Use of Allocation Funds

Guidelines for using allocation funds

Rationale

The Indiana University Alumni Association, Inc., (IUAA) operates a Unified Dues Program that distributes alumni membership dues to chartered alumni communities. Allocations are based on a formula, which is approved by the Chief Executive Officer. These funds are a portion of the alumni membership dues that each member of a given chartered alumni community pays to the IUAA. A portion of these funds are tax-deductible and have been given with the donor/member intention of receiving alumni engagement and communications.

Policy

Purpose of Funds and General Guideline

For all chartered alumni communities, the funds are to be used for regular alumni engagement, programming, and communications to their alumni base.  (We do not provide a comprehensive list of specific items that the allocation can be should be used for, there are so many options and variations.)

General items that allocation funds should not be used for:

  1. Outright development, fundraising, and solicitation purposes not related to engagement activities.
    1. IUAA will support specific fundraising efforts outlined prior to the start of a fiscal year.
  2. Scholarships (the allocation dollars should not be put directly into any scholarship account).
  3. Gifts to another charitable organization.
  4. Fixed Assets (capital) or facilities type of purchases.
  5. Professional development, conference fees, or professional organization dues should not be paid for by dues allocation.

IU staff travel to alumni engagement events is allowed, using up to 20% of the annual allocation, if no other travel funds are available (via base funding or other available accounts). Expenditures should be budgeted for annually and entered in ABM with the constituent society annual budget.

 

Management and Oversight of Funds

Constituent Societies:
Management of funds is delegated to the constituent society staff by IUAA. Constituent society staff (academic school staff partner) are responsible for budgeting, expenses, and communication with alumni boards (when applicable) on funding and budgets. The IUAA staff liaison for constituent societies has final fiduciary oversight of these accounts.

Affiliate Groups:
Fiduciary oversight and management of funds are managed by IUAA staff liaisons to each group.  IUAA staff liaisons are responsible for budgeting, expenses, and communication with alumni boards (when applicable) on funding and budgets.

Chapters:
Fiduciary oversight and management of funds are managed by chapter volunteer leadership. Volunteers are responsible for budgeting, expenses, and reporting to IUAA. See Financial Reporting section below.

Additional Revenue

Additional funds raised via event proceeds or sponsorships can be used for the above items (if funds do not have a specified donor intent).

Gifts made with additional income to another charitable organization can be done, one time only, with an amount that does not exceed $2,500. These gifts must be approved by the IUAA and should only be considered in extreme or unusual circumstances. Gifts made to outside charitable organizations have a fiscal year cap of $2,500. Alumni communities should prioritize IU and IUAA scholarships and other IUAA fundraising priorities over any outside organization.

IUAA Alumni Communities grant funds are considered additional allocation money.

Constituent Society Fund Balance

Constituent societies are the only chartered alumni community allowed to maintain a fund balance. A fund balance is a carryover of funds from fiscal year to fiscal year. Fund balances should not exceed one year’s allocation (also known as the “one-time rule”).

  • Fund balance < 100% of annual allocation = full annual allocation
  • Fund balance > 100% and < 200% of annual allocation = partial allocation adjusted for the amount by which the fund balance exceeds the full annual allocation
  • Fund balance > 200% of annual allocation = no annual allocation

Allocations not dispersed due to the one-time rule, will not affect calculations of future allocation. The calculation is done on an annual basis and will not decrease future funding.

Constituent societies who plan to spend down their fund balance (in excess of their annual allocation and other revenue), for alumni engagement or communication activities should budget in ABM accordingly, and a deficit would be budgeted (expenses greater than allocation or other revenues). The deficit should not be greater than what is available in their fund balance. The IUAA staff has the option to request more information on fund balance spending plans in order to approve it.

Fund Balances can be found in the ABM software or via the Alumni Business Office.

Constituent societies with a negative fund balance by the close of the annual IUAA audit will have their dues allocation applied to their negative fund balance first. The remaining portion of the dues allocation will be the dollars for the budget that fiscal year.

Chapter Bank Accounts

I and U chapters are allowed to hold allocation funds in an external bank account. This will function as the chapter’s operating account where the IUAA will electronically deposit dues allocations. Chapter bank accounts should not be in excess of three times their annual allocation (3 times rule).

  • Bank account < 300% of annual allocation = full annual allocation (reviewed twice per year)
  • Bank account > 300% of annual allocation = no annual allocation (reviewed twice per year)

Financial Reporting

Constituent societies and affiliate groups must submit an annual budget for approval. Chapters are required to submit financial reports twice annually following IUAA guidelines.

 

Definitions

ABM: Advanced Budget Management; the software system used by the Alumni Business Office to input budgets and report budget and actual activity for IUAA.

ABO: Alumni Business Office.

Affiliate Group: An IUAA chartered special-interest or identity group.

Chapter: An IUAA chartered group based on geographic region.

Constituent Society: An IUAA chartered school or regional campus-based alumni association.

I Communities: Major national and in-state markets

One-Time Rule: Constituent societies must not exceed one-time their annual allocation in their fund balance by the close of the annual IUAA audit.

Three-Time Rule: Chapters must not exceed three-times their annual allocation in their bank account.

U Communities: Midrange national and in-state markets

Fund Balance: Year-to-year surplus (or deficit) of allocation funds and additional revenue less expenses.

 

If you have questions about the use of allocations, please contact your liaison.

Date of last update

This policy was last updated September 2017.