Written by Emily Lowman.
Funds building to the minimum endowment level (BTE funds/BTEs) should be regularly reviewed by colleges and units to monitor progress toward reaching the minimum within the allowed time frame. Foundations Accounting and Investment’s (FAI) Funds Building to Endowment Report is available to assist with that review.
In general, donors are allowed a five year building period to reach the minimum endowment level applicable to the type of endowment they have pledged to establish. The building period begins when the endowment gift agreement is signed. Donors should be making regular progress toward fulfilling their commitment on time through a pledge payment schedule.
FAI reviews BTEs monthly, and automatically establishes endowment funds as the contribution minimums are met. It is the responsibility of the colleges and units to regularly monitor progress toward reaching the endowment minimums, and to address situations in which donors are not adhering to their pledge schedules and/or when the building period has passed but the fund has not reached the endowment minimum.
To assist the Advancement community and College and Foundation business offices with monitoring progress on these BTE funds, FAI offers a Funds Building to Endowment report. This report and related instructions are available through the Foundation Campus Reports tool available on the Systems Reporting Tools page of FAI’s website. This report can be run for each individual Foundation, and will show a comprehensive listing of all BTEs that are not yet invested in the long-term pool. The report includes the building period end date for each fund, as well as the applicable minimum endowment level and contributions received to date.
Additionally, there are some BTEs that have reached the university minimum endowment level, but have not yet reached a higher minimum level as required by that particular gift agreement. Such funds are invested in the long-term pool. Information for those funds are available in Fundriver. Instructions for using Fundriver are also available on the Systems Reporting Tools page of the FAI website.
It is best to start conversations with donors who have fallen behind early so that they can fulfill their commitment before the building period ends. If a building period ends and a donor still intends to fund the endowment at the required minimum level, the remaining balance of the original pledge should be written off, and a new pledge for the remaining amount should be signed. At that time, FAI will extend the building period end date for the fund to the appropriate extended date.
If a donor is unwilling to sign a new pledge and the building period end date has passed, current standard gift agreement language provides three options for the funds already received: endow at the amount contributed, combine with another endowment of similar purpose, or be established as a non-endowed fund to be spent as closely as possible to the donor’s original intent. This decision is at the Foundation’s discretion, in consultation with FAI. Colleges and units should work with their Foundation Business Office and FAI to determine the appropriate next steps for funds past their building period.