Monies received by the USM Foundation and held on behalf of the institutions are invested in either the Operating Pool or Endowment Pool depending on the type of account to which the funds are credited. Monies stay invested in the pools until an actual disbursement from the account occurs.
Realized Income, net of fees, on Operating funds is allocated to each institution on a monthly basis based on each institution’s total portion of the USMF Operating pool balance for that month-end. On an annual basis those accumulated earnings are transferred to each institution’s general Office of Institutional Advancement operating account to be used to further fundraising efforts or to be allocated to that institution’s operating accounts. It is up to the individual campus Advancement/Development VP’s to determine how to use this income.
The USM Foundation does not charge any fees to individual operating accounts.
Income, Realized Gains and Losses, Investment Manager Fees, Investment Bank Custodial Fees, and Unrealized Gains and Losses are allocated to endowment accounts on a monthly basis based on a unitization allocation methodology.
A unitized endowment pool has mechanics similar to that of a mutual fund. Each endowment owns individual units in the pool and the units are valued monthly based on the total market value of the pool divided by the total number of units in the pool. New monies coming into an endowment account purchase units in the pool based on the current month-end unit value. Monies disbursed from the pool sell units based on the prior month-end unit value. Earned Income (interest and dividends) and fees buy or sell units in the pool based on the current month-end unit value. Realized and Unrealized gains and losses do not impact the number of units but adjust the value of the units each month and establish the new per unit value for the next month.
On an annual basis, in the first quarter of the fiscal year, based on June 30th market value, the USM Foundation charges each endowment account with three assessments. These assessments are: an Investment Services assessment, which covers the annual operating costs of the USM Foundation investment office; an Endowment assessment, which covers the operating costs of the Business and Advancement offices of the USM Foundation; and an Institutional assessment, which is used to support the fundraising efforts of each campus. These fees are treated as disbursements for endowment accounting and performance purposes.