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We are thankful to be welcome on these lands in friendship. The lands we are situated on are covered by the Williams Treaties and are the traditional territory of the Mississaugas, a branch of the greater Anishinaabeg Nation, including Algonquin, Ojibway, Odawa and Pottawatomi. These lands remain home to many Indigenous nations and peoples.

We acknowledge this land out of respect for the Indigenous nations who have cared for Turtle Island, also called North America, from before the arrival of settler peoples until this day. Most importantly, we acknowledge that the history of these lands has been tainted by poor treatment and a lack of friendship with the First Nations who call them home.

This history is something we are all affected by because we are all treaty people in Canada. We all have a shared history to reflect on, and each of us is affected by this history in different ways. Our past defines our present, but if we move forward as friends and allies, then it does not have to define our future.

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Endowment Management Procedures

Classification number LCG 1133.01
Parent policy Endowment Management Policy
Framework category Legal, Compliance and Governance
Approving authority Audit and Finance Committee
Policy owner Chief Financial Officer
Approval date February 17, 2016
Review date February 2019
Supersedes Endowment Policy, June 2013

Purpose

The purpose of these Procedures is to ensure the prudent administration of trust and Endowment funds and to provide guidelines for the calculation and distribution of the annual amount available for spending those funds.

Definitions

For the purposes of these Procedures the following definitions apply: 

“Donor” means a person, foundation, or corporation that makes a Gift that is eligible for a donation receipt.

“Endowed Fund” means a principal sum, set aside permanently and invested by the University with only the income (all or a portion thereof) used to support specific programs or projects, often based on Donor direction. 

“Endowment” means the total value of the University’s Endowed Funds. The Endowment 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.

“Endowed Fund Agreement” means a document describing the name, purpose, funding and administration of an Endowed Fund, normally signed by the Donor and the University.

“Stabilization Fund” means the fund established to smooth the year over year to smooth the year over year fluctuations in earnings, as well as provide a reserve to be used when the Endowment fund does not earn sufficient income to cover the approved spending amounts.

Scope and authority

These Procedures apply to all University Endowed Funds and related Endowment Fund agreements, unless specifically exempted by the Audit & Finance Committee of the Board of Governors.

The Chief Financial Officer, or successor thereof, is the Policy Owner and is responsible for overseeing the implementation, administration and interpretation of these Procedures.

Policy

Duties and Responsibilities

  1. University Advancement is responsible for the following, in accordance with the Gift Acceptance Policy and Procedures:

    1. Communicate with Donors to ensure the donation is of an appropriate size to generate sufficient investment income to meet the Endowment objectives.
    2. Assist Donors with the transfer of any share donations.
    3. Ensure Donor(s) understands and agrees to the terms and conditions of the Gift.
    4. Agreement or other instrument establishing the Endowment.
    5. Confirm that accepted donations to existing Endowments are in compliance with the pre-existing terms and conditions.
    6. Issue charitable tax receipts in accordance with Canada Revenue Agency policy and guidelines.
    7. Maintain the Donor database.
    8. Provide a copy of the Gift Agreement to the finance department.
    9. In consultation with the Office of the Registrar and appropriate faculty and staff, set the specific terms of reference for a scholarship/student award, and subsequently communicating with Donors as to the names of award recipients and/or the availability of funds to support the award.
    10. Distribute Endowment stewardship reports, on an annual basis, in conjunction with the finance department. 

  2. Finance is responsible for:

    1. Establishing a unique account for each Endowed Fund in the finance system.
    2. Accounting for investments and allocating investment earnings in accordance with the Endowment Management Policy and these Procedures, as amended.
    3. Communicating with the external investment manager, and reporting on status of investments and related issues to the Investment Committee.
    4. Monitoring Endowment spending in accordance with the Statement of Trust, Endowed Fund Agreement or other instrument establishing an Endowed Fund. In case of a disagreement with the account holder in connection with the eligibility of expenditure, Financial refers the matter to the CFO.
    5. Monitor the availability of expendable student award funds.
    6. Control over expenditure of funds from the Endowment.  

  3. Office of the Registrar is responsible for:

    1. Understanding and complying with the terms and conditions specified in the Endowed Fund Agreement, or other instrument establishing an Endowed Fund, and all applicable University policies and procedures.
    2. Reporting any circumstances that have resulted in the inability to meet the terms and conditions of the Endowed Fund Agreement to the Advancement.
    3. Communicating the availability of student awards and other relevant information to the student body.
    4. Disbursing the award to the selected recipient in accordance with the terms of the Gift Agreement.
    5. Providing a listing of student award recipients, each year, to University Advancement.

Allocation of Investment Returns

  1. Each Endowment Fund account will track original contributions, disbursements and a proportional share of total net investment return.
  2. The annual investment return for disbursement is comprised of realized gains and losses, including interest, dividends, adjusted cost base changes, and realized capital gains/losses. 
  3. The actual annual investment return for disbursement, as at March 31st (net of investment manager fees, custodial fees, and administrative fees) is allocated to each Endowment Fund account in proportion to the Endowment account balance. 

    1. In the case of funds endowed during a fiscal year, the total annual investment return will be allocated based on the number of months in the fiscal year the funds were endowed.  

Spending

  1. Spending levels will be recommended to the Board for Approval by the Strategy and Planning Committee on the recommendation of the CFO.  The spending level will be reviewed annually on the basis of the investment earnings experience of the Endowment.
  2. Spending levels are calculated using a percentage of a four year rolling average of the inflation adjusted capital value of the Endowment.  The spending level enables investment income to be used to support the Endowment commitments.
  3. The spending rate must be consistent with the federal government`s prescribed minimum annual payment percentage to retain the charitable tax status.   

Disbursement

  1. All cash outflows required for disbursement purposes are to be met, first, from the Stabilization Fund.
  2. The funds required to meet approved disbursement spending will be transferred from the Stabilization account to the Advancement Cash account, leaving the principle investment intact. 

    1. If funds are insufficient the award is not made, and account information is passed on to Advancement.
    2. Conversely, as the spending allocation permits, the Advancement office may recommend increasing the value of awards to-time to maintain their real value.

  3. At any time, the board has the option to top-up the Stabilization Fund provided the 5% cap, as set out in the Endowment Management Policy, is not exceeded.  

Monitoring and review

These Procedures will be reviewed as necessary and at least every three years.  The Chief Financial Officer, or successor thereof, is responsible to monitor and review these Procedures.

Relevant legislation

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Related policies, procedures & documents

Endowment Management Policy

Statement of Investment Policy

Asset Class Management Procedures

Naming of Physical University Assets Policy

Gift Acceptance Policy

Gift Acceptance Procedures

Signing Authority Policy

Signing Authority Registry and Approval Procedures

Planned Giving Program Guidelines