Matched funding scheme for voluntary giving 2008 to 2011

1. What is the aim of the matched funding scheme for voluntary giving?

This scheme is the first of its kind in the UK, and is intended to promote a culture of philanthropic giving to higher education institutions, which outlasts the duration of the scheme.

The scheme will also help other directly funded higher education providers in England to increase their capacity to raise funds.

2. Who are the main intended beneficiaries of the scheme?

The benefits of the scheme should be spread widely across the higher education sector.

3. What is the timescale for us to decide which tier we wish to join?

The deadline for response to HEFCE was 30 June 2008.

4. Will the monetary value of each tier confirmed prior to the deadline help us to decide?

No. We provided illustrative examples, but the downside of asking HEIs to express a preference is that the monetary value of the caps could not be determined in advance.

5. Is there a guarantee that the total money available for the match in tier three will be greater than in tier two (irrespective of the number of institutions entering tier three)?

We stated that the level of the cap in tier three would be higher than the cap for tier two but how much higher depended on the number of institutions electing to join this tier. It was possible that institutions entering tier three may have needed to raise a lot more money for match but ended up with less match money than they might get in tier two due to the number of other institutions entering the same tier. This risk is part of entering tier three - more risk, more reward.

1. What is the difference between grants, contracts and gifts?

A grant is a financial assistance mechanism a sponsor uses to award funds for specific research studies. The responsibility for the performance of the project rests primarily with the grant recipient, who commits resources to fulfill expectations of the sponsor under specified constraints.

A contract is an award establishing a legally binding procurement relationship between the sponsor and the recipient. It obligates the recipient to furnish a project outcome or specific service that is defined in detail in the written contract, and it binds the sponsor to pay for it.

Funding for research from charitable foundations for a defined piece of work to generate new knowledge in specified areas of intellectual interest, where formal peer review scrutiny is normally involved, is excluded from the matched funding scheme. Generally, these research grants are most frequently initiated by academics through the research office, not the development office.

A gift is a voluntary transfer of money by a donor, made with philanthropic intent. After receipt, the gift must be owned in full by the receiving institution, and the recipient institution must retain complete ownership of any resultant work or project. The donor may not retain any explicit or implicit control over a gift after acceptance by an institution.

Only gifts are eligible for matched funding.

2. Is there a clear definition of philanthropic gifts, which would help us identify income eligible for matching?

Eligible gifts are donations of cash or shares which are given voluntarily with philanthropic intent for the benefit of the institution. After receipt, the institution must own the donation in full, and any work, project or intellectual property that results. There must be no contractual conditions attached to the donation.

A donor can request that a specific area should benefit from their donation (for example, research, a school or faculty), but this cannot become a condition of the donation. The institution may report informally on the use or impact of their donation as appropriate, but the donor may not retain any explicit or implicit control over it. Neither can the donation benefit the donor - the donor should not receive exclusive information or rights, promotion or sponsorship (indirectly or requested), preferential consultancy arrangements, or any other forms of financial benefit.

1. We have several streams of income from previous pledged donations. Will we be able to count these donations from previous pledges towards matched funding, if they come in after 1 August 2008?

Yes. The matched funding scheme aims to help institutions attract new philanthropic gifts but donor integrity is also considered. If pledges made previously turn into eligible cash donations received into the participating institution's accounts from 1 August 2008 they can be counted.

2. Are donations from gift clubs eligible for matching?

Yes. These are stewardship devices, and they comply with the Gift Aid rules. There is no 'contract' to provide a service.

3. Are donations from 'friends' clubs eligible for matching?

Yes, unless they are subscriptions that service or benefit the donor (for example, free entry to a gallery, priority bookings).

4. Can employers 'match a match'? I wish to donate £200 to my university, and my employer has agreed to match this to make a £400 total. Would the matched funding scheme match the £400 total or just my initial gift?

Yes, the matched funding scheme would match the £400 total. However donors and their employers must be external to the recipient university. Participating institutions cannot ‘match a match’ of any donations from their own employees, and subsequently claim match funds on the total amount.

5. Are donated shares eligible for matching?

Yes. For matching purposes the cash value is fixed at the value of the share on the date of donation.

1. I understand matched funding eligible cash income is equivalent to philanthropic cash income, but are there any exceptions?

Yes. Income from the following sources will not be eligible for matched funding purposes:

• Bequests and legacy gifts (that is, legacy income received from deceased individuals)
• gifts in kind
• lottery grants
• funds from foreign governments (grants and gifts)
• gifts from major trusts and foundations that donate over £60 million annually. These include:
  • UK trusts and foundations
    • Arts Council England
    • Wellcome Trust
    • Co-operative Action
    • National Lottery
  • International trusts and foundations (all in the US)
    • Gates Foundation
    • Ford Foundation
    • Lilly Endowment
    • Robert Wood Johnson Foundation
    • William and Flora Hewlitt Foundation
    • W.K. Kellogg Foundation
    • Gordon and Betty Moore
    • Jewish Communal Foundation
    • Andrew W. Mellon Foundation
    • John T. and Catherine McArthur Foundation
    • Annie E Casey Foundation
    • Walton Family Foundation
    • David and Lucile Packard Foundation
    • Pew Memorial Foundation
    • Kresge Foundation
    • United Jewish Appeal
• gifts funded through partnerships between trusts and foundations where one of the partners donate over £60 million annually. These include:
  • UK trusts and foundations
    • Wolfson-Wellcome Capital Awards in Biomedical Science.

Gifts from any other UK and international trusts and foundations should be included, including grant income from 501(c)(3) registered foundations in North America.

2. We are making an application to the Wellcome-Wolfson Capital Awards in Biomedical Science. Would this be matchable?

No. Donations from initiatives funded jointly by Wolfson (eligible donor) and Wellcome (ineligible donor) would not count for matched funding purposes, on the basis it will be impossible to ascertain what part of a donation could be attributable to which foundation.

3. A legacy to our institution has just been realised and the cash is now in the institution's accounts. Will this count for matched funding?

No. Legacy gifts, realised or not, are not eligible for matched funding.

4. We received a Universities UK communication requesting case studies from our institution in respect of major gifts, including bequests. So are bequests match-fundable, after all?

No. Bequests are not match-fundable. The Universities UK publication will be used to inform the wider picture of voluntary giving in the UK higher education sector.

5. Our institution has been donated a piece of artwork. Can we sell it and claim the cash value as a donation for matching?

No. Only donations of cash or shares are eligible for matched funding. If the donor sells the artwork and donates the income from the sale to the institution, this can be matched.

6. A large amount has been pledged to our institution in this financial year. Can we include the value for matched-funding purposes?

No. Pledges do not count for matched funding whenever they were or are made. As and when they turn into actual eligible donations, after 1 August 2008, they do count.

7. Our university will be holding a fundraising lecture event, with all proceeds from the sales of tickets going towards a particular scholarship fund. Will this count for matched funding?

No. Money raised via ticket sales is not eligible for matched funding. This is effectively a contract (payment of ticket ensures entry to the lecture) and not a philanthropic donation.

1. Can donors specify how they wish their donations to be used?

A donor can give to a specific department or programme at their chosen institution, and the donor can expect the institution to honour this restriction. If the donation will fund a programme of activity, the donor and recipient may wish to discuss its aims. Recipient institutions also often wish to involve donors informally in the activity they are funding. The donor should not benefit personally from their donation.

2. We would like to produce a gift agreement, which will confirm in writing what we have agreed with the donor in respect of their donation. Is this acceptable?

A gift agreement may be written to outline the way in which a donation will be used: it can detail the department or programme the money will be directed towards, informal reporting proposed, and set out the aims of the activity or activities to be funded through the donation. Any gift agreement should not benefit the donor personally, or offer any kind of sponsorship arrangements. Such an agreement should not give the donor any influence over who is granted appointments, scholarships or other awards.

Any gift agreement should be written with the understanding that the donation is a philanthropic gift, given over to the control of the participating institution, although the donor can expect the institution to honour their wishes.

3. A potential donor wishes to fund a student scholarship. Would this count for matched funding?

Yes, a donor may establish a scholarship fund. But the recipient institution must select the student.

4. We have received a donation towards a student scholarship, and have offered the donor a seat on the board which has final responsibility for student selection. Is this donation eligible for match funding?

Provided that it is clearly understood by all parties that the donor cannot have undue influence, or power of veto, over the selection of the student, and that such power lies autonomously with the institution, we would consider this reciprocal, and the donation would be eligible. But the donor cannot make their sitting on such a board or panel a requirement of the donation.

5. A donor is prepared to make a restricted contribution to a professorship, on the condition our institution awards a professorship to a specified individual. Would this count for matched funding?

No. The appointment process must remain under the control of the recipient institution and its appointment procedures.

6. Our institution wishes to give donated money as prizes to students. Like a scholarship, this would benefit students - so can it be match funded?

As long as the donations are freely gifted to the institution, and there are no benefits to the donor (such as promotional material as part of or included with the prize) then it is eligible.

1. Can donors specify how the resultant match from their donations should be used?

No. The scheme rewards fundraising efforts in higher education institutions by providing discretionary matched funds, and giving institutions the freedom to decide how those funds are best spent. Potential donors might request universities to match their specific gift, but this should not be an automatic expectation.

2. Can we confirm to each donor how we use the match on their donation?

It would be advisable to inform donors of the institution's strategy in respect of how the use of match is proposed.

1. We would like to acknowledge a donor’s gift. How could we do this without jeopardising the match?

Reciprocation of donor generosity (such as the naming of a chair, a plaque or acknowledgement via a printed publication such as a newsletter or Annual Report) must be a simple acknowledgement and not constitute advertising or sponsorship.

2. For our capital campaign we are planning to put the name of a donor above a door when they donate above an agreed level. We do this to encourage donations and recognise the donor. Would these donations be eligible for the matched funding?

Naming opportunities are reciprocation and not benefit - therefore the donation is eligible for matched funding. However if the company logo appears this becomes sponsorship, and will not be eligible for matched funding.

3. A local company has offered a donation to the media department at my university. The company produces equipment for media recording, and it has been suggested that we name our recording studio after the donor or one of their products. Can we do this?

Yes, as long as the naming convention and practicalities rests with the university.

4. The normal stewardship process at my institution frequently includes publication of logos of corporate donors on our web-site as a 'thank you' for their gift. If the appearance of a company logo is not a condition of the donation, is this match-fundable?

No. The use of a company logo (whether directly requested or not) constitutes sponsorship.

Donors should not receive any sponsorship, indirectly or requested, for their donation.

1. What is the difference between charitable trusts and research trusts, and how can we tell if their gifts would be eligible for matched funding?

For eligibility in the scheme, both types of trusts should donate less than £60 million per annum. Monies offered to an institution must be in the form of gifts. Very large trusts which donate over £60 million per annum are excluded from the scheme.

Funding for research from charitable foundations for a defined piece of work to generate new knowledge in specified areas of intellectual interest, where formal peer review scrutiny is normally involved, is excluded from the matched funding scheme. Generally, these research grants are most frequently initiated by academics through the research office, not the development office.

As a guideline, if the grant is dictated by the grant-making institution (linked, for example, to a call for proposals or made as a direct offer at a set amount to a particular institution), it should be excluded from matching. If the budget is a point of negotiation, or the grant results from an approach to the trust by the institution, then it probably should be included, as long as it meets the qualifying criteria. Please contact HEFCE (matchedfunding@hefce.ac.uk) for advice.

Gifts from individuals for research, and from their associated family trusts, where there has been negotiation between the individual and the university, are eligible for matched funding.

2. Our institution has a development trust through which we currently undertake all our fundraising activities. Would gifts made through our development trust qualify for matched funding, or would they need to go to the institution directly?

We do not wish to prevent people accessing income from fundraising trusts for matched funding purposes. But the scheme aims to encourage the public perception that higher education institutions are worth giving to as charities in their own right, so HEFCE will require any donations made to trusts after 1 August 2008 to be paid into the institution's accounts before any matched funding grant can be released. Funding must be paid into the institutions accounts in the same financial year that it is received: that is, any donation made between 1 August 2008 and 31 July 2009 must be moved into the university accounts in this same time period. Donations made to the trust before 1 August 2008, even if transferred after this date, will not be considered eligible for match funding.

3. Would a consolidated trust of a higher education institution (HEI) qualify to participate in the matched funding scheme?

Trusts which are consolidated into the HEI's accounts are considered to be part of the HEI, and therefore monies raised are eligible for matching.

4. We have a trust which has not been engaged in fundraising, and which we have used for tax-efficiency purposes. The trust has some assets which could be gifted to the university as a result. Would this count for matched funding purposes?

Trusts used solely for the purpose of tax efficiency do not comply with the general aims and criteria of the voluntary giving scheme. Therefore these assets would not qualify for matched funding.

1. A company has offered to fund the full costs of a senior lecturer, for a five-year period, as part of a private research contract the company is funding. Is this eligible for matched funding?

No. This is a research contract and therefore ineligible for matched funding.

2. One of our researchers has received an award from a Foundation, which provides funding for him to undertake a specific project. Is this eligible for matched funding?

No. This is a research grant and therefore ineligible for matched funding.

3. A charitable trust has approached us to fund a professorship in a specific field of engineering. They are in agreement that all findings should be in the public domain, but insist that if intellectual property with commercial value comes from the research programme, the rights to this will be split 50/50 between the university and the charity. Is this eligible for matched funding?

No. Any intellectual property rights, including commercial value, should remain the property of the university.

4. We have noted that a new award, funded jointly by a Foundation and a Research Council, focuses on salary enhancement for a named researcher. Would this be eligible for matched funding?

No. This award is conditional to a specified individual, and does not allow the institution discretion in the use of the funding.

5. A major trust already funds our university through an existing research contract, and has offered to make a philanthropic donation towards a new building. Is this eligible for matched funding?

Research contract funding is ineligible, but philanthropic gifts are eligible. Large trusts donating over £60 million per annum are excluded from the matched funding scheme, so it would depend on the trust in question.

6. We have a donor who wishes to give a substantial donation to a specific research project. There are no deliverables, the donor does not want to have results reported, will not have any rights over intellectual property, and has not restricted the donation in any way, other than they want to support the specific research in which they are interested?

Unrestricted cash gifts to support research are eligible for matched funding.

1. Is only Gift Aid 'earned' after the 1 August 2008 start date eligible, or can previous year's unclaimed Gift Aid be counted as well?

Only Gift Aid earned after 1 August 2008 is eligible. This should be the gross expected value of a donation at the time of the claim. Matching will apply to gifts once Gift Aid is included.

2. Can transitional relief be counted?

No.

1. If the Ross-CASE survey will not be used to claim matched funding from HEFCE, why is its completion mandatory for institutions participating in the scheme?

The Ross-CASE data will be used to assess the impact of the scheme in respect of philanthropic donations to the higher education sector. It should be completed by all participating institutions, irrespective of experience in fundraising.

2. When will the 2008-09 Ross-CASE survey be available?

The 2008-09 Ross-CASE survey will begin on 14 September 2009, with the closing date for responses on 6 November 2009. Full details will be published on the NatCen web-site. NatCen will write directly to heads of institutions to inform them of the timescale.

3. I have a query regarding completion of the survey. Who do I contact?

All queries regarding the Ross-CASE survey should be directed to the NatCen survey team on 020 7549 9584 or at rosscasesurvey@natcen.ac.uk.

1. What is the process by which institutions can request and claim their matched funding?

Please refer to claiming and payment.

2. Does matching apply to cash gifts once Gift Aid is included, rather than just on the original gift?

The matched funding will apply to cash gifts once Gift Aid is included. Gift Aid is not obtainable on the match proportion.

3. What is HEFCE’s guidance on the use and accounting of matched funding income? Our Finance Office has told Fundraising they must spend the money they have brought in the current financial year (before 31 July 2009). We have used the promise of matched funding to leverage donations, and we think it neither sensible nor ethical to spend quickly merely because we are running up to the end of the financial year.

The use of matched funding is at the discretion of the higher education institution (HEI) (that is, when and how institutions choose to spend this money is for them to decide). Matched funding can be applied over an extended period with no requirement to spend it all at once.

In terms of accounting, HEIs are free to account for the matched funds however they want internally within their management accounts. For instance, the funds could be placed in an internally earmarked reserve or fund which mirrors the endowment fund. In terms of external financial reporting, HEFCE matched funding is general income, and as such should be reported in the financial statement and accounted for in the year it is receivable.

Matched funding is also paid in the financial years following receipt of the gift, so there is a time lag whereby the gift is received one year and the matched funding received the following years.

HEFCE has not imposed any restrictions, nor require any reporting on the use of matched funds, so there are no constraints (aside from the law and the Financial Memorandum) on how HEIs manage their public funding.

Finance Directors may wish to refer to the BUFDG weekly digest (1 July 2009) 'Accounting for matched funding' where responses from Andrew Connolly, Chair of the BUFDG Financial Reporting Group and Ian Lewis, Head of Finance at HEFCE are posted on the Discussion Board (registration required).

4. We would like to use matched funding from the scheme to set up an endowment, however SORP does not seem to allow this. How can we use matched funding to set up an endowment?

HEFCE matched funding is unrestricted income, so it is recognised as income in full when received. As this money is not a restricted endowment, the latest SORP does not allow it to be transferred out below the line to create endowments.

It has been clarified by BUFDG that income will therefore need to be included as part of the surplus or deficit for the year, and transferred to the accumulated general reserves on the balance sheet.

For more information, consult the BUFDG Discussion Board (registration required).

5. At the end of the scheme (31 July 2011), will we be able to match accrued donations?

No. Accruals at the end of the financial year 2010-11 will not count for matched funding. Donations will need to be received into the institution's accounts by 31 July 2011.

1. Why did HEFCE pay more in February 2010 for 2008-09 eligible gifts than we expected?

The profile of payments that we announced originally - 11.5 per cent, 31 per cent and 57.5 per cent for each of the three years - was based on the timing of the total £200 million funding being provided to us by the Government, of £23 million in 2009-10; £62 million in 2010-11; and £115 million in 2011-12. The annual percentages were expressed as percentages of the total £200 million (£23 million = 11.5 per cent; £62 million = 31 per cent; £115 million = 57.5 per cent).

So had the sector received eligible gifts in 2008-09 that would trigger matched funding of £200 million, we would have still pay out £23 million but it would have been 11.5 per cent of the eligible amounts.

The letter sent to universities and colleges alongside the first payment in February 2010 said:

'Your February payment from HEFCE is [amount of payment]. This amounts to 37.6% of the total match for your first year's claim, based on your tier. It was originally anticipated that HEFCE would pay out only 11.5% of eligible match against the first year of the scheme: this was based on the amount of funding available for the first year compared with the scheme total of £200 million. The higher percentage reflects the funding available as a proportion of the actual eligible funding raised in the first year. Further payments will be made across the next two years up to the maximum for your tier, which will take account of the first year's payment.'

2. How much should we plan to receive for years 2 and 3?

This depends on the total eligible, giving up to and including those years that qualifies for matching. If the eligible giving for 2008-09 and 2009-10 in aggregate is, say, £150 million , then the £62 million paid out would be around 41 per cent; if the eligible giving for 2008-09 and 2009-10 in aggregate is, say, £250 million , then the £62 million paid out would be around 25 per cent.

The cash amount being paid out is unchanged (£62 million in February 2011) but the percentage will vary depending on the total of eligible giving for the sector.

For the final payment in February 2012 we will pay out 100 per cent of the cumulative eligible giving over the three years, less the amounts paid in the first two years.

Aggregate payments for all years to any institution cannot exceed the cap for their tier.

3. If we feel after year one or year two, that we are in the wrong tier, will we be able to shift tiers?

Downward tier movement is not permitted. Capacity for upward tier movement will be analysed in the final year of the scheme.

Flexibility will depend on compensating changes to other higher education institutions so the scheme stays within budget overall. Institutions therefore should not plan to move up a tier, as no guarantees can be made.

4. What would happen if we were over-ambitious and could not raise the necessary philanthropic funds? Can we relegate a tier?

We will illustrate this by using the example of an over-ambitious institution electing to join tier three, capped at £2.75 million, but who are clearly not going to meet anything like the £8.25 million needed to get the £2.75 million match. Resultantly they would just receive the annual 11.5 per cent, 31 per cent, and 57.5 per cent payouts of match on a 3:1 basis of what they have raised. Only upward movement of tiers will be considered at the end of year two. Therefore, institutions are strongly advised to remain realistic when choosing the most appropriate tier.

5. Will league tables of funds raised by institutions be published?

Neither HEFCE nor the Department for Business, Innovation and Skills intend to publish institutional data.

1. When will HEFCE pay year 1 match and how do we claim this?

Payment of year 1 matched funds (11.5 per cent) will be made by the end of March 2010.

The actual claims for matched funding income for 2008-09 (the first year of the scheme) will be made via a separate return form. The completed return form must be certified by the institution's Finance Director prior to submission to HEFCE. 

2. Why do we need to complete this return form, when it's mandatory to complete the Ross-CASE annual survey?

The annual Ross-CASE survey will inform general philanthropic trends across the higher education sector. The return form will inform HEFCE of an institution’s eligible philanthropic fundraising totals for 2008-09, to enable calculation of matched funds for the first year of the scheme. The return form, unlike the Ross-CASE survey, is certifiable and auditable.

3. Can we claim for Gift Aid that has not yet been received?

Yes, but Gift Aid amounts due at 31 July 2009 must relate to gifts actually received during the financial year ending 31 July 2009.

4. Can we claim for transitional relief?

No. Transitional relief is not eligible for matched funding.

5. Why does HEFCE need information regarding major gifts?

To inform the Government how philanthropic giving to higher education has been effected by the matched funding scheme.

6. Why does the institution’s Finance Director need to certify this form?

The Finance Director must, on behalf of the institution, certify the completed return form prior to submission to HEFCE. Certification confirms that:

• gifts included in the return form have been received into the institution’s accounts during the financial year ending 31 July 2009
• gifts meet HEFCE’s matched funding eligibility criteria
• Gift Aid and Gift Aid due relates to eligible gifts which have been received into the institution’s accounts during the financial year ending 31 July 2009
• gifts and Gift Aid claimed will be included in the institution’s consolidated audited financial statements for the financial year ending 31 July 2009
• it is understood that this return form is auditable and that this institution may be selected for audit.

7. When is the deadline for return to HEFCE?

The certified completed return form should be submitted electronically via the HEFCE extranet by no later than 1700 on 20 November 2009.

The original copy of the certified completed return form, signed by the institution’s Finance Director, should then be sent to HEFCE to arrive by 1700 on 4 December 2009.

8. Are these deadlines flexible? What will happen if our institution does not meet these deadlines?

These deadlines are fixed and non-negotiable, as late submissions would result in a delay in payment of matched funds for all institutions.Institutions not meeting both these deadlines will not receive their matched funds for year 1 of the scheme.

9. Will we be audited?

A sample of institutions from all tiers will be selected annually for audit. Institutions selected for audit of their data returns of matched funding income for 2008-09 (the first year of the scheme) will be informed early in 2010.

10. I have a question regarding completion of the return form. Who do I contact?

Please contact matchedfunding@hefce.ac.uk in the first instance.