Frequently asked questions
University of Missouri Extension started its endowment and gifts program in 1984. The goal was to create a corpus, a body, of private monies to invest in MU Extension programs at both county and state levels. The program was started during difficult economic times for the state and the university with the hope that endowment earnings would replace funding lost from other sources. In 2005, a development plan was created that, for the first time, built a connection between MU Extension and the MU Development and Alumni Relations Office.
What’s the difference between a gift and an endowment?
Gifts are donations of money, tangible items, volunteer time or other valuable resources that can be used immediately to support the mission of University of Missouri Extension in the short run (one or two years).
Endowments are a long-term funding strategy whose proceeds are designated to be used for a specific purpose. The money put into this fund — the corpus — will be part of the fund forever in order to earn interest and grow. Only the earnings portion of the endowment will be spendable. The earnings are generally distributed monthly within a year of starting an endowment, or the endowment decision-makers can choose to invest the earnings and deposit them into the endowment once the endowment fund balance reaches $2500. The larger the corpus, the more earnings it can generate — earnings that will be available in the future to support more significant programming.
What are the advantages and disadvantages of gifts?
- Gifts help MU Extension sustain and grow in the short run.
- They can support programs until more long-term strategies can be put in place.
- Success is based on MU Extension’s reliable, relevant and responsive performance.
- Gifts can stimulate more substantial funding. Money attracts money. Success attracts success.
- Once the resources are used, they’re gone, and new or continuing gifts may need to be generated to sustain programming.
- Gift generation efforts often take time and money away from programming.
What are the advantages and disadvantages of endowments?
- Plans are made deliberately and carefully for long-term impact of funds.
- University of Missouri endowment funds are professionally managed and conservatively invested.
- The funds are expected to be in place forever to help make important programming available for generations.
- The value of the corpus and its earnings, while managed conservatively, are at the risk of the stock market and vary with its fluctuations.
- Often, costs are associated with management of the corpus.
- The corpus is not available for unexpected, short-term financial emergencies.
- A significant amount of money is needed in the corpus for earnings to be substantial enough to make a significant difference.
How many counties have endowment funds?
This question is a bit tricky to answer. Technically, the answer is 114, although not all of them are funded. On Dec. 31, 2012, 25 percent of counties had a zero balance in their university endowment fund and an additional 30 percent had a balance less than $2,500.
How many counties have a funded endowment managed by the university?
On Dec. 31, 2012, 51 counties had funded endowments (more than $2,500) and the remaining counties had pending endowments (less than $2,500) in funds managed by the University. When extension endowments were initially created in the 1980s, endowments at the University of Missouri needed to be $2,500 or greater to be considered funded. Today endowments created at the University of Missouri must be $25,000 or greater to be considered funded. The extension endowments that are currently pending or funded have been grandfathered in at the $2,500 amount, however.
Total of spendable
and endowment funds
Dec. 31, 2012
Who manages the investments of MU Extension endowments?
The Treasurer’s Office of the University of Missouri manages the investments of the endowments. Up-to-date information on investments at the University of Missouri can be found online at http://www.umsystem.edu/ums/fa/treasurer/endowment.
What are the administration fees?
The current policy was approved by the Curators of the University of Missouri effective July 1, 2013.
State legislation within the past few years now allows the university to use a portion of the endowment fund to support internal endowment administration and development activities.
Annual management fee: Endowments — 1 percent. Gift funds — no annual fee.
Gift administration fee: Beginning July 1, 2013, there is a one-time 3 percent fee for new money going into endowment and gift funds.
There is not a gift administration fee for funds going into the spendable account for distributions coming from permanent endowments.
What monies can go into an endowment?
Monies from donations and gifts, fundraising activities, and endowment grants can be used to create or enlarge endowments. Money from federal, state or county appropriations cannot be placed in endowment funds.
Should a receipt be issued for each gift?
Yes, a receipt should be issued for all gifts to MU Extension.
If the gift is given to the Extension Council, the council is to issue a receipt. The Fiscal Policies and Procedures document (revised 12/11/12) is posted on the MU Extension website and points out a numbered receipt is to be issued for all transactions in which money is received in the extension center or by staff at locations other than the extension center. A copy of the receipt is maintained as an official part of the accounting record.
If a gift is given via a University managed website or submitted at the state level, receipts will be provided by the University.
If an extension council chooses to issue a gift acknowledgement form, what information should it contain?
- Name of extension council
- Amount of cash contribution or description (but not the value) of noncash contribution
- Statement that no goods or services were provided by the organization in return for the contribution, if that was the case, or description and good faith estimate of the value of goods or services that an organization provided in return for the contribution
- Neither the social security number nor the tax identification number of the donor needs to be noted on the receipt
The IRS publication Charitable Contributions: Substantiation and Disclosure Requirements (PDF) may be of interest.
A gift acknowledgment form is available on the gifts and endowment website that has the details above plus incorporates the 1972 IRS opinion letter stating gifts to extension councils are tax deductible to the extent allowed by law.
How do I find out my county’s current fund balances?
Balances of county university-managed endowment and spendable fund accounts are updated monthly. Just send an email inquiry to Director of Donor Education Cynthia Crawford or Director of Development Cat Comley requesting the most recent balances for your headquarter county.
Can I receive them automatically?
You can now receive quarterly reports of your headquarter county’s university-managed endowment and spendable account fund balances by emailing Cynthia Crawford with your request.
Are donations to MU Extension tax-deductible for the donor?
Yes, donations to MU Extension are tax-deductible.
What is the return on the spendable fund?
Spendable funds earn about what a passbook savings account earns. The good news is that the money is earning a positive interest rate. The bad news is that the interest rate is a fraction of a percentage point and the money is losing purchasing power over time.
What is the return on endowment fund accounts?
The value of endowment funds fluctuates with the market. Endowment funds grew 13.7 percent in calendar year 2012.
The university takes a conservative approach and has calculated that 4.5 percent of funds in an endowment account can be distributed per year (1/12 per month). The corpus will be in place forever.
Because of the weak investment market performance in recent years, the management goal of university endowment funds was to preserve purchasing power. Now that market performance has strengthened, the university has returned to the goal of increasing purchasing power.
Who can I contact to learn more about extension gifts and endowments?
Director of Development
Director of Donor Education
MU Extension Accounting Associate Shelly DeJaynes, Director of Development Cat Comley and Director of Donor Education Cynthia Crawford, 2013.