT)

1) Standard (CRUT)

2) Net Income (NICRUT)

3) Net Income Plus Makeup (NIMCRUT)

2. Funding Minimum: $50,000

3. Additions

Additions may be made to a charitable remainder unitrust at any time by a letter of instruction. The minimum amount for an addition is $10,000. By law, additions cannot be made to a charitable remainder annuity trust.

4. Funding Assets

The charitable remainder annuity trust and all forms of the charitable remainder unitrust may be funded with readily marketable securities. If the assets are not readily marketable, e.g., real estate, closely held stock, the net income unitrust or the net income plus makeup unitrust must be used. In cases where there are both readily marketable assets and illiquid assets available to fund the trust, the planned giving officer will discuss the situation with the Office of the Treasurer and will make recommendations to the donor on the basis of that discussion. In any case, it is the University's preference that a net income unitrust not include a makeup provision.

5. Trusteeship

In the gift negotiation process, the prospective donor will be given all of the options regarding choice of trustee including The Rector and Visitors, a corporate trustee, an individual trustee, and self-trusteeship. If the individual expresses an interest in the University serving as trustee, the donor must name The Rector and Visitors as trustee. The only exception is if the trust is to benefit the University of Virginia Alumni Association. In that case, the University of Virginia Alumni Association will be named as trustee. In certain situations, a University related foundation may serve as trustee but the foundation trustee must adhere to the University's policies governing gift acceptance, crediting, and accounting. The development officer working on behalf of the University related foundation will send a copy of the trust agreement to the Office of Planned Giving as soon as is practicable after closing. Regardless of beneficiary, when real estate is proposed as a funding asset, the donor will be advised to name the University of Virginia Real Estate Foundation as trustee, with either The Rector and Visitors of the University of Virginia or the University of Virginia Alumni Association serving as successor trustee.

a. The Rector and Visitors

1) Investment Management - The Office of the Treasurer will invest the trust assets in one or more of the funds within the University's Consolidated Endowment. If use of the funds is inappropriate for the investment objectives or for the assets used to fund the trust, the Office of the Treasurer will use other investment vehicles to accomplish the objectives.

2) Administration - The Office of the Treasurer will select an organization to provide the administrative services to the trusts for which it serves as trustee. Currently, Fiduciary Trust Company International provides services which include custody of assets, trust accounting, statement rendering, check issuance, and tax return preparation, tax reporting, and compliance with the Internal Revenue Service regulations.

b. University of Virginia Real Estate Foundation (UREF)

1) Investment Management - The UREF appointed the Office of the Treasurer at the University of Virginia to serve as its agent in investing its non- real estate trust assets. These assets will be invested as stated in Paragraph II., C., 5., a., 1).

2) Administration - The UREF may handle all or part of the administrative services associated with the management of its trust accounts, or it can use its discretion to appoint an agent to provide the services needed.

c. University of Virginia Alumni Association (UVA FUND)

1) Investment Management - The Alumni Association currently uses Davenport and Company, LLC as its agent to serve as custodian and investment manager of its trust assets.

2) Administration - The Alumni Association may handle all or part of the administrative services associated with the management of trust accounts, or it can use its discretion to appoint an agent to provide the services needed.

6. Payout Rates

a. The development officer may discuss payout rates that are in the 5-7% range with prospective donors. The 7% option is based on the return of the long term U.S. Treasury Bond. This rate may be adjusted from time to time. Given the interplay between payout rate, investment assumptions, and the ages of the beneficiaries, the development officer should be mindful that gift plan projections should show that the projected value upon termination of the trust is at least 100% of the funding value of the gift in trust.

b. Higher payout needs/requests will be considered by the Planned Gift Advisory Group but will be treated as exceptions to policy. The development officer will submit "exception to policy" requests in writing to the Director of Planned Giving who will seek review by the Planned Gift Advisory Group. The recommendation of the Planned Gift Advisory Group will be submitted to the Executive Vice President and Chief Financial Officer of the University who will exercise his/her discretion in making the final payout decision.

7. Beneficiaries

a. Income Beneficiaries - One or more income beneficiaries may be named in the trust agreement. The development officer must be mindful of how these additional beneficiaries impact the projected remainder as discussed in II., C., 6. above.

b. Charitable Remainder Beneficiaries - Charitable remainder beneficiaries may include one or more units within the University, including the University related foundations. Should the donor wish to include one or more non-UVa but qualified charities as charitable remainder beneficiaries, it is possible to do so as long as the University's beneficial interest (including University related foundations) amounts to at least 51% of the remainder of the trust.

8. Disclosure

Prior to executing a charitable remainder trust on which The Rector and Visitors is to serve as trustee, the development officer must provide the donor with the charitable remainder trust disclosure statement. The development officer is responsible for reviewing the statement with the prospective donor to insure that he/she understands how the trust is to be invested and administered by the University.

9. Reporting to Donors Each donor will receive a statement of account, at least annually, from the trustee or its agent. The accounting will include a portfolio summary and transaction summary.

D. UVa Pooled Income Fund (PIF)

1. Funding Minimum: $5,000

2. Additions

Additions may be made in increments of $1,000 or more with a letter of instruction from the donor.

3. Funding Assets

Only readily marketable securities or cash may be used to make a gift to the PIF. Federal law prohibits the acceptance of tax-exempt securities for the PIF.

4. Trusteeship

The trustee of the University of Virginia Pooled Income Fund is currently Fiduciary Trust Company International.

a. Investment Management - Investment objectives for the PIF are determined by the Office of the Treasurer after discussion with the Office of Planned Giving. The Office of the Treasurer conveys these objectives to the trustee which invests the trust's assets to meet the stated investment objectives. Presently, the trustee chooses to meet these objectives through investments in a variety of common trust funds. The Office of the Treasurer monitors the performance of the trustee of the PIF.

b. Administration - Fiduciary Trust Company International administers the PIF. It calculates the principal and income values, accepts gifts, prepares calculations for donors, prepares and mails participant checks on a quarterly basis, renders statements, prepares annual reports for the participants, prepares the fiduciary tax return, insures compliance with the terms of the trust document, and performs duties associated with tax reporting to donors.

5. Disclosure

As the donor is preparing to execute the PIF gift agreement, the development officer must provide the donor with a copy of the PIF trust agreement and its amendments, as well as a disclosure statement. The gift agreement asks the donor to verify that he/she has read and understands the trust agreement.

6. Payout Rates

The payout guidelines are communicated to the trustee by the Office of the Treasurer. Currently, the desired income objective is to maximize annual yields consistent with the rate of the long-term U.S. Treasury Bond less fees.

7. Beneficiaries

a. Income Beneficiaries - One or more income beneficiaries may be named in the gift agreement. The development officer must be mindful of how these additional beneficiaries impact the projected remainder as discussed in II., C., 6. above.

b. Charitable Remainder Beneficiaries - Charitable remainder beneficiaries may only include the University, its units, and its related foundations. Outside charities may not be included as beneficiaries under the PIF.

8. Reporting

The trustee is expected to provide the Office of the Treasurer and the Office of Planned Giving with quarterly reports on the trust's investments as well as an updated value on the units of participation. The trustee is expected to provide the annual report required to all participants.

E. Gift Annuities

1. Acceptable Forms

The development officer may offer immediatelcurrent charitable gift annuities, deferred charitable gift annuities, and commuted payment (or college) gift annuities.

2. Funding Minimum

Minimums may vary depending on whether the annuitants live in the Commonwealth of Virginia, another unrestricted state, or in a restricted state. A state is classified as restricted if it requires very conservative investment of at least a portion of the gift. Policies are outlined in the attached "Gift Annuity Policy" (Appendix I) approved by the Board of Visitors in its September, 1996 meeting. By law, additions cannot be made to a gift annuity.

3. Funding Assets

A gift annuity may be funded only with readily marketable securities or cash (no real estate).

4. Contractor

Given the complexities of individual state registration and investment requirements, the University of Virginia Real Estate Foundation (UREF) will serve as the sole contractor of gift annuities for all entities of the University of Virginia, including University related foundations.

5. Investment Management

The University of Virginia Real Estate Foundation appointed The Rector and Visitors of the University of Virginia as its agent for purposes of investment management. The Office of the Treasurer will invest the annuity assets with the approval of the Finance Committee of the Board of Visitors.

a. Regulatory Requirements - Because of the regulatory investment requirements of various states, the UVa Real Estate Foundation will insure that it is in compliance with the various reserve requirements and investment restrictions. In all cases, the Foundation will meet all state requirements and will obtain all permits required to offer gift annuities under applicable state law. The Office of Planned Giving will maintain its membership in the American Council on Gift Annuities (ACGA) and will forward all relevant information from the ACGA to the University of Virginia Real Estate Foundation, along with any related correspondence.

b. Fees - In accordance with the "Gift Annuity Policy" (Appendix I), all reasonable investment management and administrative fees will be assessed to the gift annuity pool. Prospective gift annuity donors are to be informed of the fees in the gift annuity disclosure statement provided to the individual prior to gift closing.

c. Liabilities Incurred - Although highly unlikely, it is possible that an annuitant may outlive his/her life expectancy. Since the obligation of the contractor is usually to provide income for the annuitant's lifetime, the annuity account may be reduced significantly or even depleted. In these cases, the University of Virginia Real Estate Foundation, through the Office of Planned Giving, will require the designated remainder beneficiary (unit, school, or University related foundation) to provide whatever funds are necessary to complete the contract. This plan is based on the assumption that the remainder beneficiary is also expected to benefit from distributions from other annuities where the plan terminated earlier than projected, or where investment performance was particularly strong for the investment period.

6. Administration

The UVa Real Estate Foundation may administer the annuity program or it may appoint an outside firm to perform the administrative responsibilities.

7. Payout Rates

The development officer may quote payout rates that are consistent with, or lower than, the rates published by the American Council on Gift Annuities (ACGA) that are in effect at the time of the gift. These rates vary depending on the age(s) of the income beneficiaries and are adjusted periodically by the ACGA.

8. Beneficiaries

a. Income Beneficiaries - A maximum of two income beneficiaries may be named in the gift annuity contract.

b. Charitable Remainder Beneficiaries - Charitable remainder beneficiaries may include one or more units within the University, including University related foundations. Non-UVa charities cannot be including as beneficiaries under a gift annuity contract.

9. Disclosure

Prior to executing a gift annuity contract, the development officer must provide the prospective donor with the gift annuity disclosure statement provided by the University of Virginia Real Estate Foundation. The development officer will be responsible for reviewing the disclosure statement with the donor to insure that he/she understands how the contract will be invested and administered.

F. Charitable Lead Trusts

1. Acceptable Forms

a. Charitable Lead Annuity Trust (CLAT)

b. Charitable Lead Unitrust (CLUT)

2. Funding Minimum: $500,000

3. Additions

Additions may be made to the charitable lead unitrust at any time through a letter of instruction from the donor. The minimum amount for an addition is $50,000. By law, additions cannot be made to a charitable lead annuity trust.

4. Funding Assets

The charitable lead trust may be funded with readily marketable securities and/or cash.

5. Trusteeship

6. The Rector and Visitor as Trustee

a. Investment Management - The Office of the Treasurer will invest the trust assets in one or more of the funds within the University's Consolidated Endowment. If use of the funds is inappropriate for the investment objectives or for the assets used to fund the trust, the Office of the Treasurer will use other investment vehicles to accomplish the objectives.

b. Administration - The Office of the Treasurer will select an organization to provide the administrative services to the trusts for which it serves as trustee. Currently, Fiduciary Trust Company International provides services which include custody of assets, statement rendering, check issuance, and tax return preparation, tax reporting, and compliance.

7. Payout Rates

The development officer may discuss any payout rate allowable by law with a prospective donor. Normally, the payout range will be between 1% and 15%.

8. Beneficiaries

a. Income Beneficiaries - One or more units of the University and its related foundations may be named as income beneficiaries in the trust agreement.

b. Non-charitable Remainder Beneficiaries - Non-charitable remainder beneficiaries may include the donor, children, grandchildren or others.

9. Disclosure

Prior to executing a charitable lead trust for which the University is to serve as trustee, the development officer must provide the donor with the disclosure statement for charitable trusts. The development officer is responsible for reviewing the statement with the prospective donor to insure that he/she understands how the trust is to be invested and administered by the University.

G. Life Insurance

1. Acceptable Forms

a. Paid-up Policies - These are whole life, universal or variable policies taken out by an individual who has since completed all required premium payments and now wishes to donate the policy to the University. The policy has a cash surrender value and a death benefit attached to it, although in some cases these values may be reduced by existing loans taken out against the policy. If the donor names The Rector and Visitors as owner and beneficiary of the policy, it would be an irrevocable gift.

b. Partially Paid-up Policies - These are whole life or variable policies taken out by an individual who paid some of the premiums required to keep the insurance in force but who either: 1) no longer plans to continue paying the premiums; or 2) wants to give the policy to The Rector and Visitors, i.e., name it owner and beneficiary, but the donor will continue to pay the premiums to keep the policy in force. These policies have cash surrender and death benefit values, less the amount of any outstanding loans. If the donor names The Rector and Visitors as the owner and beneficiary of the policy, it would be an irrevocable gift.

c. New Policies in Which The Rector and Visitors is Named Owner and Beneficiary - An individual may wish to take out a term, whole life, or universal/variable term life insurance policy with the objective of making a gift to the University. In these cases, the donor would name The Rector and Visitors of the University as the owner and beneficiary. The donor can either pay the premiums directly to the insurance company, or contribute the premium amount to The Rector and Visitors which will, in turn, pay the premium amount required to the insurance company. Given that premium costs of term insurance may be prohibitively expensive for a donor after a number of years, gifts of whole life and universal/variable policies would be preferred. A gift of this type of policy would be an irrevocable gift.

d. Policies in Which The Rector and Visitors is Named Beneficiary (But Not Owner) - For a variety of reasons, the ownership of some insurance policies cannot be changed. However, the individual may designate a charitable beneficiary. There are three types of policies and a gift of this type of policy would be a revocable deferred gift (because the incidents of ownership are retained).

1) Individual - where an individual is the insured and premiums are paid by an individual or corporation; and

2) Group - where term insurance is offered to the employees of an organization based on salary or on some other compensation based formula. These policies normally remain in force only as long as the individual continues to be employed by the company. Note: In some cases the company will change ownership on group life. Individuals will be encouraged to designate the University as a beneficiary. A gift of this type is a revocable gift.

3) Charitable Award Programs - are programs designed to reward service on corporate boards through nonmonetary means. Some organizations give their directors the chance to name one or more charitable beneficiaries of a life insurance policy that the corporation maintains on its board members. In most cases, the corporation reserves the right to discontinue the program or to restructure it any time. This is an example of a revocable gift.

2. Policy Minimum: None

3. Ownership and Beneficiary Designations

To make an irrevocable gift of life insurance to benefit a school/unit of the University, the donor must name The Rector and Visitors as owner and beneficiary of the policy. The donor may also further direct that the proceeds are to be distributed or held for the benefit of a specific school, program or fund at the University. Donors may also name a University related foundation as owner and beneficiary. In some cases, the University related foundation may prefer that The Rector and Visitors handle the administration of gifts of life insurance.

4. Investment Management

In cases where the policy is paid up or if the donor intends to discontinue premium payments, the planned giving officer will review the terms of the policy, its funding status, and the cash surrender value with the Treasurer and the school/unit development officer involved and reach consensus about whether the policy should remain in force and how additional premiums are to be made.

5. Crediting Gifts of Life Insurance

a. Paid-up Policies - When a donor makes an irrevocable gift of a paid-up life insurance policy, the cash surrender value (CSV), will be credited as a cash gift and counted toward the Capital Campaign. The difference between the CSV and the face value (death benefit) of the policy will be credited toward the Future Support goal of the Campaign.

b. Partially Paid-up Policies - When a donor makes an irrevocable gift of a partially paid-up insurance policy, the cash surrender value (CSV) will be credited as a cash gift and counted toward the Capital Campaign. Additional premiums paid would be treated as additional cash gifts to the Campaign. The difference between the CSV and the face value (death benefit) of the policy will be credited toward the Future Support goal of the Capital Campaign and adjusted as additional premiums are paid.

c. New Policies - Gifts of the amount of the premiums needed to keep new insurance in force will be treated as cash gifts and credited toward Capital Campaign totals. The difference between the premiums paid and the face value (death benefit) of the policy will be credited toward the Future Support goal and adjusted as additional premiums are paid.

d. Revocable Life Insurance Policies - The revocable life insurance policies described in II., G., 1., d. above will be counted toward the Future Support goal.

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PLANNED GIFT ACCEPTANCE POLICY