Endowment Spending & Accumulation Policy

I.  Purpose

This policy ensures the prudent, consistent, and mission-aligned use of endowment distributions while supporting the long-term growth of the College’s endowment.

This policy establishes guidelines for:

• The use and accumulation of annual endowment distributions
• The appropriate balance between current spending and reinvestment
• Defined roles and responsibilities for departments managing endowed funds

This policy is intended to support departments in maximizing both the current and long-term impact of their endowed resources, and aligns with the College’s fiduciary responsibility to balance current needs with preservation of purchasing power for future generations.

This policy applies to all departments, programs, and administrative units that receive annual distributions from:

• Donor-restricted endowment funds
• Board-designated (quasi) endowment funds

Endowment distributions are intended to support the specific purpose defined in the donor agreement or Board designation in the fiscal year in which they are distributed.

To promote effective use of funds and long-term endowment growth:

• Departments are encouraged to actively utilize available endowment distributions.
• Accumulation of unused endowment distributions is limited and subject to review.

1.  Timing of Distribution

Endowment spending distributions are effective July 1, the first day of each fiscal year. However, the final distribution amounts cannot be calculated until the Business Office has received, reviewed, and reconciled all June 30 investment statements from the College's investment managers and custodian. This reconciliation process is typically completed in October.

To assist departments with planning, the Business Office will provide estimated distribution amounts in September. Final amounts will be provided in October, once the year-end accounting and reconciliation process is complete. The final distributions will be calculated in accordance with the College’s approved endowment spending policy and recorded retroactively to July 1, ensuring departments receive the full annual distribution to which they are entitled.

Until estimated amounts are provided in September, departments should generally assume that available spending will be comparable to the prior year’s distribution unless otherwise communicated.

2.  Estimated Distribution Planning

To support departmental budgeting and planning, the Business Office will provide fund managers with an estimated endowment distribution report following the close of the 2nd quarter (December 31). These estimates are intended solely for planning purposes and are based on the best information available at that time.

Estimated distributions may differ from the final distribution amounts due to changes in endowment market values, investment performance, additions to or withdrawals from endowment principal, donor activity, and the completion of the annual reconciliation of June 30 investment statements. 

3.  Spending Intent

Distributions are intended to fund programs or activities consistent with donor restrictions.

1.  Standard Allowable Accumulation

Departments may carry forward and retain up to two (2) years of annual endowment distributions.

2.  How the Two-Year Carryforward Is Calculated

The carryforward balance threshold is calculated using the current fiscal year’s distribution amount as the benchmark. If a fund’s accumulated unspent balance equals or exceeds two (2) times the current year’s distribution, it is subject to review and reinvestment.

Balances that equal or exceed  two times the current year distribution will be examined on a case-by-case basis.

3.  Excess Balances

Any accumulated balance exceeding two years of distributions will:

• Be reviewed by the Business Office and Budget Office in partnership with the department, and
• Be considered for reinvestment back into the endowment corpus or quasi-endowment pool, unless an exception is approved.

4.  Rationale

Reinvestment supports growth of the endowment principal, increased future distributions, and alignment with long-term investment objectives. Idle balances held in operating accounts do not benefit from the endowment’s investment returns and therefore reduce long-term financial impact. Reinvesting unspent funds honors the intent of the donor. 

If a department or fund manager does not respond to the Business Office’s carryforward balance review notification within the established deadline (see Section XI, Timeline), the following default action will apply:

• The full excess balance — any amount above two years’ worth of distributions — will be reinvested into the endowment corpus.
• No additional distribution will be issued for the upcoming fiscal year if the carryforward balance equals or exceeds the two-year threshold.

The Business Office will provide advance written notice of this default action at the time of the initial review notification. Departments are responsible for responding within the established window. Reinvestment executed under this default provision is not reversible.

Departments may request approval to retain balances exceeding the two-year limit where there is a strategic or programmatic need:

1.  Documented Plan Required

The department must submit a written plan that includes:

• Purpose of accumulated funds
• Timeline for use
• Alignment with donor intent

2.  Approval Requirements

Exceptions must be approved by:

• Division Vice President
• CFO/COO
• VPIA 

3.  Time-Bound Approval

Approved exceptions will include a defined timeframe and be subject to periodic review by the Business Office and Budget Office.

1.  Alignment with Donor Intent

All expenditures must comply with donor restrictions and College policy.

2.  Order of Funding Consideration

Departments are encouraged to:

• Prioritize the use of available endowment distributions for eligible expenses.
• Minimize the use of unrestricted operating funds when restricted funds are available for the same purpose.

3.  Overspending Restrictions

Spending may not exceed available endowment balances in accordance with existing controls and review processes.   Expenses submitted for overspent funds will be denied. 

1.  Annual Review

The Business Office, in collaboration with the Budget Office, will conduct an annual review of all endowment spending balances by February 1st each year to:

• Assess accumulation levels
• Identify funds exceeding allowable thresholds
• Evaluate alignment with budget planning and actual spending patterns

This review is a collaborative planning tool to help departments maximize the impact of their endowed resources while aligning with institutional priorities. Adherence to established deadlines is essential; the Business Office is responsible for executing this process on schedule.

2.  Reporting and Follow-Up

Departments with excess balances will be notified and required to:

• Submit a spending plan, or
• Acknowledge reinvestment of excess funds

Responses are due within 30 days of notification. Failure to respond by the deadline triggers the default reinvestment action described in Section VI.

3.  Reinvestment Coordination

The Business Office, in coordination with the Budget Office, will facilitate the reinvestment of excess balances and ensure alignment with institutional financial planning and endowment strategy.

4.  Internal Controls

Monitoring of funds will align with existing endowment oversight and reconciliation processes, with the Business Office reviewing all expenses charged to endowed funds to ensure their proper use. 

Departments / Fund Managers

• Ensure appropriate use of endowment distributions
• Monitor balances and plan spending
• Respond promptly to Business Office review notifications
• Submit exception requests when applicable
• Coordinate with Institutional Advancement Office on any required reporting for donor impact reports

Business Office

• Monitor balances and enforce policy
• Execute the annual review process by February 1 each year
• Notify affected fund managers and coordinate responses
• Coordinate reinvestment of excess funds
• Partner with the Budget Office on annual review and analysis

Budget Office

• Collaborate on annual review of balances and spending patterns
• Provide insight into budget alignment and future planning
• Partner with the Business Office to ensure consistency with institutional financial strategy

Vice Presidents / CFO

• Review and approve exception requests
• Ensure alignment with institutional priorities

Institutional Advancement

• Consult with impacted Vice President and Departments when a new endowment may be established to ensure donor intentions align with program goals 
• Communicate with Business and Budget Offices and impacted departments when new endowments are being established
• Communicate any endowment agreement amendments are made 

The following timeline governs the annual carryforward review cycle. Deadlines are firm; the Business Office is responsible for executing each step on schedule.

This policy takes effect in FY2027. The Business Office recognizes that some funds currently carry carryforward balances exceeding two years’ worth of distributions. The following transition approach applies:

• Prior to February 1, 2027, the Business Office will identify and communicate with all fund managers whose balances are projected to exceed the two-year threshold under this policy. 
• Fund managers will receive advance notice and an opportunity to submit a spending plan or exception request before the policy’s first review cycle.
• At the March 3, 2027, review, any remaining excess balances not covered by an approved exception will be subject to reinvestment per the standard policy terms.

The goal of this transition period is to give fund managers adequate notice and the opportunity to plan, while ensuring the policy is fully in force beginning FY2028. Questions about specific fund impacts should be directed to the Business Office.

This policy is effective as of October 2026 and will be reviewed periodically by the Business Office and the CFO/COO.