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Grant fund - ENDOWMENT AND SIMILAR FUNDS E-525 Page 1...

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ENDOWMENT AND SIMILAR FUNDS E-525 ACCOUNTING MANUAL Page 1 TL 82 9/30/99 ENDOWMENT AND SIMILAR FUNDS Contents Page I. Introduction 3 II. Endowment Management 4 A. Authorities 4 B. Establishment of New Funds 4 C. Administration 4 D. Accumulation of Endowment Income 5 III. Fund Types 5 A. True Endowment Funds 6 B. Funds Functioning as Endowment 6 C. Funds Held in Trust by Others 6 D. Deferred Gifts 7 E. Agency Funds 8 IV. Investment Pools 8 A. General Endowment Pool 8 B. High Income Pool 8 C. Short-Term Investment Pool 8 D. Separately Invested Funds 9 V. Endowment Income Accounting and Reporting 10 A. Restriction Codes 10 B. Availability of Investment Income for Expenditures 11 C. Accounting for Investment Income 11 D. Total Return Method 12 E. Endowment Cost Recovery Assessment 13 VI. Distribution of Principal Appropriated 13 VII. Transfer of Income to Campuses 14 A. Estimate of Endowment Income 14 B. Transfer of Income 14 C. Compliance with Fund Terms 15 D. Return of Unexpended Income to OP 15 VIII. Distribution of Income to Outside Recipients 16 IX. Reporting Responsibilities 17 X. References 17 Appendix I Restriction Codes--Endowment and Similar Funds 19 Appendix II Investment Income--Account Codes 21 Exhibit A Total Return/Cost Recovery Calculation Example 22
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ENDOWMENT AND SIMILAR FUNDS E-525 Page 2 ACCOUNTING MANUAL 9/30/99 TL 82 ENDOWMENT AND SIMILAR FUNDS "By pooling its endowments the University has provided to every donor of endowment moneys an ultimate assurance of safety, of absolute fairness of treatment, of productivity, and of permanence for the fund which he has created. This means that each endowment fund, the terms of which permit such action, is regarded as having a due proportional share in every investment made with the moneys which represent the total of the endowments thus pooled. Thus each endowment profits proportionately by each particularly favorable investment made, each is insured by the combined millions of the whole pool, and all alike share in the increase in productivity in the pool moneys .... " --Report of the Secretary to the Regents for the Year Ending June 30, 1905 I. INTRODUCTION The Endowment and Similar Funds group consists of true endowment funds, funds functioning as endowment, funds held in trust by others, deferred gifts (living trust funds, annuity trusts, unitrusts, charitable lead trusts, pooled income, gift annuity), and agency funds. 1 This chapter provides a general description of University's endowment management program and the types of funds that make up the endowment and similar funds group. A brief description of the pools in which the funds in this group are invested is provided in Section IV, Investment. (Accounting Manual Chapter I-582 , Investments and Investment Income, provides an overview of the University's investment operations.) This chapter also covers accounting, reporting, and distribution of endowment income and principal appropriated.
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