Written by Emily Lowman.
Foundations Accounting & Investments (FAI) calculates spending budgets for endowments held by the foundations and the University Endowment Fund annually and communicates those budgets to the benefiting colleges and units as appropriate. FY24 endowment spending budgets were communicated to the appropriate colleges and units in December. This included budgets for Distinguished Professorships (DPs) that were fully funded by 6/30/22, including the state match.
In contrast to fully funded DPs, DPs that were in the queue waiting to receive the state match from the UNC System on 6/30/22 were still considered building to endowment (BTE) funds. In general, spending is not allowed from BTEs. However, guidance from the UNC System allows early spending from DP funds that are in the queue, provided the following conditions are met:
- The required amount of private funding has been collected;
- The Chancellor’s plan for the fund has been approved by the System President;
- The donor has provided written permission allowing spending prior to receipt of the state match and understands that the title of, “Distinguished Professor,” cannot be used until the state match is received;
- The professorship does not carry the title of Distinguished Professorship until the state match is received; and
- The fund has spending reserves available to fund the budget.
In January, FAI calculates budgets for DPs that were in the queue as of the prior fiscal year end and that meet the criteria above. This includes DPs that received the state match in the fall and DPs that are still in the queue as of January. FAI and the University Treasurer review the calculated budgets to determine whether withdrawing early spending is fiscally prudent and allowable based on the endowment’s level of reserves and current market conditions.
After that review, Chris Lemons, FAI Endowment Accountant, will communicate the allowable budgets to the following individuals in each college or unit, as applicable:
- Dean/Provost
- Assistant Dean for Finance
- Foundation President/Executive Director of Development
- Business Officer(s)/Coordinator(s)
- Others, as appropriate
A response is required in order to withdraw the spending budgets for these endowments. If the unit does not request the exceptions, the funds will remain invested in the long-term pool.
Colleges and units will be asked to give special consideration whether the early spending for Distinguished Professorships is truly necessary. Due to the current market environment, FAI strongly encourages units not to withdraw early spending at this time, unless there is a valid and necessary business reason to do so. Additional information and instructions for response regarding expenditure of corpus will be provided in the email communication.