FUND 320Chartstrings

Building Endowment Chartstrings

Why So Many Chartstrings?

• Principal tracked separately from spending.

• Spending budget set by policy.

• New gifts can be added to principal at any time.

• Changes to endowment uses, purposes, agreements, etc. require written authorization from each and every donor.

Gift

SPENDING

True

Buys units

Term

Spending Income

Reinvestment

BUDGET- EXPENSES= BALANCE

Consolidated Endowment

BasicsBook Value consists of the original corpus (gifts) and reinvested income; represents the money used to buy units (or shares) of the consolidated endowment and is used to determine when an endowed fund reaches term and becomes a true endowment.

Market Value is the current value of the consolidated endowment. Each fund has units (or shares) of the consolidated endowment and the unit value is calculated each month. Units are purchased at MV.

Gifts are added to the consolidated endowment.

Investments are made. Performance of investments increases market value of the consolidated endowment.

Policy determines income distributed for spending.

4.5% rate of spending is based on a rolling 13 quarter average of the consolidated endowment market value (not the current endowment market value). This spending policy provides a smoothing effect to the highs and lows of endowment market values.

Once a year, a management fee is assessed against the consolidated endowment, based on a 4-quarter average of the market value. The 0.5% management fee does not reduce the 4.5% spending rate.

Year-end balances are made available for spending the following year.

The Board of Trustees has fiduciary responsibility.

If a term endowment, then spending income is reinvested.

5,7624,2220000 Spending

1.82461.82461.50701.09510.70810.3445Units

110,276110,27689,12365,04742,24420,616Book Value

020,00020,00020,00020,00020,000Gifts

Year 6Year 5Year 4Year 3Year 2Year 1

$100,000 Pledgepayable over 5 yearsTerm until $100,000

Growth & Spending

70,17668,02165,91263,47758,28151,524Unit Value 13Q Ave

01,1534,0762,8031,628616 Reinvestment

74,78372,47070,23068,05865,94863,814Unit Value Current

136,449132,229105,83474,52846,69621,982Market Value

5,7625,3754,0762,8031,628616Income

Buy units based on current market value.

Income reinvested while a term endowment.

Becomes true endowment when book value reaches term.

4.5% spending based on 13-qtr average (not market value).

Gift

SPENDING

True

Buys units

Term

Spending Income

Reinvestment

BUDGET- EXPENSES= BALANCE

Consolidated Endowment

Chartstring - Fund

352

400

320

Term Endowment

True Endowment

Endowment Spending

0484352Term Endowment

0484400True Endowment

0000320Endowment Spending

3xxxxxDonors & Restrictions

03975205012You

PRPPURPROAIDPROJPCBUFNCSRCFDDPTOBASICS

Source_________

Describes the donors and any restrictions. See fund documents to view restrictions, including purposes and investments.

Building the Chartstring

One code per chart-string; used centrally

12 52050 320 300123 201 0397

99.9% of time, these are “0000” or blanks.

12 52050 320 300123 201 0397 0000 0000

Optional; use for tracking expenses.

12 52050 320 300123 201 0397 0000

Completing the Spending Chartstring

O DPT FD SRC FNC PCBU PROJ AID PRO PUR PRP

Fund - Spending_________

Departments usually spend from

endowments and that’s why you use Fund 320

so much.

All endowments have governing documents including such things as:

• who established the fund• who can give to the fund• restrictions on spending• restrictions on investing • contingency plans

To receive a copy of endowment documents, please contact:

Development and Alumni Relationsor

Financial Reporting and Accounting Services

To establish new endowments, please contact:

Development and Alumni Relations

alumni.uvm.edu/business