Fast facts about spendable and endowment accounts

Spendable account managed by MU

Goals

Accumulate money to be used within two years.

Source of funds:

  • gifts from donors
  • distribution from permanent endowment funds

Key points

Balance no more than 15 percent of endowment. This is not a good place to leave money long term because deposits lose purchasing power.

The university does all accounting work and sends thank you letters and all tax paperwork needed by donors.

Yield

This is a savings account with interest similar to passbook rates.

With an interest rate lower than the rate of inflation, the longer the money is on deposit the more purchasing power is lost.

More importantly, the money needs to be used to improve people’s lives.

Costs

3 percent one-time gift administration fee.

No annual fees.

No fees for distribution funds transferred into the account.

Council's role

Active management includes:

  • Development plan in place as part of county business plan.
  • Council can establish an account by motion in minutes and with an initial deposit.
  • Council directs withdrawals or transfers through motions in minutes. Minutes submitted to director of donor education for processing.

Councils are important, also, in generating new gifts and stewarding donors.

Endowment account managed by MU

Goals

Deposits remain in place forever. The account becomes permanent once the balance reaches $2,500 and paperwork is completed.

Once an account becomes permanent, a distribution goes into the spendable account, and this cash flow continues forever. The goal is for the corpus to grow in purchasing power, or to at least maintain it

Key points

Funds are invested conservatively by the university. Funds are not withdrawn from the account once the account becomes permanent.

The university does all accounting work and sends thank you letters and all tax paperwork needed by donors.

Yield

The value of the endowment is based on performance of the investment market and therefore can fluctuate. In 2012, university endowments grew 13.7 percent.

4.5 percent distribution to the spendable fund, with one-twelfth distributed each month (not interest).

Costs

3 percent one-time gift administration fee.

1 percent annual management fee

No gift administration fees if councils choose to transfer spendable funds into endowment accounts.

Council's role

Active monitoring of accounts in place.

Active management to:

  • Establish an endowment by motion in council minutes and an initial deposit
  • Increase the corpus of endowment funds and steward donors.

If you have questions or need more information, contact
Cat Comley, comleyc@missouri.edu, 573-882-2003 
Cynthia Crawford, crawfordc@missouri.edu, 573-825-8778
109 Whitten Hall, Columbia, MO 65211