Endowment Management Policy
June 25, 1991
Date of Last Review/Revision
November 24, 2022
November 24, 2022
Policy Authority: Vice-President, Finance and Administration
Associated Procedure: None
Pursuant to section 27(2)(o) of the University Act, the Board of Governors of Simon Fraser University (“the University”) has the responsibility to “administer funds, grants, fees, and endowments and other assets.” The University has created an Endowment Fund which is intended to generate investment earnings to ensure that the University is able to maintain the quantity and quality of projects and programs that are possible through the generosity of donors. This policy establishes the framework for management and oversight of the Endowment Fund.
TABLE OF CONTENTS
3.0 SCOPE AND JURISDICTION
6.0 ROLES AND RESPONSIBILITIES
8.0 RELATED LEGAL, POLICY AUTHORITIES AND AGREEMENTS
9.0 ACCESS TO INFORMATION AND PROTECTION OF PRIVACY
10.0 RETENTION AND DISPOSAL OF RECORDS
11.0 POLICY REIVEW
12.0 POLICY AUTHORITY
14.0 PROCEDURES AND OTHER ASSOCIATED DOCUMENTS
1.1 Simon Fraser University (“the University”) actively seeks and welcomes donations in support of the activities of the institution.
1.2 This policy is subject to and consistent with the University’s Investment Governance Policy (B 10.09) and the Responsible Investment Policy (B 10.16).
2.1 The University has created an Endowment Fund to ensure that it is able to maintain the quantity and quality of projects and programs that are possible through the generosity of donors. The Endowment Fund which is intended to generate sufficient investment earnings to serve those purposes.
3.1 This policy applies to the assets of the Endowment Fund only.
4.1 See Appendix A for the definitions of words used in this policy and its associated procedures.
5.1 The Endowment Fund is designed for the collection of assets held in perpetuity to support the activities of the University. The Endowment Fund is made up of individual Endowment Principal Accounts each representing the original value of the donation and additions made for inflation and other capitalized amounts.
5.2 Donations made to the Endowment Fund are normally pooled together and invested in accordance with the University’s Investment Governance Policy.
5.3 Where practicable, non-cash donations such as securities and real property are normally converted to cash for investment purposes.
5.4 The Spending Income Allocation Rate is set by the Board of Governors on the recommendation of the Vice-President, Finance and Administration and is reviewed every third year on the basis of the investment earnings experience of the Endowment Fund. If a decrease in this rate is anticipated, The Vice-President, Finance and Administration will notify the Fund Administrators as early as possible.
5.5 The Spending Income Allocation for an Endowment Principal Account should be predictable and stable, even if financial markets perform below the minimum investment objective of this policy.
5.6 Fund Administrators are responsible for requesting the capitalization of any portion of unused Spending Income Allocations remaining in an Endowment Income Account at the fiscal year end. Once capitalized, these amounts become locked-in and are not reversible.
5.7 The primary investment return objective of the Endowment Fund is to earn, over the mid and long term, an absolute annual rate of return that exceeds the annual rate of increase in the Consumer Price Index (“CPI”) plus the Spending Income Allocation Rate, net of investment management expenses.
5.8 The purchasing power of the Endowment Fund will be preserved by the addition of an Inflation Adjustment Factor to each Endowment Principal Account.
5.9 The University maintains an Endowment Stabilization Reserve. When there are insufficient investment earnings to support the annual Spending Income Allocation, transfers are made from this account. The Endowment Stabilization Reserve will not exceed 15% of the aggregate market value of the Endowment Principal Accounts.
5.10 Investment earnings are distributed first to the Spending Income Allocation and the Inflation Adjustment Factor for each Endowment Principal Account. Any remaining investment earnings, in excess of the amount required to maintain the Endowment Stabilization Reserve, are then capitalized to the Endowment Principal Accounts.
6.1 Roles and responsibilities under this policy are subject to, and will be consistent with, the Investment Governance Policy.
6.2 The Board of Governors is responsible for setting the Spending Income Allocation Rate, on the recommendation of the Vice-President Finance and Administration.
6.3 The Vice-President Finance and Administration is responsible for:
6.3.1 the implementation and administration of this policy;
6.3.2 making recommendations to the Board of Governors;
6.3.3 authorizing exceptions to a specific endowment; and
6.3.4 reporting to the Board of Governors on the recommendation of the Spending Income Allocation Rate as set out in section 5.4.
6.4 Each Endowment Principal and Income Account has a designated Fund Administrator who is responsible for the effective use of the funds.
7.1 The VPFA will report to the Board of Governors as set out in section 6 of this Policy.
8.1 The legal and other University Policy authorities and agreements that may bear on the administration of this policy and may be consulted as needed include but are not limited to:
8.1.1 University Act, R.S.B.C. 1996, c. 468
8.1.2 Freedom of Information and Protection of Privacy Act, R.S.B.C. 1996, c. 165
8.1.3 Investment Governance Policy (B 10.09)
8.1.4 Donations Policy (GP 03)
9.1 The information and records made and received to administer this policy are subject to the access to information and protection of privacy provisions of British Columbia’s Freedom of Information and Protection of Privacy Act and the University’s Information Policy series.
10.1 Information and records made and received to administer this policy are evidence of the University’s actions to manage endowments. Information and records must be retained and disposed of in accordance with a records retention schedule approved by the University Archivist.
11.1 This policy must be reviewed every five years and may always be reviewed as needed.
12.1 This policy is administered under the authority of the Vice-President Finance and Administration.
12.2 Exceptions pertaining to specific endowments may be made only the Vice-President Finance and Administration.
13.1 Questions of interpretation or application of this policy or its procedures shall be referred to the President and the Chair of the Board, whose joint decision shall be final.
14.1 Appendix A contains the definitions applicable to this policy.