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Frequently Asked Questions about New Gift Cost Centers

Answers to common questions about new gift cost centers at Central Michigan University.

    Gifts are considered "expendable restricted" funds. By putting them in a 9xxxxxx cost center, we can classify all gifts as expendable restricted. Gift cost centers will more clearly identify the expendable restricted funds for departments and for financial reporting purposes.

    Endowment holding accounts have traditionally been established when the University expects to receive more than $10,000 in gifts but have not yet reached this level. Once this level has been reached, an endowment account can be established.

    Gift cost centers are seven digits in length. All of these cost centers begin with the numeral "9." They are not 9 digits in length. By increasing the field length for these cost centers, there should be adequate room for adding new cost centers as needed by various departments.

    The numbering scheme used for the new cost centers is designed to provide the information required for financial reporting of restricted funds. The following categories are used for the new cost centers:

    91xxxxx Instruction 96xxxxx Institutional Support

    92xxxxx Research 97xxxxx Operation and Maintenance of Plant

    93xxxxx Public Service 98xxxxx Scholarship & Fellowship (previously 28xxx)

    94xxxxx Academic Support 99xxxxx Future Endowment

    95xxxxx Student Services

    Yes, the only revenue being posted to the 9xxxxxx cost centers will be gifts received and processed through Advancement.

    All non-gift deposits will go to the departments non-gift cost centers. Only gift revenue will go into the 9xxxxxx cost centers beginning July 2008. All gift revenue must be processed through Advancement.

    Only gifts should be recorded as revenue in the 9xxxxxx cost centers. The funds should be spent in accordance with the donors' intentions.

    Gifts of $25,000 or more are recorded in their own cost center. These gift funds cannot be transferred to a 2xxxx, 3xxxx, or 4xxxx account to offset expenses incurred there.

    Purchase orders can be assigned to these cost centers when spending the gift funds on supplies and equipment. If the expense was incurred on a credit card, the necessary reclassification can be made.

    Gifts funds should be spent directly from their 9xxxxxx account. If a department incurs expense in their 2xxxx, 3xxxx, or 4xxxx account that is to be funded by gift revenue, the department should submit a journal entry to move the expense from the other account to the 9xxxxxx gift account. It must state what the gift funds were spent for and provide supporting documentation.

    Departments must be cautious that spending does not create a deficit in the 9xxxxxx.

     

    The only external funds that should be recorded as revenue are gifts. However, departments may need to transfer funds from another cost center to cover any deficit that arises due to overspending in the gift cost center.

    All gifts must be processed through the Advancement office so that the donor receives the proper gift receipt and so that the University can more accurately track gift revenue. No other revenue should be posted to the 9xxxxxx accounts.

    Only gift revenue (or gift carryforward) can be transferred into the 9xxxxxx cost centers. If another department wants to help fund expenses for an event or project that is otherwise funded by a gift cost center, a journal entry is required to split the expenses between the two cost centers. The non-gift funds should not be moved into the 9xxxxxx cost center.

    All gifts are processed through Advancement. Advancement and Accounting Services will work in conjunction to create new cost centers on an as-needed basis. Accounting Services will inform departments of new 9xxxxxx cost centers established for their areas. A new cost center should be created when a cost center does not already exist that would accommodate the donor's intentions for the spending of the gift funds.

    Yes, internal orders can be used with the gift cost centers.‚Äč