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Spending Procedure

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THE ENDOWMENT FUND  SPENDING PROCEDURES


OBJECTIVE

The objective of a spending rule is to establish a spending rate which: I) will result in a stable spending amount from year to year, 2) can be maintained over the long term, and 3) will preserve the real value of the endowment over the long term so as to help provide for intergenerational support.

To achieve these objectives, the North Carolina State University Endowment Fund has a total return spending rule. Total return spending allows spending budgets to be funded from interest and dividend income, realized gains, and unrealized appreciation.

PROCEDURE

  1. Programmatic Spending: Programmatic spending will be 4.00% of the average market value per unit of the long-term investment pool computed over the previous twenty quarters, multiplied by the number of units owned by each endowment as of the prior fiscal year end (See Attachment A, "Budget Timetable").
  2. Assessments: Assessments for supporting the cost of fundraising and other administrative expenses may be charged annually to each endowment. The number of basis points assessed will be determined annually and subject to board approval. The assessment amount will be computed following the same methodology used for programmatic spending. In the event that reserves are insufficient, priority will be given to the programmatic spending budget.
  3. Cap on Increases: Increases in programmatic spending and assessments will be capped at CPI plus 1% over the prior fiscal year spending amount, except in cases of new gifts.
  4. Spending of Corpus: Unless the gift instrument specifies otherwise, up to 15% of the corpus (historic gift value) of an endowment may be expended if reserves are not sufficient to fund the programmatic spending amount, subject to the guidelines provided in NCGS Chapter 36E, Uniform Prudent Management of institutional Funds Act. (See Attachment B, UPMIFA)
  5. Evaluation: The spending rule will be formally evaluated by the Treasurer every three years and recommendations for changes will be brought to the board for their consideration.
  6. Donor requirements included in endowment agreements will take precedence over this rule.
  7. Exceptions: Exceptions must be approved by the Dean, Director or Department Head and Treasurer.


----Basics of Endownment Spending Budgets [PDF]---          

 

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