Fund Administration and Use
2.0 Overview of Fund Types and Fund Administration
KU Endowment’s records are maintained in accordance with the principles and practices of “fund accounting.” Each fund account is a separate accounting entity; however, accounts may be grouped together for financial reporting purposes, e.g. to provide reports for multiple accounts within a specified academic unit. Most of the assets held by each account are also pooled together for investment purposes, and each account is allocated an appropriate portion of the investment pool to maintain its separate accounting capability.
Although the basic forms of fund acounts at KU Endowment can be generally classified as endowed or expendable, there are other variations of fund types. The Fund Administration Practices brochure provides an excellent description of the various types of fund accounts managed at KU Endowment, as well as a general discussion of how spendable resources are generated for the University’s use.
The assets of most accounts that are intended to provide a permanent source of income to benefit the University are aggregated together for investment purposes in the Long-Term Investment Program. KU Endowment’s Investments Committee has developed important policies to manage this collection of invested fund accounts. The Investment Policy Statement establishes a target asset allocation and performance objective for the Long-Term Investments Program, and a Spending Policy that specifies a reasonable amount that is available for immediate spending by each participating account without eroding its ability to generate resources for future spending. These policies provide the basis for KU Endowment’s oversight of its professional investment fund managers.
Standard reports of fund account transactions and statements of assets and fund balances are available on-line to all Fund Account Representatives. These reports may be selected or sorted based on several user-defined criteria. Examples of KU Endowment financial reports are provided in section 6.0. It is important for appropriate University faculty and staff to review these reports to ensure the accuracy of KU Endowment’s transactions.
Whenever special bank service charges are incurred (other than traditional check processing services), such as for wire transfers, stop payments, or credit card processing fees, the bank fee will be charged to the associated fund account.
Donors contribute resources to KU Endowment to help the University of Kansas achieve its goals in education, research, and public service. An obvious, but critical, element in the success of this system is the expenditure of the contributed resources. Although a significant majority of KU Endowment’s spendable resources are sufficiently used for the exact purpose specified by the donor, some funds may be underutilized, or may even become dormant. When the expenditures from any KU Endowment fund have not been equal to at least 80% of the income earned by the fund for at least one year in the past three years, KU Endowment may contact the University representatives for the fund account see section 3.0 to determine appropriate alternative steps to ensure the use of the fund as the donor(s) expected.
A Note About Scholarship Funds
Because funds for student scholarships represent the largest share of all KU Endowment fund purposes, and because the need for scholarship resources is so great, scholarship funds are very high-profile funds. They deserve special attention to ensure they are used as effectively as possible. Although the Office of Student Financial Aid technically serves as the Fund Account Representative for nearly all of KU Endowment’s scholarship accounts, persons responsible for the selection of scholarship recipients at the school, division, or department level should also be proactive in contacting KU Endowment whenever a scholarship account is too restrictive to be effectively used. Otherwise, the scholarship allocation of spendable resources for each fund, which is provided by KU Endowment each spring, should be entirely expended during the succeeding academic year (including the current year summer term, as appropriate).
A Note About Research Fund Accounts
Because of the potential health and other public policy issues related to research activities, any of the expenditures for the following items must be paid through the KU Center for Research or the KUMC Research Institute, as appropriate: human subjects; vertebrate animals; environmental, health or safety risks; conflicts of interest; export controls; intellectual property; or subcontracting work outside of the University. If use of the account will be predominantly for these sensitive research activities, it may be most efficient to transfer assets from the KU Endowment account to KUCR or KUMC-RI to expedite vendor payments. Please see section 5.1 for specific procedures on how to pay for these controlled research activities.