2.13 Expenditure of Endowment Funds
5 February 2016
Executive Director, Finance
This policy applies to all existing and future endowment funds established at the University.
Gallaudet University (the University) has interpreted the District of Columbia Uniform Prudent Management of Institutional Funds Act of 2007 (the “Act”) as requiring the University, absent explicit donor stipulations to the contrary, to act in good faith and with the care that an ordinarily prudent person in a like position would exercise under similar circumstances in making determinations to appropriate or accumulate endowment funds, taking into account both its obligation to preserve the value of the endowment and its obligation to use the endowment to achieve the purposes for which it was donated. The University classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment required by the applicable donor gift instrument. The remaining portion of donor-restricted endowment funds that are not classified as permanently restricted are classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the University. The University defines the appropriation for expenditure as the authorization of the spending rate in accordance with the University’s current investment policy. In making a determination to appropriate or accumulate, the University adheres to the standard of prudence prescribed by the Act and considers the following factors:
- The duration and preservation of the endowment fund;
- The purposes of the institution and the endowment fund;
- General economic conditions;
- The possible effect of inflation or deflation;
- The expected total return from income and the appreciation of investments;
- Other resources of the institution; and
- The investment policy of the institution.
Endowment funds with a market value of $3 million or more will be annually reported to the President, the applicable division administrator and the fund manager, if different, at the beginning of each fiscal year to ensure annual consultation on the use of the fund's payout.
Gallaudet University Board of Trustees