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DHMH POLICY NUMBER: 02.02.09
TITLE: POLICY ON THE RAISING OF NON-BUDGETED AND NON-STATE FUNDS BY FACILITIES OR ANCILLARY ORGANIZATIONS OPERATING FOR THE BENEFIT OF DHMH FACILITIES
SHORT TITLE: FUND-RAISING POLICY
I. EXECUTIVE SUMMARY
The purpose of this policy is to provide guidelines for DHMH facilities and/or ancillary organizations to receive grants, to sell merchandise and/or to engage in other profit making activities.
Ancillary organizations, with the approval of the respective DHMH facility Superintendent, may accept grant funds, services and/or merchandise if the grant is not available to, or if available, was refused by the facility. These grants shall be used as outlined in the grant conditions and as accepted by the ancillary organizations with the approval of the facility Superintendent or designee, and the Secretary, DHMH or designee.
The profits from the sale of merchandise or from the engagement in activities shall be used for the benefit of patients who receive services from the facility. Emphasis for these benefits shall be placed on services over and above those which the State provides to the clients. Facilities must have prior approval of the Secretary, DHMH, to provide said services. Profits may also be used for legitimate expenses of the ancillary organization.
This policy also provides operating guidelines for canteens and other activities . If possible, canteen and profit making activities shall be under the charge of the ancillary organization but may be under the charge of the facility if an ancillary organization is not at that location. If the canteen is operated by the facility, all income must be handled in accordance with the State Finance and Procurement Article of the Annotated Code of Maryland. If the canteen is operated by the ancillary organization, all income must be under the control of the organization. When profits of the canteen or other activities are used to purchase items for patients, wards and/or clients, the purchases must be approved by the facility Superintendent or designee. No state or patient funds may be used to supply merchandise for the canteens, and articles sold in the canteen must be purchased independently of state supplies. No state property is to be sold in the canteen, but the canteen may sell crafts and art work of the patients, wards and/or clients.
Business practices for operating the canteens are further defined in this policy. Acceptable bookkeeping systems shall be administered and maintained by those in charge. Guidelines for the disposition of funds are provided, and certain responsibilities of employees of the ancillary organization or facility are defined.
Sales tax must be collected on all taxable sales made by canteens. Ancillary organizations can apply for tax exemptions for items purchased for the benefit of facilities, patients and/or wards.
The methods of requesting funds, services and items from ancillary organizations are included in this policy. Written requests must be submitted to the facility Superintendent, or designee, who shall forward approved requests to the ancillary organization.
Residents in facilities of the Department of Health and Mental Hygiene have enjoyed the profits of canteens, vending machines, fairs, dances and other profit making activities which have usually been supervised and run by ancillary organizations. These funds are over and above those budgeted by the Legislature and provide benefits to residents not ordinarily provided by the State.
DHMH Policy 02.02.09 supersedes and replaces DHMH 7341- Policy on the Raising of Non-budgeted and Non-State Funds by Facilities or Ancillary Organizations Operating for the Benefit of Facilities of the Department of Health and Mental Hygiene which was issued January 23, 1984 to provide rules for the raising and use of these funds, to define methods for operating these activities, and to establish business practices.
This new policy adds specific guidelines for the acceptance of grants by ancillary organizations, updates operating procedures, and reflects current interpretations of regulations pertaining to the ancillary organizations' exemptions from the payment of State sales tax.
III. POLICY STATEMENTS
1. The phrase "
to sell merchandise
" for the purposes of this policy shall mean to operate any canteen, gift shop, store, vending machine, etc., on a regular ongoing routine business basis on the grounds of a facility.
2. All such canteens, gift ships, stores, vending machines, etc., shall be covered under the general term "
," and the income accruing from the operation of such canteens shall be called the "
3. The phrase "
engage in such other activities for profit
" for the purposes of this policy shall mean to hold and conduct bazaars, dances, fairs, etc., collect dues, etc., but not the receipt of grant funds.
4. All such bazaars, dances, fairs, etc., dues, etc., shall be covered under the general term "
," and the income accruing from the operation of such other activities shall be called "
other activity funds
5. The phrase "
," for purposes of this policy, shall mean any group, incorporated or non-incorporated , which is directed to the interest of a patient(s), ward(s), and/or client(s) and is acceptable to the governing body of the facility. (It is recommended that all ancillary organizations, for the protection of their members, be incorporated.)
B. GENERAL PROVISIONS
1. All DHMH facilities may permit ancillary organizations to sell merchandise and engage in such other activities for profit as may be authorized by the facility Superintendent, or designee, and approved by the Secretary, DHMH or designee. The facility Superintendent shall make every effort to facilitate the operation of the canteen and other activities by the ancillary organization, but where this is not possible, the facility may sell merchandise and/or engage in other activities for profit, if approved by the Secretary or designee.
2. Local, State, Federal government and private grant funds, services and/or merchandise may be accepted by an ancillary organization, provided each grant is specifically approved by the facility superintendent or designee and the Secretary, DHMH or designee, and that grant conditions meet one of the following criteria:
a. The grant is only available to private organizations and not to facilities and/or DHMH, or
b. The grant was offered to and refused by the facility and DHMH.
3. The profit raised from the sale of merchandise and/or from engagement in such other activities for profit by a facility or an ancillary organization shall be used for the benefit of patients, wards and/or clients domiciled, treated, rehabilitated and/or supervised at the facility, regardless of disease, treatment, race, sex, age, handicap, impairment, religion or national origin of the patient, ward and/or client.
4. The internal functioning of the ancillary organization is the sole responsibility of its Officers, Board of Directors, and members; however, it is authoritatively subject to the general policies, rules and regulations of the facility at which it is operating and the Department.
C. OPERATION OF THE CANTEEN AND OTHER ACTIVITIES
1. The operating of a canteen and other activities shall be under the charge of an ancillary organization of the facility wherever possible.
2. In those facilities where, because of their location, their function or other reasons, it is not prudent or possible to have an ancillary organization, the canteen and other activities may be under the charge of the facilities' staff.
3. The operation of a canteen and/or other activities under the charge of an ancillary organization and all income derived from the operation shall remain under the actual control of the ancillary organization. However, all purchases made for patient, ward(of the State) and/or client areas or for patient, ward, and/or client use must be approved by the facility Superintendent or designee.
4. All income from the operation of a canteen and/or other activities under the charge of the facility staff and not under the charge of an ancillary organization must be handled in accordance with the State Finance and Procurement Article of the Annotate Code of Maryland and the rules, regulations, and policies of DHMH.
5. No funds of the State or funds of the patients, wards, and/or clients of the facility shall be available to provide merchandise to be sold in any canteen.
6. No merchandise or property belonging to the State is to be sold in the canteen. However, the canteen, as a convenience to the facilities' patients, wards, and/or clients, may act as a selling agent for handicraft, art work, etc., that are produced by patients, wards and/or clients. The money realized from the sale of such handicraft, art work, etc., shall be placed in the patients', wards', and/or clients' welfare fund or placed in the account of the individual patient, ward and/or client.
7. Articles to be sold in the canteen must be purchased independently of supplies purchased for the facility.
D. BUSINESS PRACTICES
1. A system for acceptable bookkeeping shall be installed in the canteen. The system of bookkeeping is to be maintained and administered by those in charge of running the canteen. A volunteer or paid accounting service shall be retained when the canteen and/or other activities are under the control of an ancillary organization. When the canteen and/or other activities are under the charge of an ancillary organization, no employee of the respective facility shall be retained or used for bookkeeping or accounting work during normal work hours.
2. The accounting service shall be responsible for all accounting functions and shall keep the accounts in accordance with normal and accepted accounting principles. However, in the case of an ancillary organization, all checks should be signed by two responsible officers of the organization. It is recommended that these signatures be that of a President, Vice President, and Treasurer, any two of the three signatures being acceptable to the bank handling the account.
3. The annual Auxiliary Presidents' Reports along with the organization's Treasurer's Reports may be submitted instead of an annual auditors' report, with copies to the Secretary, DHMH, and the facility Superintendent.
4. All funds under the control of an ancillary organization shall be deposited in a State or Federally insured bank or savings and loan association, or licensed brokerage account
5. There shall be a minimum of two accounts for the accounting of monies by an ancillary organization that operates a canteen. These accounts shall be a "Canteen Fund Account" for operation of a canteen, and a "General Account" for the operation of other activities. Both accounts may be used to pay the legitimate expense of the ancillary organization.
6. The working fund of an ancillary organization should be a checking account and the balance in the account should approximate two months' operating expense.
7. Any monies in excess of approximately two months' operating expenses may be deposited in the organization's name in a State or Federally insured savings account. Monies in excess of two year's operating expenses may also be invested in stocks, bonds, or mutual funds in a licensed brokerage account. All investments must be closely monitored by the organization's Treasurer, with all changes approved by the Board of Directors.
8. The facilities' accounting personnel may not be made responsible for the accountability of funds of the ancillary organization. Facility personnel are not bonded for this purpose and have no jurisdiction over ancillary funds. There is no objection to the facility accountant rendering supporting service, e.g., transporting canteen funds to and from the bank at the same time he does similar work for the facility. (It is recommended that all ancillary organizations carry insurance to cover all contingencies in regards to money.)
9. Any paid employees of the ancillary organization shall be bonded.
10. All sales shall be on a cash basis unless the ancillary organization and the facility administration choose to use some form of prepaid credit system, i.e., canteen cards.
11. The facility Superintendent or designee, and the officers of the ancillary organization may enter into further negotiations and devise methods of procedure not in conflict with this policy.
E. USE OF PROFIT AND GRANT RESOURCES
1. Any local, State, Federal government and private grant funds, services and/or merchandise shall be used by the ancillary organization as outlined in the grant conditions, and as accepted by the ancillary organization, with the approval of the Superintendent of the facility or designee, and the Secretary, DHMH or designee.
2. Profits from the canteen or other activities may only be used for the following:
a. The benefit of patients, wards and/or clients, with the approval of the facility Superintendent, or designee. Emphasis shall be placed on benefits over and above those which the State ordinarily provides, and will constitute largely projects which add to the comfort, entertainment, rehabilitation and self-respect of patients, wards and/or clients. Any project which will make a substantial physical change or addition to any of the facilities must have prior approval of the Secretary, DHMH or designee, the facility Superintendent, and other agencies of the State and locality, as required.
b. The legitimate expenses of the ancillary organization, e.g., appropriate bonds for any paid person handling funds; convention expenses of individuals authorized by the Board of the respective ancillary organization to attend a regional or national meeting of the nationally-recognized parent organization of which the ancillary organization is a legitimate member; membership dues to recognized cooperating organizations, and accounting or other expenses incidental to operation, etc.
3. Any equipment given by an ancillary organization to a facility for the general use of patients, wards and/or clients shall become the property of the State of Maryland before being utilized.
F. SALES TAX
1. In accordance with Maryland law, State sales tax must be collected on all taxable sales made by the canteen and other activities. All reports required by law must be filed. An exemption from the collection of sales tax is allowed to gift shops at mental hospitals operated by DHMH.. (Article 81, Section 326, Annotated Code of Maryland).
2. Items purchased by ancillary organization for the benefit of the facility, patients, wards or clients may be State sales tax exempt. To qualify for the exemption, the ancillary organization must apply for an exemption certificate.
G. REQUEST FOR FUNDS, SERVICES OR ITEMS FROM ANCILLARY ORGANIZATIONS
1. The request for funds, services or items from an ancillary organization shall be submitted in writing to the facility Superintendent, or designee, from the requesting party or parties. After due consideration, the Superintendent shall approve or disapprove these requests in the order of their importance to the welfare of the patients, wards and/or clients, and the facility. The approved requests shall then be submitted to the ancillary organization(s) for their action.
2. No request may be sent to an ancillary organization without the knowledge and approval of the facility Superintendent or designee.
Article 81, Section 326, Annotated Code of Maryland
State Finance and Procurement Article, Annotated Code of Maryland
DHMH 02.02.05 - Policy on the Administration of Funds
Martin P. Wasserman, M.D., J.D.
Signature on File
Effective Date: March 22, 1999
201 W. Preston Street, Baltimore, MD 21201-2399
(410) 767-6500 or 1-877-463-3464
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