Endowment Payout

Purpose

The purpose of the SAUF Endowment Distribution Policy is to establish a procedure for determining spending guidelines for the earnings of endowment accounts.  The primary goal is to achieve a proper balance between present and future needs.

Objective

The following objectives are to be met to achieve this balance:

  • To preserve the real value of the endowment portfolio over time
  • To provide current programs with a predictable and relatively stable stream of revenue
  • To reduce the effects of market fluctuation

Management

The Board of Governors monitors, adjusts, and approves the policy and the spending distribution rate on an annual basis with emphasis on meeting current program support needs and preserving the long-term intergenerational purchasing power of the endowment.

This endowment distribution policy is compliant with the Uniform Prudent Management of Institutional Funds Act (UPMIFA) as adopted by the State of Arkansas.

Implementation of the distribution policy is delegated to the Executive Director of SAUF.

Distribution Calculation

The formula used to determine the annual spending distribution applies a rate of 4.75% to a base equal to the 12-quarter trailing average of fair market value (FMV) of the total of endowment funds as of December 31 of the prior SAUF fiscal year.

Minimum Thresholds for Distributions

Upon creation of an endowment, no distributions for spending will be made from the endowment until 12 months after the principal amount reaches 100% of the defined endowment threshold.  Until that time, all earnings are held in the endowment or reinvested per the established endowment agreement.

Consolidations

Annually, endowments not reflecting investment activity for a 5-year period will be reviewed and consideration given to merging the funds into a pooled account.

Distribution

Distributions for unrestricted endowments that have reached the defined endowment threshold will be made annually.

This includes allocations to:

4.25% to:

  • SAU Endowments
  • Foundation Scholarship endowments (object code-3250) which will be transferred to student accounts upon completion of award acceptance requirements

0.50% to:

  • Foundation Director’s Account (71-6003-2100) to be used for Foundation operations
  • And, an additional $25,000 designated for the President’s Foundation Account

The distributions for endowments that have not reached the defined endowment threshold will be reinvested to the historic gift value (HGV).

The Board of Governors may authorize additional distributions at their discretion.

Each Department receiving an annual earnings distribution should ensure compliance with spending the funds in accordance with the related endowment gift agreements, stated terms, and specific donor intent.

Approved by the Board of Governors on November 3, 2017.

Mission Statement

The mission of Southern Arkansas University Foundation is to assist and coordinate in raising and managing funds and resources on behalf of Southern Arkansas University to be used exclusively in furthering the literary, scientific, and educational purposes of the university.

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Magnolia, AR 71753-2181
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