The Catholic University of America

Responsibilities of Director of Alumni Relations

Industry Standards

Payment Card Industry Data Security Standard
Summary: Effective June 30th, 2005 VISA and Master Card put into effect a data security standard for any organization that processes credit card transactions accepting their card brand. Currently this program has expanded to include all major credit card brands. The credit card companies require that all members, service providers and merchants who store, process, or transmit cardholder data remain compliant with the PCI Standard.

Responsibility: Work with the Information Security Officer to ensure that all credit card transactions meet the CUA Information Assurance Policy and the necessary level of PCI compliance.

Federal Laws

Family Educational Rights to Privacy Act of 1974 (FERPA)

Summary of the Law:
Regulates the keeping and dissemination of student records at all institutions that receive federal funds or who have students receiving federal funds. Procedures must be in place to allow a student access to student records. Consent must be obtained to release student records to a third party, with certain exceptions contained in the law.

Responsibilities: Ensure compliance with FERPA. Education Records does not include information about a student after he or she is no longer in attendance at the university and which do not relate to the person as a student.

Ethics in Government Act of 1978 (amended by the Ethics Reform Act of 1989 and the Honest Leadership and Open Government Act of 2007

Members of Congress and officers and employees of the executive, legislative, and judicial branches are barred from soliciting or accepting anything of value from anyone seeking official action from, doing business with, or conducting activities regulated by the individual's employing entity or whose interests may be substantially affected by the performance or nonperformance of the individual's official duties.

The Director of Alumni Relations is responsible for being aware of restrictions on gifts to members of Congress and staff; and for knowing the event sponsorship and other rules under this law.

Unrelated Business Income Tax

26 U.S.C. § 511(a)(2); 26 C.F.R. §§ 1.511-1 to 1.513-4
Income from an activity that is a trade or business, regularly carried on, and not substantially related to the conduct of the institution's educational or scientific research purposes will be considered unrelated business income and is taxable. The IRS has opined that income derived by a college or university from fees received by alumni or the general public is unrelated business income. Those items sold by the university to students, faculty and staff that are required or otherwise necessary for courses of instruction or fall under the "convenience exception" will not constitute unrelated business income. With the exception of items that have the university logo affixed, the IRS takes the position that non-educational items with a useful life of more than one year are subject to the unrelated business income tax (UBIT). The IRS holds that an institution must have an accounting system in place to deal with sales that are subject to UBIT and those that are not subject to UBIT.

Use of university facilities in unrelated activities will be subject to UBIT. Mailing list income is not subject to UBIT if the list is sold or exchanged to other exempt organizations. A corporate sponsorship issue arises when a company makes a gift to the school and in return receives certain publicity and exposure beyond a mere acknowledgment of the payment. The IRS will closely examine the relationship between the university and any related entity that has potentially unrelated business activities.

The Director of Alumni Relations has oversight of UBIT questions as they relate to alumni magazine advertising (see below) and also in working with the GC to determine if a particular alumni travel tour must be treated as UBIT. To avoid UBIT the travel tour must be substantially related to the University's exempt educational purpose. See IRS Publication 598 and the examples.

Questions and Answers on Alumni Magazines, UBIT and Non-Profit Mailing Rates

Question: Can a university alumni magazine accept paid advertising without affecting the magazine's non-profit mailing rates?

Answer: The tax issue first: Advertising that is unrelated to the university's purposes (which probably would be most advertising that would appear) would be subject to the unrelated business income tax ("UBIT"). Technical rules are in place to apply expenses of the publication against its editorial content and against its advertising content. Only the net income from advertising (i.e., gross advertising revenue minus the appropriate portion of expenses attributable to advertising) is subject to UBIT. Frequently, for publications not intended to make a profit, but rather to build relationships, the expenses can eat up a large portion of the revenue; thus net advertising revenue, and the resulting UBIT, can be minimized significantly.

On the mailing issue, there are two kinds of postage for alumni magazines, standard nonprofit and nonprofit periodical (formerly called nonprofit second class). If the university uses "standard nonprofit" for its alumni magazine, there are significant restrictions on advertising in a publication mailed at "standard nonprofit" rates. Those restrictions are extremely complex and this is one issue on which greater detail may be necessary. Suffice it here to say that for "standard nonprofit," the advertising must be related to the purposes of the nonprofit organization, there may be no credit, debit or charge card advertising, and advertising for insurance policies and travel are severely restricted. These restrictions are attributable solely to an historical anomaly. Nonetheless, the advertising restrictions associated with "standard nonprofit" mailings would significantly restrict the advertising that the university could include in its Alumni Magazine.

The second kind of postage that can be used for an alumni magazine is nonprofit periodical class, i.e., the postage rate used for periodicals and magazines. The appeal of nonprofit periodical class is threefold. First, there are no restrictions on advertising. Second, ninety percent of the time, nonprofit periodical class will be less costly than standard nonprofit. Third, nonprofit periodical mail moves more quickly than does standard nonprofit mail. The downside is that the publication must qualify for nonprofit periodical class. Generally it must be published like a magazine with a regular number of issues per year (at least 4), mailed at regular, or agreed upon, intervals, and the publication must be "authorized" by the postal service (not a difficult process).

-------------------------------

Question and Answer on Alumni Magazines courtesy of Thomas Arden Roha, Esquire, Roha & Flaherty, Washington, D.C. Attorney Roha serves as tax counsel for The Catholic University of America.

Resources:

FERPA Q and A

Higher Education and PCI Compliance: Definitions, Challenges, and Actions (2006)

PCI Compliance for Higher Education: Best Practices Checklist

PCI audit procedures

E-Commerce and the Cardholder Information Security Program (CISP)
This Educause Effective Practice Detail provides basic information important for universities that sell products or services online and collect fees via credit card. The approach is meant to help institutions of higher education get started in assessing their responsibilities with regard to cardholder data that they may process or otherwise come in contact with, and help institutions determine whether there are regulatory obligations, what those obligations are, and some steps to take to help meet those obligations.

NCSU PCI Compliance Summary

ACE memo titled What do the New Rules on Lobbying Congress Signify for Colleges and Universities?

Related Policies

Information Assurance Policy
Student Records
Tax Compliance

links checked and updated 07/22/10 TOL