- Designated funds are a subset of the General fund and therefore belong to the University. They account for funds from a specific purpose or activity.
- NACUBO's Financial Accounting and Reporting Manual define Designated funds as: "…current unrestricted funds represent(ing) … balances for operational purposes that have not been restricted by outside donors or grantors. These balances include funds that have been designated by the governing Board for specific purposes…."
- Most commonly used activities include:
- Sponsored Research Indirect Cost Recovery;
- Athletic Camps;
- Non-gift-related fund raising;
- Extended Programs and Educational Outreach (EPEO) revenue share;
- Certain lab fees and course fees; and
- Except for EPEO revenue share and lab/course fees, revenues come from external individuals and groups who purchase goods and services provided by the activities listed above.
- When revenue is recorded in a Designated fund, the associated expenses must be recorded in the same fund.
- Designated funds are generally considered temporary but may be reoccurring (as in camps and conferences).
Salaries of permanent staff and faculty may not be charged to designated funds without the Controller's approval.
- Designated funds may be used to supplement General fund expenditures. This can be accomplished by a funds transfer from the Designated fund to the General fund.
- Conversely, General funds may NOT be used to supplement Designated funds, unless a Designated fund falls into deficit. (see Negative Balances below)
- Designated funds are not used for University initiatives such as Institutes, Centers or Programs. These are appropriate for the General fund.
- Designated fund balances at fiscal year-end roll into the new year. In addition, spending budgets are increased monthly when new revenue is generated.
- Certain activities may be deemed taxable as unrelated business income .In addition, certain activities may require collection of Michigan Sales Tax . Review the links provided for more information, or call General Accounting at 7-1321 for assistance.
Procedures for Establishing a New Designated Fund
- Complete the Designated Fund Application form.
- Obtain approval from your Vice President or Dean.
- Send the form to 212 Hover or email it to General Accounting email@example.com .
- General Accounting will establish the fund code and inform the financial manager.
- To post revenue in a Designated fund, complete a Deposit Voucher . Forward the voucher and money to the Cashiers' Office in 201 Pierce.
- Spending can begin once revenues are posted in Banner. Complete a Direct Pay form for most types of spending. Forward it and the necessary support to Accounts Payable in 104 Hover. Utilize our forms page for more information on spending.
Inactive Designated Funds
- Designated funds with no activity for 24 consecutive months will be deemed inactive and reviewed for closure.
- Notification will be sent to the Financial Manager and associated Vice President prior to closing.
- The balance will be transferred to an alternative Designated fund within the department. If an alternative Designated fund does not exist, we'll transfer the balance to the department's General fund.
- Reports from General Accounting are sent to each Dean notifying them of a negative balance.
- Upon notification, the respective Designated fund will be inactivated and additional spending will not be allowed until the negative balance has been cleared.
- If a negative balance remains for 2 consecutive quarters the appropriate Vice President or Dean will be notified.
- General Fund discretionary budget may be used to clear a negative balance. The Designated fund may then be permanently closed.
- The Financial Manager or their Supervisor must notify General Accounting at firstname.lastname@example.org when a change in signature authority is necessary.
- Include the following:
- Fund code and title;
- Name of the Employee to be removed;
- Name and EID of the Employee to be added;
- Effective Date of Change