Designated Funds

DEFINITION

Designated funds are current funds that are being accounted for outside of the general fund. These funds are a subset of the general fund and therefore belong to the University. The Financial Accounting and Reporting Manual define designated funds as: "Balances of current unrestricted funds represent those 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. If desired, those designated balances may be shown as designated, with appropriate disclosure of the purposes of those designations, but those balances may not be shown as restricted... "

PURPOSE

Designated Funds are used to account for funds that are for a specific purpose or activity. Most commonly used for Indirect Cost Recovery, Athletic Camps, non-gift related Fund Raising, EPEO revenue share, designated lab and course fees and Conferences. With the exception of the EPEO revenue share and the lab and course fees, generally the source of revenues in the Designated fund group of funds comes from non-Eastern Michigan University affiliated individuals and groups who purchase miscellaneous goods and services produced as a by-product of our joint missions of instruction, research, and public service. When revenue is recorded in a designated fund the associated expenses must be recorded in a designated fund as well. Designated funds are considered temporary but may be reoccurring (as in camps and conferences).
As these funds are considered temporary, salaries of permanent staff and faculty may not be funded out of designated funds.

Designated funds may be used to supplement general fund expenditures. This will 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 to be used for University initiatives such as programs or centers & Institutes as these are more appropriately retained in the general fund.

Procedures for Establishing a New Designated Fund

Obtain a Designated Fund Application from the Accounting website.

A request for a new designated fund initiated by the Financial Manager must be approved by the appropriate Vice President or Dean.

A fund code will be assigned by the Accounting Office. The new designated fund budget must be funded with a minimum of $500 before expenditures will be allowed (exceptions will be made for IDC Funds). Annual budgets are required for all new and existing designated funds. It is our policy to hold the number of designated accounts to a minimum and therefore only one IDC fund per PI is acceptable

Inactive Designated Funds

Designated funds that have not had any activity for 24 consecutive months will be deemed inactive and therefore will be closed. A written notification will be sent to the Financial Manager and the approving Vice President prior to closing. A positive balance will be transferred to a department's alternative designated fund. However, if the fund balance is negative, the negative balance will be charged against a department's alternative designated fund.

If a department does not have an alternative designated fund the Dean's designated fund will be utilized.

Negative Balances

A report will be generated quarterly by General Accounting and 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 the negative balance remains for 2 consecutive quarters the appropriate Vice President or Dean will be notified. General Funds may be used to clear the negative balance and the designated fund will be closed not to be reopened.

Signature Authority

The General Accounting and Accounts Payable offices must be notified by the designated fund Financial Manager's supervisor in the event of a change in signature authority. The written notification should include the following:

  • Signature of the Employee to be removed
  • Signature and EID of the Employee to be added
  • Fund /Org
  • Effective Date of Change
  • Signature of the Dean/Department Head

Note: email may be used as approval signature.