Investment Income Distribution Policy for Private Gifts

The uniform investment income distribution policy for the University of Illinois and the University of Illinois Foundation.

There is an investment income distribution policy for gifts received by the University of Illinois and the University of Illinois Foundation. The income distribution policy will be reviewed from time to time for possible adjustment. The University and Foundation Income Distribution Policies provide the following:

Current Funds Income Distribution

  1. The Foundation will automatically transfer to the appropriate University account substantially all unrestricted and restricted current fund gifts upon their receipt for utilization by the benefiting University program and for investment in the Operating Fund Investment Program. Those funds not transferred but retained at the Foundation will participate in the Foundation current funds pool.
  2. The University and University of Illinois Foundation utilize the first 2% of investment income on current use gift and private grant accounts to fund development efforts.
  3. Investment income earned in excess of 2% on University cash balances will be used for the campus unrestricted funds for important capital and repair and replacement needs at each campus.
  4. Investment income earned in excess of 2% on Foundation cash balances will first be distributed to approved construction project exceptions (based on average cash balances), then be used by the Foundation for system upgrades.

Exceptions

  1. Gifts in excess of $500 thousand for approved construction facilities will receive a distribution of investment income after assessment of the 2% gift fee.
  2. Grants from grantors certifying that they will only award grant funds to institutions that distribute investment income to the grant funds, will receive a distribution of investment income after the assessment of 2% gift fee.
  3. The Vice President for Administration in consultation with the appropriate campus Provost may approve other exceptions.

Endowment Funds Income Distribution

  1. The University and Foundation endowment pools are invested with an emphasis on long-term growth and return and use the total return concept for performance evaluation. This means that growth in the endowment pool is evaluated on the total investment return which includes both capital appreciation and income generation. External managers are not required to meet cash flow needs of the University with dividend and interest receipts. Investments may be liquidated to meet such needs.
  2. The University endowment pool spending policy is based on a percentage of the seven-year moving average market value of the endowment pool. The spending rate is reviewed annually by the Vice President for Business and Finance and the Vice President for Academic Affairs who forward recommendations to the President for approval. The rate is applied to each endowment fund based on the fund's participation in the pool at June 30 of the previous fiscal year. Additions and withdrawals from the fund after June 30 will increase or decrease the income distribution on a pro rata basis. The full amount of the income distribution will be reflected in the appropriate endowment income accounts in the first month of the fiscal year for which the distribution was calculated.

Separately Invested Funds Income Distribution

Funds are separately invested by the University and Foundation either because of specific donor or legal restrictions, or because it is in the best interest of the University and Foundation not to commingle the funds. Separately invested funds hold investments which are specifically identified to the fund. All revenue earned by these investments is deposited directly into the fund which held the investments, with income distributed annually as available.

Questions concerning this policy statement should be addressed to the Associate Chancellor for Development, 244-1206.