When the market value of an endowment account is less than the historical gift value of the endowment account the account is considered to be underwater.
This is the methodology used to allocate earnings and fees from the endowment pool as a whole to the individual accounts in the pool. The Endowment pool functions like a mutual fund in that any additions and income to an account buys shares or “units” based on the unit market value as of the beginning of the month. And disbursements from an account cause shares or “units” to be sold to cover the disbursement. Unrealized Gains and Losses adjust the per unit value but don’t result in a unit increase or decrease for an account.
Unrealized Gain or Loss
Represents the difference between the current market value of a held investment and its original cost. If the current market value is higher than the original cost there is an unrealized gain. If the current market value is lower than the original cost there is an unrealized loss. Unrealized gains and losses exist on paper only – they become real when the investment is sold. Unrealized gains and losses are allocated each month to accounts based on their proportionate share of the endowment pool in order to adjust the market value of the accounts.
Refers to an operating project and the fund can be used for any purpose within the guidelines of the Foundation.