Written by Erin Delehanty.
Foundations Accounting & Investments (FAI) requests that colleges and units review unused endowment spending balances and return budgets that will not be needed within the next year to the endowment principal. Funds may be returned to the endowment principal at any time during the fiscal year.
The balances in endowment income (spending) projects roll forward from year-to-year and are known as unused endowment spending budgets. Responsible persons should regularly review unused endowment spending balances to determine if there are excess funds that can be returned to the endowment principal.
FAI recommends returning to the endowment principal budgets that will not be needed within the next year for the following reasons:
Unused endowment spending budgets left in an income project
- roll over from year-to-year.
- are not invested in the long-term pool.
- can potentially create donor relation issues if not spent.
Returned unused endowment spending budgets
- will be reinvested in the long-term pool.
- will increase the spending reserves and market value of the endowment.
- will begin participating in investment earnings of the fund.
- can signal to donors that endowment funds are being appropriately stewarded, even if funds are not currently needed/being spent.
- may be requested as a spending exception if funds are needed at a future date.
Unused balances in endowment income funds can be obtained by running a Fund Report for a foundation or the University Endowment Fund. The FAI Fund Type for endowment income projects is “F0.” The balances in these projects are the “unused spending” balances. The Fund Report and further instructions are located under Foundation Campus Reports on the Systems Reporting Tools page of the FAI website.
Please be thoughtful of upcoming budget needs during this process. If funds will reasonably be required to meet needs within the next year, we recommend they remain in the spending project. See FAI’s website for additional information about returning unused endowment spending budgets to endowment principal.