I just started at a new organization and we are in the process of reviewing unspent endowment funds with our Finance department. We currently do not have a policy in place for these and was hoping someone could share some best practices around this. I've read some institutions allowing unspent funds to remain for a 3 year time period and then being transferred to the principal account for reinvestment. However if this is not written into the original endowment agreement, are we able to do so or do we need written approval from the donor? Many of these unspent funds have not been reviewed in quite some time and I am sure exceed a 3 year period. We definitely need to put new policies in place and update agreement language so could use some best practices as a starting point.Thank you!
What John said! You cannot make funds permanently restricted that are not permanently restricted by donor. Also by making the endowment bigger, you are augmenting the issue that the department isn't spending the income for some reason. You need to research the reason and find a way for dept to spend it as the donor wished. My thoughts.
Aaron Forrest CPA
Senior Director Gift and Donor Services
University of Rochester Office of Advancement
585.275.2799 | email@example.com