To define the nature of the various categories of University trust funds, and the procedures for the establishment of these funds. This policy will also provide the means for the University, through the Finance Committee and the Investment Subcommittee of the Board of Regents, to discharge its responsibilities for the maintenance and enhancement of trust funds.
Applicable to all trust funds bequeathed, donated or otherwise obtained for purposes of scholarships, bursaries, student loans, endowment or research and education development, or for such other purposes as are determined from time to time by the Board of Regents.
Trust fund - a general term used to describe all funds donated, bequeathed or otherwise obtained by the University for purposes of:
b. Issuing graduate fellowships, scholarships, bursaries, loans or the like; the Dean of Graduate Studies is responsible for the control of such trust funds.
c. Providing funds for guest lecturers; such trust funds come under the jurisdiction of the Dean, Director or Principal assigned responsibility for the particular trust fund.
d. Providing funds for development of education or research purposes; such trust funds come under the control of the Dean, Director or Principal assigned responsibility for the particular trust fund.
e. For any other purpose as occasionally determined by the Board of Regents of Memorial University.
Restricted Fund- A trust fund that has limitations placed on the expenditure of the principal and the related earnings from the investment of the funds.
Unrestricted Fund - A trust fund that has no limitations placed on the expenditure of the principal and the related earnings from the investment of the funds.
Restricted capital - Restricted capital is that portion of each trust fund which has been established by the terms of the particular trust as being indispensable. Income not expended at the end of each academic year will be added to restricted capital.
b. Unrestricted capital cash balances will receive monthly interest at the rate earned by the true savings account of the University.
c. For Faculty Research and Education Trusts, the unrestricted capital will include donations and other capital contributions to the trust.
d. Interest income not expended will become part of restricted capital periodically, unless otherwise directed by the terms and conditions of the trust.
Trust fund classifications - There are five classifications of trust fund. The type of classification will be determined once items three to eight in PROCEDURE FOR TRUST FUNDS have been completed. Basically, the classifications are:
a. Scholarship / Bursary - These are restricted endowment funds in that the principal is not expendable and all revenue on the principal has a restricted use as defined by the terms and conditions of the trust.
b. Loan - These are restricted funds in that the principal plus any interest is to be used for restricted purposes as defined by the terms and conditions of the trust.
c. Endowment - These are restricted endowment funds in that the principal is not expendable and all revenue on the principal has a restricted use as defined by the terms and conditions of the trust. Expenditures are controlled by "Guidelines for Endowment Funds"
d. Faculty Research and Education Trusts - These are restricted funds in that the principal plus any interest is to be used for restricted purposes as defined by the terms and conditions of the trust. Expenditures are controlled by "Guidelines for Faculty Research and Education Trusts."
e. General university endowment fund - This account is a restricted fund in that the interest is to be used for restricted purposes as approved by the President or his designate as defined by the terms and conditions of the trust. The capital portion is only to be used with the authority of the Finance Committee of the Board of Regents upon the recommendation of the President.
Establishment of trust funds
a. All trust funds are established by approval of the Board of Regents upon recommendation by the Finance Committee of the Board.
b. In order to be established as an individual trust fund for the issuance of scholarships, bursaries or the like, the initial restricted capital of the fund should be at least $10,000. Exceptions will be made where it is expected that the total donations will exceed the $10,000 minimum within a reasonable period of time.
c. Donations for scholarships and donations of unspecified amounts less than required to establish an individual trust will become part of the Memorial University Scholarship Fund. Individual donor accounts will be maintained within this fund and published periodically in the University Calendar.
d. All proposals for the establishment of trust funds should be routed through the Office of the President for submission to the Finance Committee of the Board of Regents in accordance with PROCEDURE FOR TRUST FUNDS.
e. It is recommended that all trust funds contain a provision permitting the Board of Regents to change the terms of the trust to maintain the intention of the donor.
f. It is recommended that all trust funds contain a clause permitting the University to pool the available funds for investment purposes in order to maximize the possible interest income going to the trust fund.
Reimbursements for Faculty Research and Education Trusts
Expenditures under $5,000 may be approved by the appropriate Dean, Director or Principal. Expenditures over $5,000 will require the approval of the Vice-President (Academic).
The Investment Subcommittee will review annually and update the trust fund investment policy recommendations, suggest money managers and provide ongoing performance analysis. Policy recommendations of the Investment Subcommittee are subject to the approval of the Finance Committee.
Financial statement presentation
The activities of the various trust fund accounts will be reported upon annually as part of the annual financial statements of the University in accordance with accounting principles generally accepted by universities for trust funds.
a. Many of the trust fund restricted capital accounts may be pooled for the purposes of investing the funds in various long term investment vehicles as approved by The Memorial University Act.
b. The purpose of this activity is to attempt to generate returns in excess of what can be obtained on the University savings account and to ensure an even flow of income over the life of the trust funds.
c. Investment earnings from the pool are distributed to various participating funds on the basis of the assignment to each fund of a number of units calculated on the market value of assets in the pool at the time of entry of each fund into the pool. This procedure is known as the "current valuation method" of accounting for investment pools.
1. Guidelines for the current valuation method of accounting for trust funds
The following are the guidelines to be followed for the pooling of investments under the current valuation method:
a. Pool entry/exit: Trust funds can only enter or leave the pool at the end of each month.
b. Portfolio valuation: A current market valuation is required at the end of each quarter, or whenever there are additions or deletions to the pool.
c. Cost per unit: The cost per unit will initially be $1,000 for the trust funds which started the pool. Thereafter the cost per unit will be calculated based upon the current market value of the portfolio (prior to any changes) divided by the number of units outstanding.
d. Revenue distribution: Revenue from the portfolio will be distributed periodically to the individual trust funds participating in the pool based upon the weighted average total number of units outstanding for the period for each trust fund.
A weighted average is calculated to make adjustments for units held for less than a full year or period.
Current revenue will be reduced by the costs of commissions and other expenses related to investment activity.
e. Portfolio disposals: At times, investments will be liquidated in whole or in part from the portfolio without an immediate repurchase of another investment. When this occurs, the extra cash will be accounted for in a separate account for the pool and given interest at the current daily interest rate on the savings account. This interest will be distributed to the pool as per "Revenue distribution" above.
At this time, there will be a realized gain or loss on the capital investment. This gain or loss will be recognized immediately by adjusting the value of each trust fund's contribution to the pool on a per unit basis.
f. Withdrawal from pool by trust fund: This type of transaction will be rare. When it does occur, one of two courses of action has to be taken:
Whichever action is taken, the withdrawing trust fund will receive reimbursement based on the number of units for which reimbursement is being made times the current market value per unit.
The balance left in the individual trust fund pooled investment account will represent a gain or loss to that trust fund.
2. Guidelines for endowment funds
These are usually substantial amounts bequeathed or donated by friends, graduates, foundations, business organizations or others.
Disbursements from the fund may be made in accordance with the specific wishes of the donor so long as they meet University regulations and guidelines and are authorized by the Dean/Director of the faculty or school designated.
The capital amount of an endowment fund will usually be sufficiently large so that the annual interest may be used to meet one or more of the following purposes:
Somewhat smaller amounts to the foregoing may be allocated to the following:
3. Guidelines for Faculty Research and Education Trusts
The Faculty Research and Education Trusts of a faculty/school/department or institute may be derived from:
Expenditures under $5,000 may be approved by the Dean, Director or Principal. Expenditures over $5,000 will require the approval of the Vice-President (Academic) As these funds are for the general use of each academic unit concerned, all staff members in a particular academic unit have the same right to apply for use of the funds, whether or not they have waived remuneration or made specific donations.
c. Payment for Salary, Wages, or Honoraria
Under no circumstances may any payments from these accounts take the form of salary, wages, or any form of honoraria unless prior arrangements have been made with the Dean/Director who has ascertained that these payments are for research assistants or secretarial help, student support, etc., and are in support of research. Under no circumstances will any funds be paid as salary, wages or honoraria from the faculty research and education trust to anyone who has previously waived entitlement to funds in these accounts.
It is expressly understood that any equipment, etc., purchased with these funds is at all times the property of Memorial University of Newfoundland.
e. Continuing Commitments
No continuing commitments are to be made from these funds.
f. Eligible expenditures
Expenditures from these funds are intended to enrich the academic activities of the University to a level that may not be possible through the use of funds available from other sources. For example:
g. Waiving entitlements
Staff members who wish to waive entitlements would be required to complete the following documentation PRIOR to commencement of the performance of the service being waived:
Upon satisfactory completion of the work, the signing authority would prepare a Request for Transfer form requesting the Director of Financial and Administrative Services to make the necessary transfer of funds to the appropriate Faculty Research and Education Trust.