1. Endowment Reporting Finance Director Presentation April 17, 2012 Presented by: Jennifer Hinkle with Renee Fitzmorris

2. Objectives Provide general overview of the endowment – Endowment transaction process – How to spend endowment payout ETS reports Frequently Asked Questions (FAQ)

3. Endowment Overview: Like a Mutual Fund Received and recorded as revenue/transfer by Development and Comptroller’s Office in appropriate fund designation Corpus increases in ETS (both gift and IFT) Market Value increases in ETS for IFT (cash invested the month it occurs) New Endowment Gift / Internal Fund Transfer (IFT) (Transaction Date: 2/15/12) Endowment gift and IFT (corpus/principal) buys units in the following month Units bought based on 1/31/12 market value price per share Market Value increases in ETS for gifts (cash transferred the month after it occurs – allows for reconciliation and any adjustments) Units bought the following month (Transaction Date: 3/31/12) Fund generates payout based upon current year payout rate Fund shares in earnings/expenses of the pooled endowment Fund allocations begin the following month (Transaction Date: 4/30/12) Price per share (Market Value: 1/31/12)

4. How to Utilize Payout Submit Endowment Request Form to Treasury Management with supporting documentation attached. Form location  http://financeoffice.gwu.edu/treasury/ http://financeoffice.gwu.edu/treasury/

5. Option 1: Payment Request (for Direct Charge) Option 2: Funds Transfer (for Reimbursement) New Form Section! Option 3: Payout Reinvestment Something to keep In mind… What specific information would be useful for reporting back to the donor? Something to keep In mind… What specific information would be useful for reporting back to the donor? Required Information: -Requestor -Endowment Fund Required Information: -Requestor -Endowment Fund Required Information: -Requestor & Department Approval Signatures Required Information: -Requestor & Department Approval Signatures

6. 1) Payment Request/Direct charge Have endowment pay for expense directly from available payout Purchase Requisitions/Purchase Orders may be required See guidance  http://www.financeoffice.gwu.edu/procurement/Documents/PDF/RequisitionNeeded FAQ.pdf http://www.financeoffice.gwu.edu/procurement/Documents/PDF/RequisitionNeeded FAQ.pdf Treasury Management reviews form and supporting documentation and sends approved form to Accounts Payable (Comptroller’s Office) for processing 2) Funds Transfer/Reimbursement Reimburse department for expenses incurred related to endowment purpose Treasury Management reviews form and supporting documentation and sends approved form to Endowment Accounting (Comptroller’s Office) for processing 3) Reinvest payout into endowment fund Department does not have current use for payout Payout is no longer available for spending, but it buys additional units. These additional units then generate more payout for use in future periods. 3 Options to Utilize Payout:

7. ETS Reports Frequency: Quarterly – Monthly or ad-hoc reports provided upon request Q1 September Reports Provided by October 20th Q2 December Reports Provided by January 20th Q3 March Reports Provided by April 20th April Reports Provided by May 20th May Reports Provided by June 20th June Reports (Year-end) Provided mid- September (after financial statement audit)

8. ETS Reports Location: GWDocuments Report Types: 5 – Description – Payout Rollforward – Payout Drawdown – Gift – Corpus GWDocuments also contains DONOR DOCUMENTS such as: -Memorandums of Understanding (MOU) -Internal memos -Payout requests

9. Description Report Quick snapshot of funds by fund number (ET/EQ) Purpose Description of fund purpose (see MOU for more detail) # of units Book value (i.e. gifts, IFTs that contribute to the corpus/principal) Market value Unspent payout allocated to date Includes

10. Payout Rollforward Report Shows payout activity during current fiscal year Purpose A. Beginning unspent balance rolled over from prior year B. Payout allocated to date C. Payout spent to date (drawdowns) See Drawdown report for more detail! D. Payout spent to date (direct charges) See Drawdown report for more detail! E. Current system balance as of report date F. # of units G. Remaining “Authorized” payout to be allocated through June Includes

11. Drawdown Report Detail of payout spent in current year Purpose Fund number, amount, description of expense (scholarship, direct charge, payout drawdown request) “Release of Restrictions” are entries for accounting purposes and have no impact (net to zero) Includes

12. Gift Report Shows gift, pledge payment, and internal fund transfers for the current month/year Purpose Some versions show the units bought and total units Remember, units are purchased on a one month lag from the gift date! Note

13. Corpus Report Shows transactions during the current year that impact the corpus balance of the endowment Purpose Very few departments get this report as the information is included in book value amount on the Description Report Note

14. Trivia Question I have a new December 2011 gift coming in for an endowment, how can I estimate how much payout I will have to spend for the rest of FY12? A.If material/critical to your operating needs, contact the Endowment Analyst for information to calculate. If less critical, wait until the next ETS report comes out. B.Calculate price per share from ETS Description reports using total units and market value for your division. Answer: A Obtain price per share from Endowment Accountant (you need the total units in the pooled endowment and total market value, which is not available at the divisional level). Calculate units purchased = gift amount / share price Calculate payout = units * pro-rated annual payout rate applicable to gift timing Timing can be complex and some information may not show up on ETS reports timely Strongly encourage checking calculations that will be used for donor communication or business operations with Endowment Accountant. Calculations should be confirmed with subsequent ETS Reports (as actual amounts could differ due to rounding or human error).

15. FAQ: Calculate Total Payout Available as of Report Date Current Unspent Payout Balance (Column E) + Current Year payout to allocate through June (Column G) Example A = ($6,375) + $20,625 = $14,250 Example B = $248,750 + $56,250 = $305,000 Example C = $31,750 + $11,250 = $43,000 Use: Year end requests (can be completed before May/June) *Calculation incorporates current year activity (i.e. payout drawdowns)

16. Trivia Question As of July 1, 2012, how much endowment payout is available for use? A.None B.The month of July C.Only unspent prior year payout D.Unspent prior year payout PLUS all of the payout that will be allocated in FY13 (Jul-12 through Jun-13) Answer: D Unspent prior year payout carries into the next year. All payout that will be allocated on a monthly basis during FY13 is available for spending on July 1. GW STRONGLY encourages spending unspent prior year payout as well as all current year payout. The donor has given this money to be used for the purpose of the endowment (scholarships, professorships, etc.).

17. FAQ: Calculate Total Payout Allowed to be Spent as of 7/1/11 Beginning Balance (Column A) + Current Year payout allocated through report date (Column B) + Current Year payout to allocate through June (Column G) Example A = $14,750 + $28,875 + $20,625 = $64,250 Example B = $250,000 + $78,750 + $56,250 = $385,000 Example C = $36,000 + ($4,250) + $11,250 = $43,000 + $20,000 (12/31/11 reinvestment) = $63,000 Note: On 7/1/11, this fund had $63,000 available, however when $20,000 was reinvested, it was taken out of column B and is no longer available for spending per Jan-12 report. Use: Good for planning at the beginning of the year (payout requests can be completed before May/June) *Calculation EXCLUDES current year activity (i.e. payout drawdowns). It shows gross payout that will be allocated.

18. Trivia Question I won’t have my June reports until September. Is there a way I can ESTIMATE how much payout a fund will get in FY13? A.Yes B.No Answer: A The Board of Trustee’s will typically approve the payout rate for the upcoming year at its Q3 meeting, held in May. Using the most recent ETS Report (Descriptions or Payout Rollforward), the number of units can be multiplied by the payout rate to determine how much payout will be allocated over the next 12 months. Confirm this when Q1 reports are received. Note: There can be nuances; for example if a new gift is received, there is a timing lag before payout is earned.

19. FAQ: Calculate Annual Payout Quick Estimate: Calculate with Units Units (Column F) * FY12 Payout Rate Example A = 16,500 * $3.00 = $49,500 Example B = 45,000 * $3.00 = $135,000 Example C = 9,000 * $3.00 = $27,000 More Precise Estimate: Sum Authorized Payout Columns Payout allocated through report date (Column B) + Payout to allocate through June (Column G) Example A = $28,875 + $20,625 = $49,500 Example B = $78,750 + $56,250 = $135,000 Example C = ($4,250) + $11,250 = $7,000 + $20,000 (reinvested payout taken out of column B) = $27,000 Use: Talking with donor about payout their endowment is generating annually and planning annual support for ongoing activities, such as awards, prizes, professorships, etc.

20. Jennifer Hinkle Senior Endowment Analyst and Supervisor Comptroller’s Office hinklej@gwu.edu (703) 726-1910 Renee Fitzmorris Manager, Gift and Endowment Administration Treasury Management rfitzmor@gwu.edu (703) 726-4156