Financial Guidelines

FNG07 Endowment Spending Stewardship

Policy Status: 

Active

Policy Steward: 

Office of the Corporate Controller

Contents:

PURPOSE:

To set stewardship standards for endowment spending accounts.

SCOPE:

University endowments funded by donors must be managed with the highest level of stewardship, to assure that the University can provide detail on how funds were managed and expended in compliance with the guidelines set by the donor. Guidelines are established by the donors and become a legal contract with the University, which dictates how the University may use the funds generated by an endowment. The individuals responsible for the management of endowments for the unit must assure that the spending from the account meets the guidelines set by the donors, including selection of recipients for scholarships and other awards.

Note: All scholarships from endowed funds must be awarded through eSteward using the unique ISIS source code established by Student Financial Services for the endowment. Awarding through the source code will assure that the annual donor stewardship report accurately reflects those who received scholarships from the endowment. This policy applies to scholarships from all endowed funds regardless of exceptions noted below. Refer to Policy FN09 – Scholarships for more detail.

GUIDELINES:

To assure appropriate stewardship and fiduciary management of endowed funds, all spending must be made directly from the endowment spending account and must adhere to the purpose and expenditure requirements stated in the endowment guideline. Transfers of funds from endowed / annually funded spending accounts into other University accounts are NOT permitted.

There are certain categories of endowments where transfers are permissible, due to the nature of the endowment, and these endowment spending accounts are exempt from the prohibition on transfers:

  • Loan Funds where the guidelines specify transfers to other accounts.
  • Endowed funds where the guidelines specify transfers to other accounts.
  • Endowed funds with guidelines allowing expenditures in support of the Hershey Medical Center or Four Diamonds Fund, where these funds must be transferred to the appropriate accounts for expenditure.
  • Spending account on Unrestricted Quasi Endowments (those with a single principal fund with the fund designation of 1907), given that these funds are University funds and have no donor stewardship requirements.

Exceptions to allow transfers from an endowment spending account, beyond those specified above, must be approved by the Office of the Corporate Controller and by the Office of University Development. Prior to submitting a request for exception, the request must be approved by both the Budget Executive and the Financial Officer. The request should be submitted to the Corporate Controller and include the following information:

  • A detailed explanation providing a compelling reason why the funds must be transferred to another account for management and spending;
  • A copy of the guideline for the endowed fund;
  • A detailed explanation of how the account will be managed to facilitate accurate donor reports through the Office of Donor Relations on the expenditure of funds; and
  • A detailed plan on how employees managing the transferred funds will be accountable for adhering to the donor guidelines.

If an exception is granted, all transfers must use a journal voucher, debiting object code 0427 for the endowed spending account, and crediting the funds to income object code 0046 in the receiving account. Endowed spending account transfers cannot be made to general funds unless specifically approved.

Note: Object code 0420 is restricted to the disbursement of scholarships/awards/fellowships through ISIS and should never be used in a transaction within IBIS.

FURTHER INFORMATION:

For questions, additional detail, or to request changes to this policy, please contact the Office of the Corporate Controller.

CROSS REFERENCES:

FN09 - Scholarships

FN15 - Establishing or Accepting Funds For Endowed or Named Annually Funded Accounts

Effective Date: May 22, 2013
Date Approved: May 21, 2013
Date Published: May 22, 2013 (Editorial changes- January 5, 2015)

Most Recent Changes:

  • January 5, 2015 - Editorial changes. In the GUIDELINES section, "annually funded" was added to the last sentence of paragraph 1 to clarify what types of transfers cannot be made from spending accounts into other University accounts.

Revision History (and effective dates):

  • October 3, 2013 - Editorial changes. Addition of policy steward information, in the event that there are questions or requests for changes to the policy.
  • August 9, 2013 - Editorial changes made in the SCOPE section, to clarify in the "Note" that it is Student Financial Services (formerly the Office of Student Loans and Scholarships) who establishes the unique ISIS source code for scholarships awarded from endowed funds, instead of the Office of the Bursar.
  • May 22, 2013 - New guideline.