Investment Income Allocation

Responsibility: Vice-President, Finance and Resources 
Authorization: Board of Governors
Approval Date: Dec 17, 2004
Amended: May 1, 2009 / May 1, 2012

The purpose of this policy is to outline the practices governing the allocation of investment revenue to university funds and activities.

Investment income will be allocated to the following specific university accounts or activities:

• Trust and endowment funds that have terms of reference (trust deed) which stipulate that related earnings will be used to support the designated purpose of the trust and which have been approved pursuant to Board policy. The allocation will be based on the non-spendable portion of the account. Non-spendable funds include all funds maintained under the trust deed except for the amount available annually to support the purpose of the trust.
• Activities that are externally funded whereby the external agency or company requires the allocation of investment earnings earned on unspent funds to support the project that is being funded.
• Other activities or funds may be allocated investment earnings if that allocation has been authorized by PCIP with consideration to the identified needs and the priorities of the institution, (e.g. Capital Funds, Research Funds).
• Transfer of funds from non-interest bearing to interest bearing status must also be approved by PCIP.

Investment earnings allocated to the funds or activities described in the foregoing section will be calculated as follows:

• Funds held on a short-term basis will be allocated investment earnings based on the 30 day Canada Treasury Bill rate.
• Funds held for the long-term will be allocated investment earnings on a pro-rata share of actual earnings of either the fixed or long-term pool (depending on which investment pool the funds are held).

Funds designated to receive investment income allocations that experience negative cash balances will be assessed an interest charge based on the Prime Business Rate minus 0.5% and the funds weighted average cash balance for the month, or as approved by PCIP.

1. Financial Services will ensure that investment income is allocated for all Trust and Endowment funds(non-spendable portion) and funds which require allocation of earnings to fulfill external requirements.

2. Requests for transfer of funds to an earnings-bearing fund or requests that earnings allocation be applied to an existing fund should be approved by the appropriate Dean or Administrative Unit Head and submitted to Pensions and Treasury, Financial Services.

3. PCIP approval is required for all transfers of funds to an earnings-bearing fund and designation of a fund as earnings-bearing.

4. Board approval is required where a transfer of funds or designation of a fund as earnings-bearing has the potential to allocate annual earnings of $500,000 or more to a specific unit/activity.

5. For funds approved as earnings-bearing, FSD will ensure that earnings are allocated on a monthly basis in accordance with this policy.

6. Financial Services to ensure that an annual report is provided to the Board summarizing approved allocation of earnings.