406 - University of North Carolina at Chapel Hill Policy on Endowment Income Reinvestment

Reason for Policy

The reinvestment of unspent distributions from endowment funds creates additional income with which to serve the University in the future. The Board of Trustees of the University Endowment Fund has approved this policy.

Policy Statement

An endowment fund is a gift with donor stipulations that:

1. the principal be maintained intact indefinitely, or for a specified period, or until the occurrence of a specific event, and
2. the income earned by investing the principal can be spent or reinvested.

Endowment income is distributed annually by the Investment Fund and credited to income accounts designated to support academic needs, including but not limited to, professorships, scholarships and fellowships. Adhering to donor-imposed restrictions, departments may choose to use the distributed income, invest it in the University Temporary Pool, or reinvest all or part of the income with the Investment Fund for a later withdrawal.

Reinvested income may be withdrawn with at least 30 days written notice prior to the end of a calendar month in order for a department to withdraw funds from the Investment Fund as of the first of the following month. Any exceptions must be approved by the University Controller. Reinvested income may be withdrawn with required notice without any additional action by the Department. Reinvested income, however, may not be withdrawn if the income was reinvested based on donor conditions intended to maintain a required level of endowed principal, or to meet other requirements of the endowed gift.

The availability of the Investment Fund should assist in preventing the accumulation of unspent income in the accounts by providing an additional investment choice. Under this alternative, the income to be invested in the Investment Fund will purchase units that will be separately identified from principal (non-donor equity) in the Investment Fund and also in the ConnectCarolina principal fund account. Distribution on these units will occur annually and will be credited to the existing income account.

Exclusions

None

Special Situations

None

Procedures

• Finance Procedure 406.1 - University of North Carolina at Chapel Hill Procedure on Reinvesting Endowment Income
• Finance Procedure 406.2 - University of North Carolina at Chapel Hill Procedure on Withdrawing Reinvested Endowment Income

Additional Information

Frequently Asked Questions

None

Related Data

• Finance Policy 402 - University of North Carolina at Chapel Hill Policy on Investment/Endowment Income Distribution

Contacts

History

Revised:

• November 19, 2015: Updated terminology in line with ConnectCarolina.
• January 19, 2010