13.6 Revenue Generating Events

Policy Statement

Units must ensure that revenue-generating events are properly accounted for within Banner.

Reason for the Policy

To ensure accurate reporting for the University of Illinois System’s audited financial statements.

Applicability of the Policy

All units that manage the accounting aspects of a revenue generating event, including (but not limited to) conferences, seminars, symposia, workshops, banquets, fundraising events, galas, and student/alumni events.

Procedure

To ensure that revenue generating events are properly accounted for within Banner, refer to the guidelines below.

1. Determine whether the gross income earned from the revenue generating event is directly related to a sponsored project. For example, if the gross income from the revenue generating event (such as registration fees charged to the participants or any conference sponsorship income) is related to a sponsored project award, then the gross income is classified as program income and should be deposited into a grant fund. For further details, consult 16 Sponsored Projects Program Income.

2. If the revenue generating event is not tied to any sort of sponsored project, then determine whether it is a University of Illinois System revenue generating event or if it is an external revenue generating event that the unit is simply hosting/coordinating. See the following information for further guidance on making this determination.

   University of Illinois System Revenue Generating Events

   University of Illinois System revenue-generating events have the following characteristics:

   • Owned and operated by the University of Illinois System;
   • Publicized and organized as a University of Illinois System revenue-generating event;
   • All revenues of the revenue-generating event belong to the University of Illinois System;
   • All expenses of the revenue-generating event are the responsibility of the University of Illinois System; and,
   • The University of Illinois System assumes the risks related to operating the revenue-generating event (including the responsibility for any loss or profit).

   External Revenue Generating Events

   External revenue-generating events (for which the university unit is simply hosting/coordinating the event) have the following characteristics:

   • Owned and operated by the external party;
   • Publicized and organized on behalf of the external party;
   • All revenues of the revenue-generating event belong to the external party;
   • All expenses of the revenue-generating event are the responsibility of the external party; and,
   • The external party assumes the risks of sponsoring the revenue-generating event (including responsibility for any loss or profit).

3. To ensure accurate financial reporting, revenues and expenses related to the revenue-generating event must be properly recorded. All anticipated sources of funding for the revenue-generating event must be identified and disclosed when requesting to establish the applicable fund, regardless of where the funds will eventually be recorded. See the following information for further guidance on accounting for the event.

   University of Illinois System Revenue Generating Events

   If the event is a University of Illinois System revenue-generating event, then any event-generated revenues must be recorded in either a self-supporting or gift fund.

   Self-Supporting Fund Revenue

   Operational revenue generated from a University of Illinois System event (such as registration fees, sales of advertising space in event literature or on signage, rental of table or display space, and sales of event materials) belong to the University of Illinois System and must be accounted for in an appropriately coded self-supporting fund.

   Ideally, a unique self-supporting fund would be established for each revenue-generating event. However, if several revenue generating events are similar in nature, one self-supporting fund can be used (with unique program codes for each individual event). Any surplus or deficit balance remaining in the self-supporting fund at the conclusion of an event should be factored into the rates charged to attendees of the subsequent event. For further guidance, see 22 Self-Supporting/Revenue Generating Activities.

   The sale of any type of advertising (which would include messages containing qualitative or comparative language, price information, endorsements, or inducements to purchase the advertiser’s products or services) may result in unrelated business income tax (UBIT). For further guidance see 18.13 Unrelated Business Income Tax (UBIT).

   All expenditures on the self-supporting fund must directly relate to the revenue-generating event and must be factored into the calculation of the rate charged to the customers. For further details, consult 22 Self-Supporting/Revenue Generating Activities.

   Gift Fund Revenue

   Donations received in support of a University of Illinois System revenue-generating event (such as qualified sponsorship gifts where the sponsor receives an acknowledgement, gifts-in-kind of donated services/tangible items, or the charitable portion of fundraising event registration fees) must be processed as gifts through the University of Illinois Foundation. Donations are voluntary contributions for which the payee receives no bargained-for benefit other than the use or acknowledgement of the payee’s name or logo at the event or in event materials, such as in a qualified sponsorship. For further details, consult 11.13 Accounting for Qualified Sponsorships.

   Unique University of Illinois Foundation and/or Banner gift funds may be required to be established for the event depending on the language in the agreement(s) with the donor(s). For example, if the donor wishes to support a specific event, the donation would need to be deposited into a unique gift fund restricted for that specific event. For further details, consult 11 Gifts and Endowments.

   Any gift revenues received for the revenue-generating event may be used to subsidize expenses that are not recovered in rates charged to event participants on the self-supporting fund.

   All expenses posting to the applicable gift fund(s) must be in compliance with the donor intent restrictions outlined in the related fund agreement. For further details, consult 11 Gifts and Endowments.

   For fundraising events, the entry fee is typically received in a single payment, which includes both a charitable contribution and payment for any goods or services received at the event. Since these payments include a charitable contribution, they must be deposited through the University of Illinois Foundation. The portion of the monies that represents the fair market value of the goods and/or services the attendee receives at the event (such as the value of a meal) need to be processed as a non-gift, and the charitable portion of the payment will be processed as a gift. For further details, consult 11.6 Accounting for Fundraising and Development Expenses.

   Expenditures

   All expenditures of University of Illinois System revenue-generating events (regardless of whether they post to self-supporting funds, gift funds, or any other fund type) must comply with the State of Illinois Procurement Code. Consult 7.2 Purchase of Goods and Services and 8 Payments and Reimbursements or contact the appropriate university or system purchasing office for further guidance.

   External revenue generating events

   If the event is an external revenue-generating event, all revenues and expenses related to the revenue-generating event belong to the external party and must be accounted for in a custodial fund. For example, any registration fees collected from event attendees or any donations (such as qualified sponsorships to the external party) must be recorded as revenue in the custodial fund. Any related expenses incurred (such as printing of brochures) must be posted as an expense to that same custodial fund. To establish a custodial fund, consult 2 Custodial Funds.

   Although any revenues generated by external events do not belong to the University of Illinois System, the University of Illinois System does act as a fiscal agent to hold these funds for the owner. Therefore, any checks received for event-generated revenue must be made payable to the University of Illinois and deposited with University Bursar in compliance with 10.2.1 Accept Checks as Payment. It is also helpful to note the name of the external event in the memo line.

   If the external revenue-generating event intends to collect revenue via credit card or online payments, contact Merchant Card Services to determine feasibility at (217) 244-9384 or merchantcardhelp@uillinois.edu.

   The University of Illinois System’s self-insurance liability coverage does not apply to external events. To protect both the University of Illinois System and the owner of the external event, it is important to properly assess the insurance needs for the external event to determine whether any additional insurance coverage needs to be purchased by the owner. Consult 6 Insurance and/or contact the Office of Risk Management for further guidance.

   If any university unit would like to provide financial support for an external event, they must follow the guidelines outlined in 8.1.5 Determine the Allowability of Specific Financial Support or Sponsorship Payments to Outside Organizations.

4. Close out the event in a timely and accurate manner by ensuring all revenue and expense transactions related to the event have posted to the applicable fund(s). Once all transactions have posted, analyze the financial activity to determine the net surplus or deficit resulting from the revenue generating event.

   University of Illinois System Revenue Generating Events

   For a University of Illinois System revenue-generating event:

   • If there is a net surplus in the related self-supporting fund, consult 22 Address a Self-Supporting Fund Surplus.
   • If there is a net deficit in the related self-supporting fund, consult 22 Address a Self-Supporting Fund Deficit.
   • Determine whether the related self-supporting and/or gift fund will be needed after the conclusion of revenue-generating event. If the fund(s) need to be terminated, consult 13.1 Overview of University Fund Accounting.

   External revenue generating events

   For an external revenue-generating event:

   • If there is a net surplus and if the custodial relationship is ending at the conclusion of the revenue-generating event (for example, the external party is moving the event to a different location in the following year), any remaining balance would typically be returned to the applicable external party (i.e., the owner of the event). Consult 2.7 Return Custodial Funds to the Owner. However, the applicable external party may wish to donate the surplus balance to the University of Illinois System, which is also acceptable. Consult 11 Gifts and Endowments. Surplus balances that are neither returned nor donated to the University of Illinois System will be treated as unclaimed property in compliance with the State of Illinois requirements.
   • If there is a net surplus and the custodial relationship will continue (for example, a similar conference for the same external party will be hosted/coordinated by the university unit in the following year), any remaining balance could either be returned to the owner or remain in the custodial fund for use in the future by the owner.
   • If there is net deficit resulting from the revenue-generating event (regardless of whether the custodial relationship will continue) the applicable university unit would typically invoice the external party (i.e., the owner of the event) for the amount needed to cover the deficit and use the Banner Accounts Receivable module for billing and collection. All overdrafts should be eliminated within 30 days. Consult 2.4 Comply with Unit Liaison Responsibilities for a Custodial Fund and 5 Receivables.