Quasi-Endowment Process

Definition

Quasi-Endowments are funds functioning as endowments that are resources that the University, rather than the donor, has determined are to be retained and managed like an endowment. Principal and income of these funds may be utilized at the discretion of the University. Resources that the University sets aside to function as an endowment may be unrestricted or restricted as to the purpose or time of expenditure by an agent outside the University.

Source: NACUBO Accounting Tutorial – Endowment Definitions

For Texas A&M University, the decision-making authority as it pertains to quasi-endowment approval lies with the Board of Regents.

Minimum amount to establish a quasi-endowment is $ 25,000.

Process

 When a department wishes to designate unrestricted funds be used as a quasi-endowment, the following process must be followed.

The process to create a quasi-endowment begins at the departmental level. The department head should submit a signed memo on letterhead requesting that the identified funds be used to establish a quasi-endowment. The memo should be addressed to Martha Weeks, Financial Accountant III, Financial Management Operations (msweeks@tamu.edu) and include the amount, source of funds, background information, and the purpose of the endowment (IE, intended use of income generated from the quasi-endowment). The memo should be accompanied by additional documents to support the background information cited in the memo such as a gift agreement between the donor and Texas A&M or a copy of the donor’s Last Will & Testament. Gifts must be accepted in accordance with System Policy 21.05.

Once all necessary information is received, the FMO Financial Accountant I (Martha Weeks) prepares a draft Board of Regents’ (BOR) Minute Order/Agenda Item for review by Financial Management Operations management prior to routing to other required approvers within the University. Ultimately, the Minute Order is included in the Board of Regents (BOR) agenda for approval. This process may take several months because of the lead time needed for placing items on the BOR agenda and agenda submission deadlines. BOR Agenda Item Deadlines can be found at http://www.tamus.edu/regents/, under the “Meeting Dates/Agenda Items Deadlines….” links. To allow for development of the formal Minute Order and university approvals prior to submission to the BOR, requests must be submitted to FMO one month prior to the “Agenda Items to Chancellor” due date published on the BOR website. To illustrate, for an August 2-3 BOR meeting, the agenda item is due to the Chancellor by June 22 per the aforementioned link. A complete request is due from the department to FMO by May 22. While FMO will diligently work all requests after the outlined deadlines, we cannot guarantee incomplete or late submissions will receive approval and be submitted for the next BOR meeting. Submissions that do not make the next BOR meeting agenda will be placed on the subsequent BOR meeting agenda.

Once the Minute Order has been formally approved by the BOR, the department must request a new subledger income account (for quasi-endowment earnings). A Gift Account Information form must be included with this request. These forms should be sent to new-accounts@tamu.edu.  Martha Weeks (msweeks@tamu.edu) should be copied on this request.  Once the subledger account has been established, the FMO Financial Accountant I will set up the General Ledger Quasi-Endowment account.

After the new accounts are established, Financial Management Operations will transfer funds from the source account(s) into the quasi-endowment account. For gifts, please be aware a 5% development fee will be assessed against the gift quasi-endowment earnings account (unless the purpose of the gift is unendowed scholarships). This fee will be taken out of the income account before earnings are credited to the account. 4% goes to the A&M Foundation for its support of endowment activities; 1% goes to a departmentally-designated operating account. Expenditures from the quasi-endowment earnings account cannot be made until income exceeds the fees assessed.

Repurposing a Quasi-Endowment

The process to repurpose an existing quasi-endowment is similar to the process used to create a quasi-endowment. The department head should submit a memo signed by the Department Head on letterhead to Assistant Director of Financial Management Services (Kristina Humphreys, khumphreys@tamu.edu). requesting that the endowment be repurposed. The memo should include the same information needed to request a new quasi-endowment. Sufficient information should be provided to support the need to repurpose the funds.

FMO will write a draft Board of Regents Minute Order/Agenda Item and the process will follow the steps listed above for establishment of quasi-endowment accounts.

If denied, the funds will stay in the quasi-endowment as per the original request.