Establishing an Investment Account

Overview

Periodically, departments receive funds, or may have institutional funds they would like to invest.  At such time, a college/department may request that an investment account be established in one of the investment pools. For example, a department may have royalty income and would like to set up a Quasi-unrestricted endowment for the proceeds.

Accounting Services establishes all investment accounts in the financial system. The scope of this procedure includes establishing investment accounts in both the Consolidated Endowment Fund (CEF) and Group Income Pool (GIP).

Typically, gifts to the University from donors are received and held by one of the three University foundations.

Process

Establishing a Quasi-restricted or Quasi-unrestricted endowment in CEF

CEF is the primary investment portfolio for endowments. Funds should be invested in CEF when principal appreciation is the primary goal and funds will not be expended for at least three years. Investments are exposed to market variations.

1. Once it has been decided that CEF is the appropriate pool for departmental funds, the departmental preparer should gather the following information in order to complete UM Form 1831 (PDF).
   • Amount of initial funding for endowment
   • Operating account that will fund the endowment (this determines whether endowment will be Quasi-restricted or Quasi-unrestricted)
   • The purpose or intention of the funds (this only applies if the endowment will be a Quasi-restricted endowment)
   • Income distribution choice (this includes Chartfield string(s) that will be receiving the income distribution and the percentage or dollar amount of the income distribution that should be allocated to each ChartField string)
   • Authorization (signature) from Dean (or equivalent administrative officer)
2. Once Accounting Services has received and verified the information, they will set up an endowment in the financial system. The system will assign a Participant ID to the endowment.

Establishing an investment account in GIP

GIP consists of longer-term operating reserves of the University created from various departmental funds. These reserves typically support various capital, infrastructure, and program needs. Funds should be invested in GIP when current income is the main goal.

Participation in GIP requires a minimum of $25,000 as an initial deposit; subsequent deposits must be in increments of at least $10,000. Funds deposited in GIP are subject to a 12-month initial lock-up period. The fund DeptID designated for a deposit must have a positive aggregate balance.

1. Once it has been decided that GIP is the appropriate pool for departmental funds, the departmental preparer should complete form UM 1638: Contributing to or Withdrawing from the Group Income Pool (GIP) (PDF).
2. The Dean or equivalent administrative officer) or Chancellor, the University CFO/Treasurer and the CIO must sign the Form UM 1638.
3. Once Accounting Services has received a completed form UM 1638, they will set up an investment account in the financial system. The system will assign a Participant ID to the endowment.