Endowment Accounting

Protect the interests of your organization, internal stakeholders, and donors who want to see their contributions invested and used wisely over time. Our integrated software systems increase transparency, improve accuracy, and help you gather the necessary information for each endowment fund to:

• Determine the impact of investment management decisions on funds subject to prudence standards
• Quantify amounts available for expenditure according to express donor intent as defined in fund gift instruments
• Apply default rules of construction in the absence of specific donor guidelines in order to make prudent spending decisions
• Decide whether to increase or decrease spending rates in order to preserve fund value and maintain purchasing power over time
• Modify donor imposed restrictions of small and old endowments in order to more efficiently manage funds consistent with current charitable purposes and donor's original intent

Features

• Non-proprietary solution independent of investment custodian
• Proper database rules and methodology
• Data export and integration with other accounting packages
• Global and individual preferences
• Single and multi-user environments
• Permission-based user levels
• Secure data hosting and backup
• Secure client portal for file transmission and storage

Meet net asset classification requirements for all nonprofit entities subject to UPMIFA, including:

• Track the portion of each endowment that must be retained permanently and apply proper net-asset classification
• Calculate the earnings of each endowment, including donor restrictions on reinvestment to principal, and apply proper net asset classification
• Quantify the amount and timing of appropriations for expenditure, including impact of applicable purpose restrictions, and make proper asset classification adjustments

Produce enhanced tabular disclosures required of all nonprofit organizations with endowment funds, including:

• Endowment composition by net asset class, in total and by type of fund, showing donor-restricted endowments separately from board-designated
• Reconciliation of beginning and ending endowment balances, in total and by net asset class, including all cash flow, returns, appropriation, and other activity
• Aggregate amount of deficiencies for all donor-restricted endowments for which the fair value has dropped below the amount to be retained permanently

Functionality

• UPMIFA compliant - endowment preservation and donor intent
• FSP FAS 117-1 compliant - net asset classification and disclosure
• General ledger transaction structure
• Various unitization methods
• Historical data upload and initialization for newly pooled funds
• Fund level spending payout calculation and application, including underwater funds
• Fund level policy exceptions
• Gift deposit and timing variances
• Market and cost value reconciliations of investment transaction data
• Data search and edit

Documented organizational policy further supports UPMIFA and FAS 117-1 compliance and maintains fair and consistent practices across all endowment funds within the investment pool. ADAVICO's process will help you provide clear communication to users of financial statement information and donors by defining:

• Availability of earnings for expenditure, including underwater funds
• Exceptions to administration fee and spending policy
• Donor contribution and deposit policy
• Method of pool unitization
• Prior-period adjustments

Accuracy

• Internal checks and balances validates results
• Test data verifies accuracy and precision
• Input verification warns of invalid or unexpected user inputs
• Single-entry data approach avoids 'out-of-sync' entries
• Data protection against accidental formula changes
• Double-entry structure for balanced transactions

See Why Not Spreadsheets for more examples of how ADAVICO improves accuracy.