Printed on: 11/14/2018. Please go to http://policy.umn.edu for the most current version of the Policy or related document.
Appendix

CEF and GIP Administrative Fees

Appendix to Policy

Overview

The Consolidate Endowment Fund (CEF) and the Group Income Pool (GIP) are assessed administrative fees.  Permanent University Funds (PUF) are exempt from annual administrative fees.

CEF Fees

The annual CEF administrative fee is determined by the President and approved by the Board of Regents as part of the budget process. The fee is not assessed to PUF endowments.  The administrative fee is allocated to the University of Minnesota Foundation to support their on-going development costs on behalf of the University of Minnesota.

The charge is assessed on a pro-rata basis.  Investment accounts assessed the fee will reflect a market value adjustment, whereby the Net Asset Value (NAV) will be adjusted downward. Therefore, the number of shares reflected in the investment account will not change. Because PUF accounts are not charged fees, they receive a compensating allotment of shares to offset the decrease in their share value in order to maintain their current market value.

The table below illustrates the reduction in share value due to the fee assessment and the additional shares granted to PUF to compensate for the reduction in share value.

CEF POOL Market Value Number of Shares Share Price
Non-PUF endowment (pre fee) $700,000 7,000 $100
PUF endowment (pre fee) $300,000 3,000 $100
Total (pre fee) $1,000,000 10,000 $100
Administrative Fee $7000
Non-PUF (post fee) $693,000 7,000 $99
PUF (post fee):
PUF (original shares) $297,000 3,000 $99
PUF (additional shares) $3,000 30.3 $99
Total PUF (unchanged post fee) $300,000 3,030.3 $99
Total (PUF + Non-PUF) $993,000 10,030.3 $99

GIP Fees:

The GIP administrative fee is a set percentage approved by the Board of Regents. The current annual rate is 1%. It is assessed on a quarterly basis against the total pool’s market value.

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