(Formerly Standard 10)
PGTS Standard
32. Assets held in a fiduciary capacity are kept separate from and not commingled with other assets held by the organization in a non-fiduciary capacity. [PGTS]
Fiduciary Funds
This standard requires all PGTS funds held in a fiduciary capacity on behalf of the donor must be kept in a bank account separate from funds the organization is holding to support its own operation. Fiduciary funds must be kept separate from general organizational operating or plant funds. This is accomplished by maintaining separate bank accounts for each type of fund.
Comingling of Assets
Commingling of an organization’s operational funds and PGTS fiduciary funds may happen in one of two ways. The first and most common occurrence of commingling found during trust reviews is when fiduciary funds from a POA, guardianship, trust, or estate are deposited into the organization’s normal operating fund bank account. Even if the two types of funds are accounted for separately, when they are placed in the same bank account, the fiduciary funds are commingled with the organization’s operating funds.
The second way fiduciary funds may be commingled is not as common and happens when an organization has set up fiduciary bank accounts separate from its operating bank account, as is required by standard #32, but deposits funds intended for the organization into a fiduciary bank account. This commingling may happen when a distribution is made from an outside estate that the organization is only a beneficiary of and not a fiduciary, and the distribution is deposited into the fiduciary account as a kind of catch-all for everything trust-related. This distribution should be deposited directly into the organization’s operating bank account. These distributed funds are not held in a fiduciary capacity. When they are deposited into the fiduciary bank account, the organization’s operating funds are being commingled in the fiduciary bank account.
Avoiding Comingling
To avoid commingling of fiduciary funds with non-fiduciary funds, the question must always be asked; whose funds are these? If they are donor’s funds (in the case of an estate when the donor is deceased), they must be deposited into a fiduciary bank account. If the funds belong to the organization, they must be deposited into a non-fiduciary bank account. As always, when in doubt, ask your legal counsel.