ENDOWMENT MANAGEMENT POLICY (GP 20)
Date
June 25, 1991
Date of Last Review/Revision
September 26, 2024
Number
GP 20
Mandated Review
November 24, 2027
Policy Authority: Vice-President, Finance and Administration
Associated Procedure: None
EXECUTIVE SUMMARY
Pursuant to section 27(2)(o) of the , the Board of Governors of 丁香园AV (鈥渢he University鈥�) has the responsibility to 鈥渁dminister funds, grants, fees, and endowments and other assets.鈥� The University has created an Endowment Fund which is intended to generate investment earnings to ensure that the University is able to maintain the quantity and quality of projects and programs that are possible through the generosity of donors. This policy establishes the framework for management and oversight of the Endowment Fund.
TABLE OF CONTENTS
1.0 PREAMBLE
2.0 PURPOSE
3.0 SCOPE AND JURISDICTION
4.0 DEFINITIONS
5.0 POLICY
6.0 ROLES AND RESPONSIBILITIES
7.0 REPORTING
8.0 RELATED LEGAL, POLICY AUTHORITIES AND AGREEMENTS
9.0 ACCESS TO INFORMATION AND PROTECTION OF PRIVACY
10.0 RETENTION AND DISPOSAL OF RECORDS
11.0 POLICY REIVEW
12.0 POLICY AUTHORITY
13.0 INTERPRETATION
14.0 PROCEDURES AND OTHER ASSOCIATED DOCUMENTS
1.1 丁香园AV (鈥淯niversity鈥�) actively seeks and welcomes donations in support of the activities of the institution.
1.2 This policy is subject to and consistent with the University鈥檚 Investment Governance Policy (B10.09) and the Responsible Investment Policy (B10.16).
2.1 The University has created an Endowment Fund to ensure that it is able to maintain the quantity and quality of projects and programs that are possible through the generosity of donors.
2.2 The objectives of this Policy are to:
- Provide stable, predictable annual Spending Income Allocation to Fund Administrators;
- Promote inter-generational equity through the growth of Endowment Principal Account to preserve purchasing power over time;
- Ensure that the University is responsive to changes in the financial market;
- Preserve the University鈥檚 competitiveness among its peer institutions; and
- Provide for effective stewardship and administration of accounts to ensure maximum benefit for the advance of the University鈥檚 academic mission.
3.1 This policy applies to the assets of the Endowment Fund only.
4.1 See Appendix A for the definitions of words used in this policy and its associated procedures.
5.1 The Endowment Fund is designed for the collection of assets held in perpetuity to support the activities of the University.
5.2 The Endowment Fund is made up of individual Endowment Principal Accounts and the Endowment Stabilization Reserve. Individual Endowment Principal Account includes the original value of the donation, additions made for Purchasing Power Adjustment and other capitalized amounts.
5.3 Donations made to the Endowment Fund, net of applicable fees, are normally pooled together and invested in accordance with the University鈥檚 Investment Governance Policy (B10.09) and the Responsible Investment Policy (B10.16).
5.4 Where practicable, non-cash donations such as securities and real property are normally converted to cash for investment purposes. In such cases, the Endowment Principal Account is credited by the amount realized, net of applicable fees, by the University on conversion.
5.5 The University鈥檚 primary investment objective for the Endowment Fund is to generate a target absolute rate of return over the mid and long term, after Investment Management Expenses, that exceeds the Inflation Adjustment Factor plus the Spending Income Allocation Rate and University Management Fee Rate.
5.6 The purchasing power of the Endowment Fund will be preserved by the addition of Purchasing Power Adjustment based on an Inflation Adjustment Factor to each Endowment Principal Account.
5.7 The University maintains an Endowment Stabilization Reserve where investment income or loss, net of Investment Management Expenses, is initially recognized. The fair market value of the Endowment Fund is the sum of the amounts held in individual Endowment Principal Accounts plus the Endowment Stabilization Reserve. The Endowment Stabilization Reserve is intended to enhance the stability of annual Spending Income Allocation Rate by retaining Investment Income earned in excess of targeted returns.
5.8 The Spending Income Allocation Rate is set by the Board of Governors on the recommendation of the Vice-President, Finance and Administration and is reviewed at least every three years. The Spending Income Allocation for an Endowment Principal Account should be predictable and stable, even if financial markets perform below the minimum investment objective of this policy. Under extraordinary circumstances caused by unforeseen events, the Board of Governors may approve a temporary increase or decrease in the Spending Income Allocation Rate based on the recommendation of the Vice-President, Finance and Administration.
5.9 Fund Administrators are responsible for ensuring that funds allocated to their Endowment Income Accounts are put to best use and that expenditures are incurred in accordance with the Terms of Reference of the individual endowment accounts. In certain cases where the Terms of Reference do not provide a clear direction, unspent amounts from the Endowment Income Accounts may be recapitalized to Endowment Principal Account with approval from the Provost and Chief Budget Officer.
5.10 Investment earnings are distributed to the Spending Income Allocation and Purchasing Power Adjustment for each Endowment Principal Account, followed by the University Management Fees. Any remaining investment earnings will remain in the Endowment Stabilization Reserve. The Vice-President, Finance and Administration may recommend to the Board of Governors to approve a one-time increase in the Endowment Principal Account, or a temporary increase in the Spending Income Allocation Rate.
5.11 If there are insufficient funds in the Endowment Stabilization Reserve to meet the required distributions, with the recommendation of the Vice-President, Finance and Administration, the Board of Governors may temporarily reduce the Spending Income Allocation and Purchase Power Adjustment until such time the Endowment Stabilization Reserve is restored.
5.12 University Management Fees will be charged to the Endowment Stabilization Account on a percentage basis on the market value of the Endowment Fund. The University Management Fee Rate is set by the Board of Governors on the recommendation of the Vice-President, Finance and Administration and is reviewed at least every three years.
5.13 To ensure the endowment funds are utilized to maximize their benefits for the advancement of the University and relevant to its academic mission, the University will review the endowment funds 25 years from the time the funds are established and periodically thereafter to assess whether the funds are being utilized effectively, keeping in mind the original spirit of the gift. If the University determines that the funds could be more effective if used differently, the University may update the terms to permit such use. The University will make reasonable efforts to seek the advice of the individual donors regarding the changes. Any such change is recommended by the Vice-President, Advancement and Alumni Engagement and approved by the Board of Governors.
5.14 The University will only establish an account for the Endowment Fund if there is sufficient capital to justify the administrative costs associated with the fund and it is expected to generate sufficient funding to support the intended purpose of the fund.
5.15 The Vice-President, Advancement and Alumni Engagement will review the status of individual Endowment Income Account periodically to ensure that endowment funds are being spent appropriately.
6.0 ROLES AND RESPONSIBILITIES
6.1 Roles and responsibilities under this policy are subject to, and will be consistent with, the Investment Governance Policy.
6.2 The Board of Governors is responsible for setting the Spending Income Allocation Rate, the ceiling rate to be applied in the Inflation Adjustment Factor and the University Management Fee Rate every three years or more frequently as needed, on the recommendation of the Vice-President Finance and Administration.
6.3 The Vice-President Finance and Administration is responsible for:
6.3.1 the implementation and administration of this policy;
6.3.2 making recommendations to the Board of Governors;
6.3.3 recommending Spending Income Allocation, Purchasing Power Adjustment and University Management Fee;
6.3.4 authorizing exceptions to a specific endowment; and
6.3.5 reporting to the Board of Governors as set out in section 7.0.
6.4 The Vice-President, Advancement and Alumni Engagement is responsible for providing oversight on Endowment Income Accounts to ensure that funds are being expended appropriately.
6.5 Each Endowment Principal and Endowment Income Account has a designated Fund Administrator who is responsible for the effective use of the funds and compliance with the Terms of Reference.
7.1 On an annual basis, the Vice-President, Finance and Administration will provide a report to the Board of Governors providing information on the investment results of the Endowment Fund and the balance in the Endowment Stabilization Reserve.
8.0 RELATED LEGAL, POLICY AUTHORITIES AND AGREEMENTS
8.1 The legal and other University Policy authorities and agreements that may bear on the administration of this policy and may be consulted as needed include but are not limited to:
8.1.1
8.1.2
8.1.3 Investment Governance Policy (B10.09)
8.1.4 Responsible Investment Policy (B10.16)
8.1.5 Donations Policy (GP 03)
9.0 ACCESS TO INFORMATION AND PROTECTION OF PRIVACY
9.1 The information and records made and received to administer this policy are subject to the access to information and protection of privacy provisions of British Columbia鈥檚 and the University鈥檚 Information Policy series.
10.0 RETENTION AND DISPOSAL OF RECORDS
10.1 Information and records made and received to administer this policy are evidence of the University鈥檚 actions to manage endowments. Information and records must be retained and disposed of in accordance with a records retention schedule approved by the University Archivist.
11.1 This policy must be reviewed every three years and may always be reviewed as needed.
12.1 This policy is administered under the authority of the Vice-President Finance and Administration.
13.1 Questions of interpretation or application of this policy or its procedures shall be referred to the President and the Chair of the Board, whose joint decision shall be final.
14.0 PROCEDURES AND OTHER ASSOCIATED DOCUMENTS
14.1 Appendix A contains the definitions applicable to this policy.