14 Endowment funds in 1 investment

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curt125
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Joined: Sun Dec 27, 2020 3:48 pm

14 Endowment funds in 1 investment

Post by curt125 »

We are just now installing PC Online. We have 14 individual endowments that are all invested on one investment vehicle. I was planning to set up 14 distinct Funds. However this appears to create many challenges.
1. Each fund's income & growth are to be used by the Operating Fund whose budgeted expenses are "paid for" in part by the endowments, i.e. Building, Youth, Flowers, Music, etc.
2. Both actual Income/dividends and Unearned Income should be spread among all 14 endowments quarterly. I assume the investment would be allocated amount all 14 endowments.
3. Any left over funds not spent need to be available in following years.
4. Cash needs to be moved from the Investments to the Operating Fund as needed.

Am I better off keeping all the endowments in the Operating Fund? If so, would I need to have each Endowment close to each endowment?

Any thoughts would be tremendously appreciated.

NeilZ
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Re: 14 Endowment funds in 1 investment

Post by NeilZ »

curt125 wrote:
Tue Oct 26, 2021 10:43 am
We are just now installing PC Online. We have 14 individual endowments that are all invested on one investment vehicle. I was planning to set up 14 distinct Funds. However this appears to create many challenges.
1. Each fund's income & growth are to be used by the Operating Fund whose budgeted expenses are "paid for" in part by the endowments, i.e. Building, Youth, Flowers, Music, etc.
2. Both actual Income/dividends and Unearned Income should be spread among all 14 endowments quarterly. I assume the investment would be allocated amount all 14 endowments.
3. Any left over funds not spent need to be available in following years.
4. Cash needs to be moved from the Investments to the Operating Fund as needed.

Am I better off keeping all the endowments in the Operating Fund? If so, would I need to have each Endowment close to each endowment?

Any thoughts would be tremendously appreciated.
FWIW ... I don't keep any investments or endowments under the General/Operating fund. I keep them in a separate accounting fund, and move the funds when necessary. This keeps the general fund clear of any fluctuations in endowment value, and then reflects normal yearly income. YMMV :)
Neil Zampella

Using PC+ since 1999.

curt125
Posts: 6
Joined: Sun Dec 27, 2020 3:48 pm

Re: 14 Endowment funds in 1 investment

Post by curt125 »

Thanks, Neil
Following up on your suggestion, how does one record exactly how the funds were spent. For example, if one of our Endowment funds was restricted to youth expenses, how does this show in the P&L of our Operation Fund (where we do our budgeting)? I know I could write a check for the expense from 02-1110 checking but it would not show in the 01 Operating Fund.
Thanks

NeilZ
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Joined: Wed Oct 08, 2003 1:20 am
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Re: 14 Endowment funds in 1 investment

Post by NeilZ »

curt125 wrote:
Wed Oct 27, 2021 2:33 pm
Thanks, Neil
Following up on your suggestion, how does one record exactly how the funds were spent. For example, if one of our Endowment funds was restricted to youth expenses, how does this show in the P&L of our Operation Fund (where we do our budgeting)? I know I could write a check for the expense from 02-1110 checking but it would not show in the 01 Operating Fund.
Thanks
Its not easy since (from what I have gathered) the funds are kept in an investment portfolio. If I misunderstood, and the funds are kept somewhere else please let me know. Since it appears you can write a check against this endowment/fund I would need more info on how they're setup; different checking account, or Money Market investment type account, or the like.
Neil Zampella

Using PC+ since 1999.

curt125
Posts: 6
Joined: Sun Dec 27, 2020 3:48 pm

Re: 14 Endowment funds in 1 investment

Post by curt125 »

The Endowments (all 14 of them) are invested in a mutual fund account. We sell funds as need, and currently transfer as need, not as individual expenses are incurred.

NeilZ
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Re: 14 Endowment funds in 1 investment

Post by NeilZ »

curt125 wrote:
Wed Oct 27, 2021 2:52 pm
The Endowments (all 14 of them) are invested in a mutual fund account. We sell funds as need, and currently transfer as need, not as individual expenses are incurred.
Then what I would do is just transfer the amount to operations using transfer accounts, the transfer will show up on the I&E report. But it won't be broken down as targeted to the area being funded.

What you can do is transfer the funds which usually wind up in checking and the normal unrestricted net assets account, then move the funds from the unrestricted net assets, to a temp restricted fund in operations created (using the Maintain Donor Restrictions function) for the area being funded.

So if you move 3000.00 over to operations to fund youth, you would then create a transaction to move the funds. If your Unrestricted assets are 3201, and your temp restriction is 3210 you would do the following.

01-3201-000 DB 3000
01-3210-000 CR 3000

Then when you pay the bills for youth, you would release the funds from the Temp Restricted and it will appear on the I&E as funding the youth.

Does this help?
Neil Zampella

Using PC+ since 1999.

curt125
Posts: 6
Joined: Sun Dec 27, 2020 3:48 pm

Re: 14 Endowment funds in 1 investment

Post by curt125 »

It certainly does. I think I've got it.
I added a wrinkle, let me know know what you think. :idea: Here is the flow, I think.

Session approves releasing Youth Permanent Endowment Funds 02-3310-000, Transfer released amount to Operations Temp 01-3210-000
02-3310-000 Youth Endowment DR 3000
02-9010-000 Transfer Our to Fund 01 CR 3000
01-9510-000 Transfer In from Fund 02 DR 3000
01-3210-000 Youth Temp Restricted CR 3000
Do you think this would be transparent enough?

Transfer actual cash using Transfer Accounts.
Pay bills as you suggested and release funds from 01-3210-000

Neil, again, thanks so much. :)

NeilZ
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Joined: Wed Oct 08, 2003 1:20 am
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Re: 14 Endowment funds in 1 investment

Post by NeilZ »

curt125 wrote:
Wed Oct 27, 2021 4:45 pm
It certainly does. I think I've got it.
I added a wrinkle, let me know know what you think. :idea: Here is the flow, I think.

Session approves releasing Youth Permanent Endowment Funds 02-3310-000, Transfer released amount to Operations Temp 01-3210-000
02-3310-000 Youth Endowment DR 3000
02-9010-000 Transfer Our to Fund 01 CR 3000
01-9510-000 Transfer In from Fund 02 DR 3000
01-3210-000 Youth Temp Restricted CR 3000
Do you think this would be transparent enough?

Transfer actual cash using Transfer Accounts.
Pay bills as you suggested and release funds from 01-3210-000

Neil, again, thanks so much. :)
NO ... you do NOT transfer using the Fund Balance accounts, you transfer using the CHECKING accounts. This automatically updates the Unrestricted Fund Balances in both Accounting Funds.

Frankly, I would have setup the Endowment Accounting Fund with each 'endowment' as its own temp restricted account. Then when I needed to release funds to use in operations, I would just create a release transaction from the correct temp restricted account by hitting the Release Restricted Funds button and selecting the correct endowment (temp restricted account) from the list. If setup correctly in Fund 02, the system would create the proper entries which I then would save.

Again that release moves from the temp restricted fund balance to the unrestricted fund balance. Then I would create the transfer transaction. Then I would track the youth spending via the expense accounts, and not have to release funds in Fund 01 nor have a special fund balance account there.

The release would then be seen in Fund 02 along with the transfer out, and the Transfer in shown in Fund 01.
Neil Zampella

Using PC+ since 1999.

curt125
Posts: 6
Joined: Sun Dec 27, 2020 3:48 pm

Re: 14 Endowment funds in 1 investment

Post by curt125 »

Okay. I’ll set that up in my Demo account and see how it all works.
Thanks much

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