Authorization and Approval
Responsibility: Vice-President, Finance and Resources
Authorization: Board of Governors
Approval Date: Nov 10, 2004
Amended: May 5, 2006 / Dec 12, 2008 / May 1, 2012 / May 1, 2017
To ensure the prudent administration of trust and endowment funds and to provide guidelines for the calculation and distribution of the annual amount available for spending those funds. The Policy will be applied to all endowed (internally and externally restricted) funds except as provided in individual trust agreements.
Under this policy the Committee sets a spending amount which will be paid out regardless of the actual income or appreciation experienced that year. The purpose of this policy is:
- To provide stable annual funding to support the purpose of the university
- To protect the value of endowed contributions in terms of purchasing power.
The University should manage trust and endowment funds to ensure that the annual income continues at an adequate level to support the projects and programs in accordance with the donor's direction or intent.
The University is committed to protecting and preserving the original contribution of endowed funds and ensuring that: the funds provide an appropriate level of funding for current and future generations.
This policy is based on the 'prudent person approach' to ensure prudent investment and administration.
The University strives to ensure adequate funding is available to support current and future needs.
- The amount available for spending (spending allocation) is calculated at 3.75% of the original contribution and subsequent contributions and increased annually by a factor equal to the annual rate of inflation as measured by CPI (Canada, all products).
- The allocation is monitored to ensure that the amount distributed is reasonable in relation to the market value of the endowment.
- The spending allocation is calculated based on CPI at December 31.
- The spending allocation is distributed on a monthly basis throughout the fiscal year.
- The amount available for spending will not be allocated for two complete fiscal years after the donation year or until an amount equal to ten per cent of the contribution has accrued through earnings, whichever occurs first. Investment income in excess of the approved spending rate will be retained as segregated capital.
- The spending rate will be adjusted if the effective rate falls outside of the spending range of 2.75% to 5.25% based on the endowment’s fund market value at Apr 30. This adjustment is to ensure consistent spending during periods of extreme market volatility.
- Funds are invested according to the University's Long Term Investment Policy unless otherwise restricted by the donor or the Board of Governors.
- The spending allocation may be changed to a fixed amount, income based or a reduced percentage depending on the investment vehicle or other restrictions.
- Responsibility for the investment of trust and endowment funds is outlined in the University Investment Policies.
If you have questions about this policy please contact:
Contact Person: Manager, Treasury, Financial Operations