Endowment Management Policy
– March 21, 2024
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ENDOWMENT
MANAGEMENT
POLICY
Policy Type:
Board
Initially
Approved:
October 26,
2007
Policy
Sponsor:
Board of Governors
Last
Revised:
March 2024
Primary
Contact:
Vice President
Finance and
Administration
Review
Scheduled:
March 21, 2027
Approver:
Board of Governors
A.
PURPOSE
Mount Royal University receives Endowment funding from donors for a variety of purposes including
student awards/scholarships/bursaries and program enrichment. The University is charged with
investing Endowment Funds in order to maximize the benefit to both current and future
beneficiaries. Responsible administrative and financial Endowment management is important in
maintaining and growing existing Endowments as well as attracting future Endowments.
B.
SCOPE
This Policy applies to all Endowments made to Mount Royal University. Compliance with University
Policies and Procedures extends to all members of the University community.
C.
POLICY STATEMENT
1.
OBLIGATION
1.1
Mount Royal University is responsible for balancing the following obligations with
regard to Endowment Funds:
a.
To protect the value of the funds against inflation, so that the income from
the funds will continue to work to the benefit of the beneficiaries.
b.
To distribute Endowment earnings in the manner specified by the donor.
c.
To provide a distribution of earnings that allows the University to plan
ahead knowing the level of funds available each year.
1.2
Decisions on the most appropriate use of unspent investment returns will be
undertaken on an annual basis and will be based upon a review of several factors
including the economic environment. Decisions to "inflation proof" the Endowments
by capitalizing a portion of unspent investment returns will be determined on an
annual basis. If it is determined that funds are available to be capitalized to inflation
proof the endowments over the long term, as a guiding principle, the University will
utilize Alberta CPI as the basis for determining the capitalized interest amount.
These retained investment returns will be available to provide increased stability to
the distributions during times of varying investment returns.
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2.
CONSIDERATION WITH RESPECT TO DISTRIBUTION
In making its annual determination of the percentages to be applied to the previous fiscal
year end book value, the following factors will be taken into consideration: the current level
of Endowment distributions; the total investment returns; the Alberta CPI; and expandable
balances from prior years..
3.
DISTRIBUTION OF INVESTMENT EARNINGS
1.1
The distribution of earnings from Endowed funds will be as follows:
a.
Earnings of these funds in total will be used to cover the related expenses
of custodial and investment management fees prior to determining the
amount available for individual fund disbursement.
b.
The distribution of all other unspent earnings will be made as follows:
i.
Endowments for student awards and operating funds with a
principal balance under $30,000 or $100,000 respectively will pay
out a minimum of 3.5% of the realized investment returns on an
annual basis. Any realized returns in excess of 3.5% will continue
to be capitalized on an annual basis until the Endowment principle
reaches $30,000 or $100,000 as applicable.
ii.
Endowments for student awards and operating funds with a
principal balance in excess of $30,000 or $100,000 respectively
will pay out a minimum of 3.5% of all net realized investment
returns remaining after the annual distribution and will then be
assessed for capitalization as noted in C., 3, 1.1, d.).
c.
If the net return (realized net gains, interest, and dividends) is less than
the amounts indicated in item (b), the distribution will be based on the
actual net return and any available undistributed funds from prior years.
d.
Subject to C., 1., above, should an excess of unspent expandable funds
accumulate, capitalization may occur under the authority of the Vice-
President, Finance & Administration, and the Executive Director of the
MRU Foundation. Any unspent funds not capitalized will remain for
expenditure in the future.
e.
The recommendations on the annual distribution to recipients and any
capitalization of unspent investment returns will be prepared by the Office
of the Vice-President, Finance & Administration. The recommended
capitalization amounts will be communicated to the Finance Committee of
the Board of Governors annually and will be approved as a part of the
approval of the University's Audited Financial Statements.
4.
REVIEW
This Policy will be reviewed periodically by the Office of the Vice-President, Finance &
Administration, and recommended revisions will be forwarded to the Board of Governors
for approval on the recommendation of the Finance Committee.
D.
DEFINITIONS
Endowment Management Policy
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(1)
Policy:
means the Endowment Management Policy
(2)
University:
means Mount Royal University
E.
RELATED POLICIES
● Investment Policy
F.
RELATED LEGISLATION
G.
RELATED DOCUMENTS
● Investment Procedures
H.
REVISION HISTORY
Date
(mm/dd/yyyy)
Description of
Change
Sections
Person who
Entered Revision
(Position Title)
Person who
Authorized
Revision
(Position Title)
04/12/2010
01/21/2020
Editorial
Template Update
Policy Specialist
University Secretary
10/13/2021
Editorial
Title Updates
03/21/2021
Major
AVP Financial
Services
Board of Governors