Policy 111

Endowment Funds

Approved Board of Governors 2013.21, revised 2018.04

ENDOWMENT FUNDS

PURPOSE

  1. The purpose of this policy is to outline the rules governing the endowment funds (“Fund”) at the University of Ottawa.

FUND INVESTMENT

  1. The Statement of Investment Policies and Goals ('SIPG') provides the objectives, guidelines and procedures for the management of the assets of the Fund. The SIPG is approved by the Board of Governors of the University of Ottawa.

GENERAL PHILOSOPHY

  1. Endowed funds are to be held by the University in perpetuity, with the expectation that their capital will grow at a rate approximately equal to inflation to maintain their real value and protect against capital erosion. Endowed funds are also expected to generate an income stream at a level sufficient to meet their annual spending obligations. The University has chosen to use an investment strategy that will balance the competing needs of a stable income stream and long term capital growth required to offset inflationary erosion and market volatility.
  2. Endowed funds must be managed to preserve intergenerational equity. This is done by maintaining expenditure guidelines that help ensure current spending is not so high that it will compromise future spending thereby disadvantaging future generations and vice versa.
  3. Endowed funds are invested in accordance with the SIPG.
  4. Endowed funds are managed globally, by combining each individual endowed fund constituting the total Fund.

FUND EXPENDITURE

  1. The University maintains a separate account for each individual endowed fund (“Account”).
  2. An expenditure rate of 3.5% of last 12 quarters moving average market value of the Fund will be made available to meet current obligations.
  3. The University adds the investment income net of internal and external fees and expenses paid from the Fund to each Account on an annual basis. Investment income includes interest, dividends and realized and unrealized capital gains or losses.
  4. There will be no spending if there is no accumulated net investment return.
  5. For donations of $1,000,000 and above that require spending during the first 3 years the University will withhold 9% of the original donated capital from investment in the Fund, subject to approval by the donor. In each of the first 3 years, 3% of the original donated capital may be spent. The remaining 91% of the original donated capital is invested in the Fund and spending after the initial 3 year period will be based on the amount in the Account and will be in accordance with paragraphs 8, 9, and 10 above.
  6. The annual expenditure rate will only be applied to an Account once it has reached a minimum capital amount of $30,000 and has remained at this level for a full year.

PERIODIC REVIEW

  1. This Policy will be reviewed on at least a triennial basis to ensure it remains consistent with the
    University’s objectives and the external environment.
  2. From time to time the value of the annual scholarship, bursary or expenditure budget provided by each Account may be reviewed by Financial Resources and adjustments made if necessary.

EXCEPTION

  1. No exception may be made to this policy without the written consent of the Administrative Committee.

    Revised on February 26, 2018

    (Office of the Vice-President, Resources)