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University of Idaho Foundation

Distribution Policies

Introduction
The earnings distribution amount for each endowment is determined by the endowment agreement that is signed by the person(s) responsible for the creation of the endowment.
  • Most endowments created prior to 1996 stipulate that realized income will be distributed and all realized capital gains will be reinvested as principal, and principal is inviolate (“traditional” or “restrictive” language).
  • Most endowment agreements written since 1996 and some of the older endowments have “flexible” language allowing for distributable earnings to be calculated in accordance with policy established by the Foundation’s governing board.
Policies for Endowments with "Traditional" or "Restrictive"
Investment Language
  • The CIT has historically distributed the actual realized income (dividends and interest earned). Because it is based on actual yields, the distribution rate varies from year to year.
  • The CIT has historically reinvested all realized capital gains as endowment principal. This enables each endowment to grow and its annual distributions to increase because the investment base is increased in real terms.
  • Endowments with "restrictive" language will continue to distribute the realized income and reinvest the realized capital gains.
  • All endowments are subject to investment management fees. For FY2010 distributions, that amount was 75 basis points (0.75%).
Policies for Endowments with "Flexible" Investment Language
  • The spending rate for eligible endowments whose agreements include the "flexible" language is established annually by the University of Idaho Foundation, Inc. Board of Directors based upon the recommendation of the Investment Committee.
  • The established spending rate will be the same for all eligible endowments.
  • The FY2010 spending rate was set at 4.5% of the prior three year rolling average fair market value of the invested fund balance.
  • Endowments in this category are subject to a 50 basis points (0.50%) Foundation operations fee.
  • All endowments are subject to investment management fees. For FY2011 distributions, that amount was 75 basis points (0.75%).
  • All earnings in excess of the amount distributed based on the spending rate will be reinvested as endowment principal.