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OUS Fiscal Policy Manual
Accounting and Financial Reporting

OUS » Controller's Division » Policies » OUS Fiscal Policy Manual » Accounting and Financial Reporting
Section: Accounting and Financial Reporting Number:  05.736    
Title: Accounting for Venture Development Funds

 

Index

POLICY

POLICY

.100 POLICY STATEMENT 

The following policy provides for the uniform and consistent accounting and reporting of the university venture development funds described in Oregon Administrative Rule (OAR) 580-043. . The policy also serves as a reference for answering questions.

.110  POLICY RATIONALE

NEED AND OBJECTIVE

To have a uniform and consistent methodology among OUS institutions to account for the financial activity and balances of each university’s venture development fund.

University records pertaining to the venture development fund must track the following:

  • Donations to the university’s venture development fund
  • Issuance of tax credit certificates
  • Expenditures of university venture development funds
  • Interest earnings on the cash balances of the university venture development funds
  • Royalty revenue applicable to the projects that were funded by university venture development funds
  • Reimbursement of tax credit certificates to the State of Oregon general fund.

OAR 580-043 also contains annual reporting requirements to the OUS Board.

.120  AUTHORITY

ORS 351.085 - Duties and Powers of Chancellor
ORS 351.090 - Standardization of accounts and Records; Preparation of Budget; Allocation of Funds
OAR 580-040-0005 - Delegation and Assignment of Responsibility
IMD 6.001 - Finance and Business Affairs Accounting Policies - Assignment of Responsibility

.130  APPROVAL AND EFFECTIVE DATE OF POLICY

Approved by the Associate Vice Chancellor for Finance and Administration/Controller on XX, with an effective date of April 1, 2008.

.140  KNOWLEDGE OF THIS POLICY

All institutional and Chancellor's Office personnel with accounting and financial reporting related responsibilities should be knowledgeable of this policy.

.150  DEFINITIONS

Refer to OAR 580-043 for definitions that pertain to the university venture development fund.

.160  RESPONSIBILITIES

University and OUS Controller's Division responsibilities related to the accounting and reporting of the university venture development funds include the following:

CONTROLLER'S DIVISION RESPONSIBILITIES:

  • Developing accounting and financial reporting policies related to the university venture development funds.
  • Creating report templates for annually reporting the financial activity and financial balances of the university venture development funds.

UNIVERSITY RESPONSIBILITIES:

  • Developing institutional accounting policies related to the university venture development funds.
  • Maintaining accounting records of the financial activity and financial balances of the university venture development funds.
  • Preparing annual financial reports of the financial activity and end-of-year balances of the university’s venture development funds.

.210 GENERAL DESCRIPTION OF UNIVERSITY VENTURE DEVELOPMENT FUND

The venture development fund program is designed to fast-track commercialization of research discoveries at Oregon’s eight public universities: Oregon Health & Science University (OHSU), Eastern Oregon University (EOU), Oregon Institute of Technology (OIT), Oregon State University (OSU), Portland State University (PSU), Southern Oregon University (SOU), University of Oregon (UO), and Western Oregon University (WOU).

Oregon taxpayers who contribute to the venture development fund program are eligible to receive a 60 percent State of Oregon income tax credit. The donors receive the tax credit in return for helping move research from lab to market. The tax credit certificates are issued to donors on a first-come, first-served basis.

The legislation allows for $14 million in maximum donations to the venture development fund program that are eligible for tax credit certificates. Donations to the venture development fund are used exclusively to pave the way for the commercialization of university-based research.

The universities will repay the state for claimed tax credits with 20% of the income from royalty revenue, up to the amount of tax credits issued by the university as a result of contributions to its university venture development fund. As the initial tax credits are repaid, additional tax credits may be issued allowing a cycle of reinvestment in university-derived innovation.

.310 MAXIMUM TAX CREDIT CERTIFICATES

For donations to the university’s venture development fund, a donor may receive a tax credit certificate for up to 60% of the amount donated. OUS-wide, the State of Oregon has limited the total issuance of venture development fund tax-credit certificates to $6 million. OAR 580-043 distributes the maximum amount of tax credit certificates among the OUS institutions as follows:

Institution
Maximum Total Donation Amount Subject to Issuance of
Tax Credit Certificates
Maximum Issuance of
Tax Credit Certificates at
60% of Amounts Donated
EOU, OIT, SOU, WOU Combined
$ 500,000
  
$ 300,000
  
OSU
5,350,000
  
3,210,000
  
PSU
880,000
  
528,000
  
UO
3,270,000
  
1,962,000
  
 
____________________________________________________
Subtotal - Oregon University System (OUS)
$ 10,000,000
 
$ 6,000,000
 
OHSU
4,000,000
  
2,400,000
  
 
____________________________________________________
Total
$ 14,000,000
 
$ 8,400,000
 
 
Double Line

 

.410 RECEIPT OF DONATIONS

Donations to the university venture development fund may be received by either the university foundation or the university. The accounting records must record and report the following on both a year-to-date and inception-to-date basis:

  • Donations pledged
  • Donations received
  • Interest earnings revenue on cash balances of donations received
  • Distribution of donations received

Donations received must be placed in an interest bearing fund and all interest earnings are credited to the venture development fund. For donations received directly by the university, the university will create a fund under fund type 34 or fund type 35 with a roll-up “Gift” fund in the table below.

Type
Fund
Description
34
 Private Funds - Restricted
  400000 Individual Gift Grant Contract
    400001 Individual Grant
    403000 Individual Contract
    405000 Individual Gift
  410000 Commercial Gift Grant Contracts
    410001 Commercial Grant
    413000 Commercial Contract
    415000 Commercial Gift
  420000 Oth Nonprofits Gift Grant Contracts
    420001 Other Nonprofits Grants
    423000 Other Nonprofits Contracts
    425000 Other Nonprofits Gifts
35
 Foundation Funds - Restricted
  430000 Affiliated Foundations GGC
    430001 Affiliated Foundations Grants
    433000 Affiliated Foundations Contracts
    435000 Affiliated Foundations Gifts
    438000 Fndn Interest-Endw Match Elig
  440000 Other Foundations Gift Grant Contr
    440001 Other Foundations Grant
    443000 Other Foundations Contracts
    445000 Other Foundations Gifts


The fund(s) for recording donations directly to the university would contain a
“SF - Donation Fund” bank code.

.420 ISSUANCE OF TAX CREDIT CERTIFICATES

Tax credit certificates are issued by the institution. The institution maintains a record outside of Banner FIS of all tax credit certificates issued.

.430 TRANSFER OF DONATIONS FROM UNIVERSITY FOUNDATION TO UNIVERSITY VENTURE DEVELOPMENT FUND

  • The university creates a fund with fund type 35 under fund roll-up “435000 – Affiliated Foundation Gifts” to receive the venture development fund donations from the university foundation.
  • The fund is interest bearing and should be coded with bank code “SF – Donation Fund.”
  • The fund should also be assigned a grant code to allow for both year-to-date and inception-to-date reporting.

.440 FINANCIAL ACTIVITY OF UNIVERSITY VENTURE DEVELOPMENT FUND

  • The institution establishes a separate fund and separate inception to date grant code for each venture development fund award.
  • The fund should be part of fund type 35 under roll-up fund “430001 - Affiliated Foundations Grants.”
  • If the university’s venture development fund will fund multiple grants, the institution must create a separate roll-up fund to separately identify the group of grant funds funded by venture development funds.
  • The grant fund is interest bearing with bank code “SF-Donation Fund.”
  • The grant fund for each venture development award would record the transfer of venture development donations, the expenditures pertaining to the grant fund, and the interest earnings on the cash balances of the grant fund.

.450 ROYALTY REVENUE ATTRIBUTABLE TO UNIVERSITY VENTURE DEVELOPMENT FUND

  • The institution establishes a separate fund and separate inception to date grant code for each licensing or patent agreement attributable to the venture development fund.
  • Each licensing or patent agreement royalty fund should be part of fund type 12 – Designated Operating Funds.
  • If the university has multiple licensing or patent agreement funds attributable to the venture development funds, the institution must create a separate roll-up fund to separately identify this group of licensing and patent agreement funds.
  • Each licensing or patent agreement fund is interest bearing with bank code “SB-Higher Education Invention Fund.”
  • Each licensing or patent agreement fund would record the receipt of royalty revenue, other revenue (e.g., interest earnings), transfers to the State of Oregon General Fund for the 20% of gross royalty revenue, and other expenditures resulting from the licensing or patent agreement.

.510 ANNUAL REPORTS OF UNIVERSITY VENTURE DEVELOPMENT FUND

Institutions prepare the following annual report of their venture development fund. The report will track the donations, use, and earnings of the venture development funds, and ensure that the tax credits not reimbursed to the State General Fund do not exceed the total amount of tax credits authorized to each institution.

    Year to Date Inception to Date
University Foundation Venture Development Funds    
  Beginning Balance   $
  Contributions to Fund    
  Other Revenue    
  Less: Amounts Transferred to University
___________________________________
  Ending Balance $ $
    Double Line
       
University Venture Development Funds
(Fund Type 35) 		   
  Beginning Balance   $
  Amounts Received from Foundations    
  Other Revenue    
  Less: Expenditures
___________________________________
  Ending Balance $ $
    Double Line
       
University Royalty Funds Funded by Venture Development Funds (Fund Type 12 - Designated Operating Funds)    
  Beginning Balance   $
  Royalty Revenue    
  Other Revenue    
  Less: Transfers to State General Fund    
  Less: Other Expenditures
___________________________________
  Ending Balance $ $
    Double Line
       
Tax Credits Issued by University    
  Beginning Balance   $
  Tax Credits Issued During Year    
  Tax Credits Repaid During Year
___________________________________
  Ending Balance $ $
    Double Line

 

.690 CONTACT INFORMATION

Direct questions about this policy to the following offices:

Subject Contact
General questions from institutional personnel Institution Office of Business Affairs
General questions from institutional central administration and Chancellor's Office personnel Chancellor's Office Controller's Division

 

.695  HISTORY

XX/XX/XX - Approved

Last Updated: 02/20/08
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