09.125 Policy for Endowment Administrative Fee

Chancellor

Effective, July 1, 2013; Established October 26, 2012

UNC Policy Manual 600.2.1 “Endowment Funds”

Frequently Asked Questions (FAQ) (available: website)

Chancellor/Business Affairs/University Advancement

Policy Details:

1. Purpose

   The University of North Carolina Wilmington has made a commitment to the comprehensive development effort of the advancement program in order to meet the increasing demands for private support to the institution for its students, faculty and programs. It is the goal of the university to limit state funds used to support advancement operations and manage the endowment funds by assessing an administrative fee.

2. Definitions

   1. Advancement: The development and fundraising program that cultivates, solicits and stewards donors for philanthropic gifts in support of the university.

   2. Gift: A contribution to the university that is intended as a donation and bestowed voluntarily and without expectation of tangible compensation; gifts are irrevocable.

   3. Endowment: A fund established through a gift subject to donor imposed restrictions that the principal be preserved in perpetuity, and invested with only the income being spent.

   4. Administrative Fee: An amount assessed annually on the endowment fund.

   5. Reserves: The accumulated investment earnings held in the endowment.

   6. Underwater Endowments: The term used when the fair market value of an endowment investment is less than the historic gift value.

3. Procedure

   1. The Endowment Administrative Fee is assessed annually on endowment funds; endowment funds held by the UNCW endowment and the UNCW Foundation endowment will be subject to the fee, except as noted.

   2. The 1.25% fee is assessed annually in July by the Office of Associated Entities, based on the endowment’s fair market value and computed following the same methodology used for endowment spending.

   3. Exemptions: Underwater endowment funds, student managed endowment funds, and organizations that have written established policies prohibiting administrative fees will not be assessed the administrative fee.

   4. A fully funded distribution is the highest priority in the administration of managed funds. In the event that reserves are insufficient, priority will be given to the spending distribution. If reserves are insufficient to fully fund the spending distribution or if assessment of the administrative fee would erode the endowment principal, the administrative fee will not be assessed.

4. Review
   
   Periodic reviews of the fee or other administrative changes are subject to approval by the UNCW Board of Trustees. Routine procedural changes are subject to review and approval by the Vice Chancellor for Business Affairs and the Vice Chancellor for University Advancement.