Purdue University Executive Memoranda Master Listing

 

PURDUE UNIVERSITY
OFFICE OF THE EXECUTIVE VICE PRESIDENT AND TREASURER
MEMORANDUM NO. A-28
(Supersedes Executive Vice President and Treasurer Memorandum No. A-28, dated 7 June 1982); and
(Memorandum No. A-29, dated 1 July 1983)

October 6, 1986

To: Deans, Directors and Heads of Schools, Divisions, Departments, and Offices

Re: Current Yield Pool

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Executive Vice President and Treasurer Memoranda No. A-28 and A-29 describe the creation of a Current Yield Pool within the Endowment Fund and identify conditions under which funds can be added to the pool. The purpose of this memorandum is to clarify and revise the terms of A-28 and A-29, dated 7 June 1982 and 1 July 1983, respectively.

The Current Yield Pool was established for investment purposes within the University's Endowment Funds. With the approval of the Treasurer, gifts received after 7 June 1982 are eligible to participate in this Pool. The primary objective of this Pool is to provide maximum current income rather than capital gains, even at some risk of erosion of capital. Our regular endowment pool, which has a balanced portfolio, will continue as the normal investment vehicle for all other endowment funds.

Participation in the Current Yield Pool will be authorized under the following conditions:

1. GENERAL GIFTS, REQUESTS, AND GRANTS
   1. Minimum amounts for participation in the Pool will be $5,000; however, exceptions may be granted by the Treasurer or his designee if additional funds exceeding the minimum can reasonably be expected. Entry into the Pool will be effective as of the date of receipt of the gift.

   2. Investments in this Pool generally will be considered permanent. However, if conditions of the gift permit, limited withdrawals of capital from the Pool for application to other University purposes may be approved by the Treasurer, based on the overall priorities and needs of the University.

   3. Normally donors must either sign an agreement specifying investment in the Current Yield Pool or give indication in writing that they wish their gift to be invested in the CYP and that they understand this will result in no appreciation of the principal of their gift in the future.

2. CAMPAIGN/DEVELOPMENT ACTIVITIES

   Various deans and chancellors have initiated development activities at the school or campus level. Funds raised under these programs are typically intended for current operations and are deposited into an appropriate operating account. In order to provide additional incentive and flexibility to develop outside gift support, the following policy is effective immediately and applies to funds received after 1 July 1983.

   1. Gifts not intended for an endowment will be eligible to participate in the Current Yield Pool without specific donor authorization.

   2. For participation in the Current Yield Pool, a minimum of $10,000 of either individual or accumulated gifts must be committed. However, contributions to formally-approved campaigns are authorized for full (first dollar) Current Yield Pool participation.

   3. Funds authorized to participate in the Current Yield Pool must be left in the Pool at least 12 months. (Additions can be made as gifts are received.)

   While an important aspect of the expansion of the Current Yield Pool is to provide greater fiscal flexibility, it is geared toward longer-term projects. Funds to be used for current expenditures should continue to be deposited to and expended from normal operating accounts.

3. MEMORIAL GIFTS

   The University periodically receives gifts in memory of its students, staff, alumni, and friends. Outlined below are general guidelines as to how these memorial gifts should be handled.

   1. The regular Endowment Fund is the investment option most appropriate for memorial gifts when it is important to increase the principal of the fund to offset the impact of inflation.

      Memorial funds of $5,000 or more, or funds which, through additional contributions can be expected to reach the $5,000 level, may participate in the Current Yield Pool with the approval of the Treasurer or his designee. Donors to memorial funds will not be required to sign participation agreements. Investments in the pool will earn interest as of the date of deposit of funds in the Current Yield Pool. Additions to memorials established in the Current Yield Pool may be made upon receipt of the funds.

   2. Normally, memorial funds less than $5,000 will be deposited directly to the appropriate operating account from which expenditures will be made. Memorial funds in excess of $5,000 may also be handled in this manner.

   3. Where the funds are provided by a single entity or person, the purpose/uses of the gift are usually specified by the donor. However, in most cases, checks are received from many persons "In memory of _________________" or to the "_______________ Memorial Fund". In these cases, the cognizant dean or director, with input from the surviving family if deemed appropriate, should establish the purpose for which the funds are to be used.

   4. Acknowledgement of memorial gifts is the responsibility of the receiving school, division, or department in conjunction with the Office of the Vice President for Development.

4. EARNINGS DISTRIBUTION POLICY

   Income will be distributed according to the following criteria:

   1. Income will normally be distributed to the appropriate operating accounts on June 30 and December 31 of each year. With approval from the Treasurer, earnings may be allowed to accumulate and to be reinvested.

   2. Until they have reached their respective minimum, campaign/development and memorial gifts will have 50% of earnings available for spending with 50% reinvested. Once the minimum is attained, the distribution criteria will revert to #1 of this section.

   3. Exceptions to the above-stated policy may be granted by the Treasurer.

5. WITHDRAWAL POLICY

   Notice of intent to withdraw any funds in the Current Yield Pool must be provided to and coordinated with the Director of Investments who will determine the date of withdrawal based on liquidity considerations of the Pool.

   Additional information concerning the specific policies and procedures for the operation of this Pool may be obtained by contacting the Director of Investments.

 

F. R. Ford
Executive Vice President
and Treasurer