Foundation Fees Policy

ENDOWMENT DISTRIBUTION and FEES POLICY [Download PDF]

Last Amended & Approved – Dec. 3, 2013

Purpose

In accordance with the standards of care and prudence within the Uniform Prudent Management of Institutional Funds Act (UPMIFA), this document outlines the endowment distribution and service fees related to the EWU Foundation (“Foundation”) Endowment Pool and service fees for other noted Foundation accounts.  This policy supersedes any prior adopted policies.

The EWU Foundation operating budget comes from five (5) sources:

  1. An assessment on the three-year rolling average of market value of endowed accounts. The percentage amount is determined annually and applied quarterly.
  2. An assessment on the value of non-endowed accounts.  The percentage amount is reviewed annually and applied quarterly.
  3. An assessment on outright distributions from estates, retirement plans and life insurance proceeds.
  4. Unrestricted giving to the EWU Foundation.
  5. Interest on short term investments.

The EWU Foundation strives to utilize a prudent fee structure to fund the cost of operations and provide support to the University. Similar to peer practice, administrative fees are used to fund the tasks associated with pursuing, managing and investing the various types of funds held by the Foundation. These fees provide essential support necessary to EWU Foundation’s overall operation. The fee structure and rates are reviewed annually by the EWU Foundation Finance Committee and approved by the EWU Foundation Executive Committee.

Endowed Funds Distribution and Assessment

The distribution rate will be reviewed by the EWU Foundation Finance Committee and approved by the EWU Foundation Executive Committee annually in the fall of each year, balancing the two opposing claims – the need for current students, and the obligation to preserve and grow the endowment for future students.

The distribution rate will be calculated monthly as a percentage of the fair market value using a three year rolling average of the unit value. This will be determined December 31, allowing financial aid and departments time to plan the use of the funds that will be available the following July 1.  EWU Foundation practice does not allow for distribution from endowed accounts that are “underwater”.

Earnings available for expenditure will be transferred into a holding account and, if not allocated immediately, will be invested with the Foundation’s short-term investments. If not allocated by the end of the year, the remaining distribution will be added to respective account’s principal, unless the endowment agreement specifies otherwise.

Distribution from new endowment funds may begin only after the fund has reached the minimum amount required and has been invested for a full twelve months prior to the first distribution assessment in December.

A service fee is assessed to the Foundation endowment.  The fee amount will be reviewed by the EWU Foundation Finance Committee and approved by the EWU Foundation Executive Committee annually in the fall of each year and will be assessed quarterly.  This calculation will be based on the 36 month rolling average of the endowment’s market value, which includes earnings identified for distribution but not yet allocated.  The service fee will be assessed/transferred on the schedule noted below.

Assess Fee            Transfer Fee

Q1         September            October

Q2         December             January

Q3         March                    April

Q4         June                       July

Non-Endowed Funds Assessment

The approved assessment rate is applied on a quarterly basis based on a percentage of the value of the respective non-endowed fund at the time of quarterly assessment.

Assess Fee            Transfer Fee

Q1         September            October

Q2         December             January

Q3         March                    April

Q4         June                       July

Planned Gift Realization Assessment

An assessment fee as a percentage of the overall gift shall be applied on all planned gifts at the time of realization and include estates gifts, retirement plan distributions and life insurance proceeds.

Historical Rates and Fees

The historical record of the annual Endowment Distribution rate and Service fees applied have been approved by the EWUF Executive Committee as recorded on the attached Appendix A.

Policy Historical Actions:

Approved, Foundation Executive Committee – December 4, 2008

Amended and Approved, Foundation Executive Committee – October 21, 2010

Reviewed and Recommended, Foundation Finance Committee – April 27, 2011

Approved, Foundation Executive Committee – May 24, 2011

Amendment Board Adopted – July 8, 2011

Reviewed and Recommended, Finance Cmte. – Sept. 21, 2011 & Approved, Executive Cmte. – Oct. 24, 2011

Reviewed and Recommended, Finance Cmte. – Sept. 19, 2012 & Approved, Executive Cmte. – Jan. 15, 2013

Amendment Board Adopted – June 18, 2013

Amended and Approved, Finance Cmte – October 16,2013 & Approved, Executive Cmte – Nov.19,2013

Amendment Board Adopted – Dec 3, 2013

Appendix A    (Historical Record of Approved Endowment Distribution Rate and Fees)

Gift Type                                                                FY09        FY10        FY11          FY12        FY13       FY14      FY15

Endowed Funds Distribution Rate (annual)            4%            4%            4%            4%            4%            4%            4%

Endowed Funds Assessment Fee (annual)             2%            2%            2%            2%            2%            2%           2%

Non-Endowed Funds Assessment Fee (annual)      —              —            —            1.2%         1.2%         1.2%        1.2%

Planned Gifts Assessment Fee                                 —           —            —               2.0%         2.0%         3.5%         3.5%
(one time on realized)

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* An annual administrative fee of up to 2% may apply to your donation. This fee provides essential operational support for the EWU Foundation.