Investment of Endowment Funds
All endowment funds held by Texas A&M University are invested by The Texas A&M University System as governed by the TAMUS Investment Policy 22.02: System Investment.
Endowment Income, Appreciation Reserve and Values
Distributions are normally made to the endowment income account. Distributions may also be made to the endowment corpus to increase the endowment. Distributions are made quarterly after the last calendar day of November, February, May, and August of each fiscal year.
The distribution for the coming fiscal year is calculated on an annual basis using February balances. The distribution or payout per unit amount for each quarter is the average of the quarterly market value per unit for the 20 fiscal quarters ending the previous February, multiplied by 5% and divided by 4. The payout per unit is multiplied by the number of units in your endowment to reach the quarterly distribution to the income or endowment account. This distribution is split into an Interest portion and an Appreciation Reserve portion. The Interest portion is posted to sub-code 0395 at "XQYY SEF Int Income" (where X is the quarter number and YY is the last two digits of the year). The Appreciation Reserve portion is posted to sub-code 1000 as "XQYY Apprec Reserve". The Interest and Appreciation Reserve portions will vary from quarter to quarter, but the total of the two entries as quarterly distribution will remain the same for the fiscal year. Note that the distribution may increase during a fiscal year if more funds are added to the corpus of the endowment.
To view the number of units, the quarterly distribution, and the market value of the endowment, search the TAMUS Endowments by the six digit endowment account number, starting with 074XXX or 076XXX. This report will also show the income account, listed as recipient account.
The calculation of the payout per unit may be seen at System Endowment Fund » The Texas A&M University System in the reports under the "Endowment Spending Calculation" heading.
Use of Endowment Income
Endowment Income deposited into spending accounts must be used for the designated purpose established by the donor (in the case of true or term endowments) or the Board of Regents (in the case of quasi-endowments) per System Investment Policy 22.02, Section 2.4.
Gifts/Donations/Endowments
A gift is cash, items, or property (including support which may be termed "grants" or "sponsorships" by some donors) from private sources, given voluntarily, and without expectation of specific benefit or tangible compensation. Gifts are usually received for the purpose of a program for public good, scholarship funds, equipment for research, and for other educational purposes.
ALL gifts received by Texas A&M University should be directed immediately to Texas A&M Foundation. Gifts should not be sent to the TAMU Cashier's office for deposit.
The Texas A&M Foundation is the University's agent in soliciting, managing, and acknowledging private gifts. Please see Foundation Guidelines for more information.
Endowments
Funds may be endowed by donor request or by the Board of Regents (quasi-endowment). The minimum amount for an endowment is $25,000.
For donor-requested endowments, email financial-reporting@tamu.edu for information needed to establish endowment.
For quasi-endowments, see information on the Quasi-Endowment Process.
Definition
Quasi-Endowments are funds functioning as endowments that are resources that the University, rather than the donor, has determined are to be retained and managed like an endowment. Principal and income of these funds may be utilized at the discretion of the University. Resources that the University sets aside to function as an endowment may be unrestricted or restricted as to the purpose or time of expenditure by an agent outside the University.
Source: NACUBO Accounting Tutorial – Endowment Definitions
For Texas A&M University, the decision-making authority as it pertains to quasi-endowment approval lies with the Board of Regents.
The minimum amount to establish a quasi-endowment is $25,000.
Process
When a department wishes to designate unrestricted funds be used as a quasi-endowment, the following process must be followed:
- The process to create a quasi-endowment begins at the departmental level. The department head should submit a signed memo on letterhead requesting that the identified funds be used to establish a quasi-endowment. The memo should be addressed to University Accounting Services and emailed to financial-reporting@tamu.edu and include the amount, source of funds, background information, and the purpose of the endowment (i.e. the intended use of income generated from the quasi-endowment). The memo should be accompanied by additional documents to support the background information cited in the memo, such as a gift agreement between the donor and Texas A&M or a copy of the donor's Last Will and Testament. Gifts must be accepted in accordance with System Policy 21.05: Gifts, Donations, Grants and Endowments.
- Once all necessary information is received, the Financial Accountant prepares a draft Board of Regents (BOR) Minute Order/Agenda Item for review by University Accounting Services management prior to routing to other required approvers within the University. Ultimately, the Minute Order is included in the Board of Regents (BOR) agenda for approval. This process may take several months because of the lead time needed for placing items on the BOR agenda and agenda submission deadlines. BOR Agenda Item Deadlines can be found at the Board of Regents website, under the "Meeting Dates » Agenda Items Deadlines" links. To allow for development of the formal Minute Order and university approvals prior to submission to the BOR, requests must be submitted to UAS one month prior to the "Agenda Items to Chancellor" due date published on the BOR website. To illustrate, for an August 2–3 BOR meeting, the agenda item is due to the Chancellor by June 22 per the aforementioned link. A complete request is due from the department to UAS by May 22. While UAS will diligently work all requests after the outlined deadlines, we cannot guarantee incomplete or late submissions will receive approval and be submitted for the next BOR meeting. Submissions that do not make the next BOR meeting agenda will be placed on the subsequent BOR meeting agenda.
- Once the Minute Order has been formally approved by the BOR, the department must request a new subledger income account (for quasi-endowment earnings). Once the subledger account has been established, the Financial Accountant will set up the General Ledger Quasi-Endowment account.
- After the new accounts are established, University Accounting Services will transfer funds from the source account(s) into the quasi-endowment account. For gifts, please be aware a 5% development fee will be assessed against the gift quasi-endowment earnings account (unless the purpose of the gift is unendowed scholarships). This fee will be taken out of the income account before earnings are credited to the account; 4% goes to the A&M Foundation for its support of endowment activities and 1% goes to a departmentally-designated operating account. Expenditures from the quasi-endowment earnings account cannot be made until income exceeds the fees assessed.
Repurposing a Quasi-Endowment
The process to repurpose an existing quasi-endowment is similar to the process used to create a quasi-endowment. The department head should submit a signed memo on letterhead requesting that the endowment be repurposed. The memo should be addressed to University Accounting Services and emailed to financial-reporting@tamu.edu. Sufficient information should be provided to support the need to repurpose the funds.
UAS will write a draft Board of Regents Minute Order/Agenda Item and the process will follow the steps listed above for establishment of quasi-endowment accounts. If denied, the funds will stay in the quasi-endowment as per the original request.
Use of Endowment Income
Income received from endowment corpus must be used for the designated purpose established by the donor (in the case of true or term endowments) or the Board of Regents (in the case of quasi-endowments) per System Policy 22.02: System Investment, section 2.4.
In the event funds accumulate in the income account in excess of current need, the department may request a transfer of funds from the income account to the associated endowment account. This reinvestment would enhance future earnings and therefore further the purpose established in the endowment. Departments should be advised that such movement of endowment income to true endowment corpus cannot be reversed in the future. In addition, movement of quasi-endowment income to quasi-endowment corpus cannot be reversed absent approval by the Board of Regents.
At no time may funds be moved from an endowment account or its associated income account for purposes other than stated in the endowment, unless approved by the donor (in the case of endowments) or the Board of Regents (in the case of quasi-endowments).
Process
When a department wishes to transfer of funds from an income account to the associated endowment account, the department head should submit a signed memo on letterhead requesting the amount of the transfer. The memo should be addressed to University Accounting Services and scanned and e-mailed to financial-reporting@tamu.edu.
Ensure an account is setup to receive funds from the Texas A&M Foundation. Transfers can only be made to FAMIS accounts that accept revenue. State accounts (1xxxx and 29xxxx) do not accept revenue. 24xxxx accounts do not accept revenue, except for reimbursements to CBA travel card payments.
Please contact the Texas A&M Foundation Accounting team at: accouting@txamfoundation.com for questions and assistance about disbursements from accounts held there.