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  • 1.  Urgently Needed Endowment Financial Survey

    Posted 02-28-2023 12:33 PM
    A friend not on these listservs (FundSvcs & CASE) urgently needs to collect information on endowment payouts and reinvestments.

    I have included below the information they seek to collect. If you are able to respond - or can refer this email to someone who can - I would be grateful. Even if you can answer just some of the questions, that's great!

    You are welcome to send a private response to me if you would prefer to have your information kept confidential:
    -------------------- Forwarded Survey Begins --------------------

    We are seeking to gather, from our peers, an overview of institutional internal spending policies relative to both endowed funds and temporarily restricted funds.

    Our focus is not specifically related to the methodology institutions use to establish the annual "spend rate," although that is of interest.  Our questions relate primarily to institutional policies on managing spendable income.

    Our questions:
    1. What percentage of endowment return above the established payout is returned to principal? Is any portion of that excess return swept to general operating support for the institution?
    2. How is the payout on endowed positions (chairs, professorships, endowed directorships, etc.) allocated?  What portion goes to offset salary, the individual's discretionary use/research, institutional infrastructure, and department infrastructure?
    3. How is the payout on endowed funds for program/research allocated?  Is there an internal "sweep" to support departmental or institutional infrastructure?
    4. Is there a guideline or policy for earned interest on unspent "temporarily restricted funds" not used in that year?  Does it roll over?  Does it get swept?  Is there a policy that systematically reduces the restricted fund if it is not spent?  For example, donors give $100,000 in a given year to a PI fund.  PI only spends $20,000 in that given year.  Does the fund benefit from any "investment return" on that remaining $80,000?  If not, where does the investment return go?  Are there any policies to encourage/incentivize the PIs to spend these funds within a certain time?  How do gift agreements reflect these policies, if at all?
    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987


  • 2.  RE: Urgently Needed Endowment Financial Survey

    Posted 02-28-2023 01:09 PM

    Shelby Tudor

    Director, Gift Administration

    Office: 301-565-8463

    Cell: 757-672-3160

     

    **General notice: Although you may receive this email after work hours or while out of office, please understand that I have no expectation you will read or reply to emails during your personal time.

     

     

    Our questions:

    1. What percentage of endowment return above the established payout is returned to principal? Is any portion of that excess return swept to general operating support for the institution?

    If an endowed fund is not at the threshold to spend (documented in the gift agreement), the earned value is reinvested in the "sidecar" (augmenting the corpus) until the threshold is met. Our fellowships and professorships may not be installed until the corpus reaches 75%.

    1. How is the payout on endowed positions (chairs, professorships, endowed directorships, etc.) allocated?  What portion goes to offset salary, the individual's discretionary use/research, institutional infrastructure, and department infrastructure?

    This is determined by the chairholder unless specifically determined in the gift agreement, but we generally do not get this granular to allow for the most flexibility to spend.

    1. How is the payout on endowed funds for program/research allocated?  Is there an internal "sweep" to support departmental or institutional infrastructure?

    Implemented this fiscal year, we assess a 15% infrastructure fee on the annual spinoff amount on endowed funds. We shy away from the word sweep as it tends to make our colleagues very itchy.

    1. Is there a guideline or policy for earned interest on unspent "temporarily restricted funds" not used in that year?  Does it roll over?  Does it get swept?  Is there a policy that systematically reduces the restricted fund if it is not spent?  For example, donors give $100,000 in a given year to a PI fund.  PI only spends $20,000 in that given year.  Does the fund benefit from any "investment return" on that remaining $80,000?  If not, where does the investment return go?  Are there any policies to encourage/incentivize the PIs to spend these funds within a certain time?  How do gift agreements reflect these policies, if at all?

    Our temporarily restricted funds don't reflect any earned interest and they are subject to first dollar rule. We actively work with all of our divisions, in consult with our finance department, on spend plans and determine if they should be multi-year (determined by either the gift agreement or by the programmatic needs) or if funds needs to be spent within the given year.

    John H. Taylor

    Principal

    John H. Taylor Consulting, LLC

    2604 Sevier St.

    Durham, NC   27705

    919.816.5903 (cell/text)

     

    Serving the Advancement Community Since 1987

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