The following Trust and Endowment section is a relevant source of information for funds beginning with 5xxxx, 6xxxx, 7xxxx, 8xxxx.
Defining the Type of Trust or Endowment Fund
Endowments - Funds 6xxxx to 7xxxx
Endowments are approved by the donor, the Vice Principal of Advancement, and the head of the department that the endowment fund resides in, with internal endowments also requiring the approval of the Provost. They are composed of funds donated to the University or set aside by the University to be held as an investment and the income that is earned on these investments may be used to support various activities of the University. The funds donated represent a capital contribution and may not be spent. There must be terms of reference forwarded to Financial Services prior to set up. Funds are set up via a chartfield request form.
Capital contributions to an endowment fund receive units in the Pooled Endowment Fund (PEF) based on the current PEF unit value at the time of donation. These units are set up in PeopleSoft using the restricted stat account S00001. Only Financial Services may post any transactions to this account. A payout of yearly interest occurs in May determined by Investment Services’ estimate of current year PEF income. This interest is allocated to each fund based on the number of units held in the stat account. For contributions received during the year, the interest allocation is prorated.
Endowments are managed by the departments that spend the income that is generated each year from the PEF.
Funds 6xxxx Internally Restricted Endowments
Internally restricted endowments are composed of funds that the University has set aside to generate income for specific purposes. The University, with approval by a department head or Dean and the Provost, can decide to use funds that were previously unrestricted and make an internal endowment.
Funds 7xxxx Externally Restricted Endowments
Externally restricted endowments are composed of funds that have been donated externally and the donor has requested that the income from the endowment be spent for a specific purpose. There are specific reporting requirements to the donors for these endowments and these reports are completed by Advancement.
Funds 70xxx Annuities
Annuities are set up as deferred revenue (maintained in the PEF), but the income from the investment is returned to the annuitant. When the annuitant dies, the residual income from the University may be used by the University. This program is in the phase-out stage and hasn’t been offered for several years.
Funds 78xxx Spend Down Funds
These are similar to a regular endowment fund, but the difference is the capital is not held in perpetuity. Capital contributions invested in the PEF are to be spent over the lifetime of the fund. The annual payout rate for a spend down fund is 10% of the original contribution, and any difference from the annual PEF interest allocation is paid out using capital. The capital is recorded as deferred revenue like the method used for annuities.
Trusts - Funds 5xxxx, 8xxxx
These funds are used to account for expendable designated gifts, benefactions, grants, or contracts, which must be spent in accordance with specific instructions. These funds must have Donor Terms of Reference or, for grants/contracts, must include repayment provisions should the funds not be used for the intended purpose.
Transfers of unrestricted funds to a trust are not allowed except to recover costs.
Financial Services is responsible for opening all Trust and Endowment Funds within the PeopleSoft general ledger.
Funds cannot be opened unless proper authorization is obtained. Generally, Trust and Endowment funds must be approved by the department head or Dean and is completed via a ChartField request form.
The following information is required to open all Trust and Endowment funds:
ChartField Request Form
The requestor is required to fill out the ChartField Request form (PDF, 1.7 MB) found on our website.
- Terms of Reference
A completed Terms of Reference (TOR), with proper approval and signatures must be completed in order to create a new trust or endowment fund. The completed Terms of Reference must accompany the ChartField Request form when submitting the package to Financial Services. The TOR for a new fund must be signed by the donor (if applicable), the VP and the Department Head or equivalent, whoever will be responsible for regular review and reconciliation of the fund.
Terms of Reference documents are typically coordinated through Development Officers within the Office of Advancement.
Please send completed chartfield request and terms of reference forms to:
Financial Analysis and Reporting
What is a recapitalization?
To recapitalize funds in an endowment fund is to take excess endowment fund income (surplus from the current year or prior year carry forward) and transfer that balance to the capital account. This means that the funds will be reinvested in the endowment fund for perpetuity and cannot be spent. The capitalized amount will purchase Pooled Endowment Fund units and investment income will be earned on these units each year.
The opportunity to recapitalize is offered once per year. Financial Services requires time to review and process the recapitalization requests and transfer the funds to the Pooled Endowment Fund before the fiscal year ends.
For Fiscal 2023, Financial Services will start accepting requests March 3rd, 2023 and the deadline for submissions is March 31st, 2023. Units will be calculated based on the March 2023 PEF unit value.
Submission of Requests
If you wish to recapitalize unspent endowment income, please submit your request to firstname.lastname@example.org
To process your request we require:
- the fund, department, and program for which the recapitalization is to be completed
- the amount of excess income within the fund you wish to recapitalize
- confirmation that the amount requested is not greater than total excess available within the fund
- if the request relates to an internal endowment (fund begins with a 6), please ensure a Request to Transfer Funds to Endowment Capital form is included as it will require Provost approval
The person with signing authority over the endowment fund should have approved the recapitalization request and be copied on the email.