Investment of Funds

Endowed donations and endowed grants are sent to the LTCAP for investment by Trust Accounting and no action is required from the division. Since endowment capital is intended to be invested in perpetuity, the LTCAP investment strategy has been set with this very long-term horizon in mind and therefore, only donations and grants intended to be invested in perpetuity are invested in the LTCAP.

The LTCAP is a unitized investment pool with monthly valuations (end of each month). The fair value of an LTCAP unit is set each month, and is calculated as the market value of all the investments of the LTCAP divided by the total number of units held. At the beginning of each month, new funds can be added to the LTCAP and units purchased for the endowment at the prevailing market price per unit.

Endowed donations and endowed grants received are sent to the LTCAP. Generally, donations and grants received up to the end of each month will be added to the LTCAP at the beginning of the following month.

For more information about investing in the LTCAP and other information such as investment return expectation, market value of an endowment, allocation for spending (payout) and preservation of capital, refer to the section Long Term Capital Appreciation Pool.

Occasionally a fund manager may wish to convert expendable donations to permanent investment capital (endowments) to generate investment income in perpetuity for specific purposes. It may also be desirable to capitalize (endow) some of the investment income distributed on an endowment fund, in order to increase the earning power of the endowment fund to the level required to fund a specific future purpose. It should be noted that the endowment of expendable funds should be considered as an option only when the intention is to invest these funds in perpetuity.

In some cases, long-term accumulation of expendable funds may not be consistent with the donor’s expectations and therefore, funds managers must investigate and determined whether the terms and conditions of the donations permit this. The manager should refer to the terms and conditions of the fund or any agreement established with the donor. When further assistance is required, please contact the Trust Accountant in the Financial Services Department.

If consistent with the terms of the trust, the department will request the endowment of expendable funds by completing the Request for Endowment of Expendable Funds form, and send the completed form to the address indicated in the form.

The EFIP contains expendable funds that are pooled and invested until spent. It includes the University’s cash for operations, capital projects, ancillary operations, expendable donations, expendable payouts from endowments and research grants.

Conditions

Expendable donations are eligible to be committed to earn interest to the extent they have not been committed, i.e. encumbered, for other purposes. Restricted funds which receive income other than donations and investment income on donations (i.e. research awards and other restricted agreements) are not eligible under this policy to be committed to earn interest. 

Funds must be committed specifically for this purpose for a minimum period of 3 months.

Deadlines for Commitment Requests:

For the 1st fiscal quarter (May to July), the deadline is extended to the last working day of May to allow fund managers to include the annual distributed investment income when calculating the total funds available for investment in the upcoming period  

 For the 2nd, 3rd and 4th fiscal quarters ( August to April), commitment requests must be submitted by the fifth working day of each respective fiscal quarter. 

Deadlines for Release Requests: 

For the 1st, 2nd, and 3rd fiscal quarters (May to January), release requests must be submitted by the fifth working day of each respective fiscal quarter 

 For the 4th fiscal quarter, the deadline is extended to the fifth day of each month (i.e., February, March, and April) to allow divisions sufficient time to adjust their funding based on the current year’s payout. 

Minimum amount for Commit and Release Requests:  

Each EFIP commitment or release request must be equal to or greater than $10,000 and submitted in increments of $10,000 thereafter to be processed.  Full balance releases are permitted, even if the amount is not in $10,000 increments. 

In addition, funds must maintain a minimum balance of $10,000 in the EFIP pool after any commitment or release request is processed. Any funds with balances less than $10,000 will automatically be released and will no longer be committed.

The Commitment / Release of Restricted Funds Form
Complete the Commitment / Release of Restricted Funds form, by filling in the appropriate information on the form. After approval is obtained, send the completed form to the address indicated on the form.

EFIP Distribution Rate

The Chief Financial Officer determines the EFIP rate to be paid on committed funds.  Effective from November 1, 2023, the EFIP Distribution Rate is the lower of the three-month T-bill rate or the actual EFIP return reported for the same 3-month period.

Income distribution date
Interest for the twelve months ending April 30 is distributed annually in April.

Statement of account
After confirmation of eligibility and availability of funds, commitments and releases are processed in AMS. The commitment is recorded in the restricted fund account as a reserve (investment reserve) of funds.

The income distribution is recorded in April as investment income revenue with the respective increase of expense budget in the fund.

Annual Expendable Pool Interest Report
This report identifies commitments by quarter for each fund and the net interest earned in each quarter. This report is distributed annually in May to the faculty offices for the further distribution to departments and divisions.

Examples / FAQ (for illustration purposes only):  

Commitment transaction amount: 

A fund with a FIS balance of $25,000 can commit $10,000 or $20,000, but not $5,000 or $15,000 or $25,000, as requests must be made in multiples of $10,000. 

Release transaction amount: 

A fund with an EFIP balance of $35,000  may release $10,000 or $20,000, provided the remaining balance in EFIP is at least $10,000. A release of $30,000 would not be processed, as it would reduce the remaining EFIP balance below $10,000. A full release of $35,000 is permitted. 

 

 

Last revision: April 9, 2026