Trust Funds and T Activities Procedure

Purpose

These procedures set out the process for the distribution of Foundation Trust Funds held by the University of Otago Foundation Trust to the University of Otago.

Definitions

The University of Otago Foundation Trust (the Foundation Trust)

A registered Charitable Trust under the Charities Act (CC20440). It receives and administers donations, bequests and sponsorship monies for University and academic priorities.

Trust Deeds

Foundation documents which govern the purpose of the Foundation Trust and ensure that the wishes of donors and sponsors are fulfilled.

Trust Ledger

TL Ledger within Finance One.

T Activities – Little t's

A donation which has been moved to sit within a cost centre account (see clause 3 below).

Cost Centre

Section within a department responsible for financial management.

Carry Forwards

Equity accounts held by qualifying Academic Division cost centres.

Content

1. Introduction

   The University is the beneficiary of over 420 individual trust funds held by the Foundation Trust. Each fund has a founding document, such as a trust deed or will, which governs the purpose for which the funds can be used, the manner in which this is decided and whether the capital balance needs to be retained. The distribution of income to support research and teaching activities from these funds is controlled by the Trustees of the Foundation Trust.

   Information on trust funds available to each cost centre and the purposes for which they must be used is available in the annual budget process or from the Accountant – Treasury Assets and Insurance, Financial Services Division.

2. Distributions from Trust Funds

   1. Distributions to the University can only be made from prior year earnings. The balance available in each fund is shown in the Trust ledger (TL ledger) under dissection 9961 (unspent income from prior years). The University however suggests Departments retain enough funds to support two years of future distributions in these reserves for use in years when investment income may be insufficient. During the budget process, an estimate of the funds available for distribution is provided to Cost Centres in their budget packs.
   2. Distributions from trust funds can only be made in accordance with the original purposes of each fund. Sufficient expenditure must have taken place in the University to match the distribution. Distributions must be approved by the Head of the Department, or the Dean of the School or Faculty, before being made.
   3. All expenditure on trust funded activities must be accounted for in an appropriate departmental activity within the University. Expenditure may not be coded directly to a Foundation Trust account.
   4. A journal is used to transfer distributions from trust funds to the University to fund that expenditure. This journal is completed by Finance Advisory staff for the GST exclusive costs and can be done in the following ways:
      • A lump sum at the end of the month covering all payments made during the month,
      • A regular monthly lump sum,
      • Individual journals covering individual payments, or
      • An annual journal covering all payments made during the year.
   5. This procedure ensures that Departmental accounts reflect income provided to the University by the Foundation Trust, and all research, teaching and admin expenditure is measured in the University's reporting of outputs.
   6. The General Ledger journal will always be:
      
      

      DR Trust Fund TL

      xxxx.3795 (Trust Distributions to the University)

      CR University

      GL 10.xx.xxx.1921.00 (Distribution from Trusts)

      The Project Ledger (Q Accounts) journal will always be:

      DR Trust Fund

      TL xxxx.3795 (Trust Distributions to the University)

      CR University

      PL xxxxxx.xx.Q.xx.1331.00 (Distribution from Trusts)

      Any other journal entries in the Trust Ledger will be the responsibility of Treasury staff in the Financial Services Division.

   7. At the end of each year Financial Services send out a form to be signed by the Head of the Department or the Dean of the School or Faculty to confirm that the funds distributed have been spent in accordance with the purposes of the Foundation Trust.
   8. A Financial Services Division audit of the 30 largest trust distributions will be completed at the end of the financial year to confirm that all distributions were made in accordance with the purposes of each trust fund.

3. T Activities (little t's)

   1. These are tagged gifts and bequests, which are not Trusts, and are generally known as little t's. The capital balances reside within cost centre accounts as T activities and are not required to be maintained permanently. These accounts are similar to carry forwards, but for three notable differences:
      • They are interest bearing,
      • Each fund may be fully expended provided the purpose/s given by the donor are met, and
      • The balance sits in dissection 9962
   2. Authorised expenditure is coded to the appropriate dissection within the T activity. The balance brought forward is updated before the end of March each year.

Contact for further information

For further information, contact:

The Treasury Accountant
Email fsd.treasury@otago.ac.nz