Financial Management Guidelines
A student organization is a mini-business and, as such, must operate its financial affairs in an orderly and responsible manner. Organizations have income and expenses and often make agreements with third parties. Organizations must practice good record keeping and careful accounting practices.
The university assumes no liability for the financial transactions of a given student organization and strongly recommends that each organization establish whatever controls it deems necessary via the organization’s constitution and/or bylaws.
Off-Campus Bank Accounts
It is important to establish financial controls to limit the risk of mismanaging organization funds. Your organization must establish a bank account that will provide security for the money as well as documentation for transactions. Using the name of the University of Houston-Victoria, any abbreviation thereof, or any of the University’s trademarks or logos is prohibited in the name of your bank account.
Opening a Bank Account
- Complete and submit online the form SS-4, to the Internal Revenue Service (IRS). The person applying online must have a valid social security number. After all validations are done you will get your Employer Identification Number (EIN) immediately upon completion. You can then download, save, and print your EIN confirmation notice. You must have this number to open an account.
- Submit a copy of the organization’s bylaws or meeting minutes that approve the opening of the bank account to the bank.
- Two people are required to sign the account.
- Have bank statements mailed to:
Name of Organization (use of the university name, initial, or logo is prohibited)
3007 N. Ben Wilson
Victoria, TX 77901
Guidelines for Money Management
- Require two signatures for endorsement of expenses
Requiring two signatures on checks prevents purchases by check without the consent of a second student organization officer. Unfortunately, paper checks are used less often these days in favor of ATM or check cards. As a result, double endorsement of all expenses is difficult to enforce.
- Separate financial duties
The student organization treasurer should reconcile the bank’s financial statements regularly. While the treasurer could theoretically be the second signer on a check, he or she should not be the primary purchaser or have access to an ATM or check card. If so, another person needs to reconcile the bank statements.
- Use a central mailing address
Student organizations should use the UHV mailing address to receive bank statements and notifications. This way, statements and other notifications that might identify financial mismanagement cannot be easily hidden from the student organization’s membership. Unopened statements can be picked up from the mailboxes in the Den by the student organization treasurer or president.
Like checks, paper statements are becoming increasingly rare. If statements are being emailed or require website access, multiple recipients or users should be authorized.
- Keep records public
Purposeful mismanagement of funds is difficult to conceal when financial records are made public or readily available to the student organization’s members. Public records let members question all expenses, which virtually guarantees generally accepted use of the organization’s resources and protects against prolonged collusion.
- Define consequences for embezzlement
Address embezzlement in your organization’s constitution or bylaws. Include:
- Methods for policing
- Consequences for breaking the rules
By doing so, the student organization states its intentions to police financial management of organization funds. This acts as a deterrent and leaves no ambiguity about the risk of being caught. The point is to deter the activity and outline a course of action in the rare event embezzlement occurs.
- Remove your information from accounts when you leave
When you are no longer associated with the student organization, due to graduation or any other reason, be sure to communicate with the bank and have your personal information removed from any accounts. If you do not remove yourself from the accounts, you can be held responsible for financial obligations. Also, transferring your account status to a current organization member ensures a smooth transition for the organization.
Student Organizations’ Tax Status
Student organizations do not have tax-exempt or not-for-profit status under Code 170(b) of the Internal Revenue Service. Implications of this status include:
- When purchasing items - Organizations are not exempt from paying State sales taxes for the purchase of items or services.
- When soliciting donations - Corporate or individual donors may not claim a donation to a not-for-profit organization when making donations to a UHV student organization. Organization officers should clearly specify this when seeking donations. If a corporate or individual donor is requiring a tax-receipt to claim the donation, student organizations must contact Student Life.
- When selling items - Student organizations selling items with $5,000 or more in total receipts must collect State sales tax on the items sold and submit that tax revenue to the Texas Controller. The procedures for doing so will be made available to organizations on an as-needed basis (House Bill 82, signed by the Governor on May 14, 2001).
Accepting and Acknowledging Donations to Student Organizations
Student organizations that are officially recognized by and operate under the auspices of UHV have a powerful role representing the university to the Victoria community and beyond. Parents, relatives, friends, businesses and others who may not otherwise have significant contact with the university may develop impressions of and opinions about UHV based on their dealings with student organizations. Therefore, it is critical that these student organizations conduct themselves with the highest standards of integrity, excellence and ethics in their communications and other interactions with UHV alumni, potential donors and other community members.
Perhaps the primary interaction between UHV student organizations and local businesses or individuals will be as the organizations attempt to raise funds for their projects and activities. Student organizations are asked to follow these guidelines as they raise money for their organization from local business or individuals off campus:
- The UHV Office of University Advancement (OUA) should be made aware of in writing of the purpose, method and timing of all donation requests, including both solicitations for monetary and for non-monetary support. Notification regarding the purpose (why money is being raised), the method (i.e. letters, phone calls or personal visits) and the timing (i.e. “the second half of November”) should be made by email to the Director of Alumni Relations and Annual Giving.
- In addition, the Director of Alumni Relations and Annual Giving should be informed of all businesses that the student organization would like to solicit. This is important, since other university departments or areas might already be in the midst of a solicitation process with one of these businesses. It is important that UHV entities, including student organizations, are coordinated in their fundraising efforts with local businesses.
- As quickly as possible after receiving and reviewing the information from the student organization that is listed in the two points above, the Director of Alumni Relations and Annual Giving will reply to the student organization granting full approval to proceed as described or asking the organization to modify the solicitation plan in some way. After such approval is received, the organization is free to proceed as described.
- Student organizations may only request donations on behalf of UHV if the donations will be made to UHV and handled according to university policies related to handling funds from cost centers. If a student organization is using a non-UHV bank account or any other method of collecting and storing funds outside of the UHV financial structure, the organization may not raise funds on behalf of the university but only in behalf of their organization.
- Most donors desire a receipt of their gift for tax purposes. The Office of University Advancement (OUA) will ensure that all donors to student organizations receive proper thank-you letters and tax receipts when the gift is made to UHV (for that organization) and the OUA is notified of the gift properly.
- Information regarding all donations that a student organization receives on behalf of UHV should be shared with the OUA immediately. If the donation is monetary in nature, the OUA needs a copy of the deposit slip, a Gift Transmittal Form and any documentation that is associated with the gift (such as a giving card that the organization prepared, a letter from the donor, etc.). This information should be emailed as scanned images or delivered in hard copy form (University Center, third floor, University Advancement) to the Director of Alumni Relation and Annual Giving.
- Student organizations are strongly encouraged to send hand-written thank-you cards and/or make personal phone calls to thank all donors.
- It is very important to use all money received as donations for the purpose for which the donor made the donation.