- What is the SF State Foundation?
- Why do we need the SF State Foundation?
- Who oversees the SF State Foundation?
- What are the Different Types of Endowments Managed by the Foundation?
- What If a Donor Does Not Have the Minimum Required?
- What is the process for establishing an endowment? Is there a form for establishing an endowment?
- How is the Foundation funded?
- What fee does the SF State Foundation charge and when is it taken?
- How long does it take for endowed gifts to be eligible for a distribution?
- How are endowment distributions (payouts) determined?
- What are the payout levels?
- How does the project director know if the endowment is underwater?
- What happens to obligations when an endowment is underwater?
- Is there an investment policy available?
- How do I access my financial reports for the endowment accounts I manage?
- When will I receive my first endowment report?
- What is the process to transfer funds from the endowment to the scholarship or campus program spending account?
- How does the SF State Foundation differ from the University Corporation, San Francisco State?
- Who provides the financial administrative functions for the SF State Foundation?
What is the SF State Foundation?
The SF State Foundation is a 501(c)(3) non-profit corporation established to manage all philanthropic support to San Francisco State University. It provides a clear system for making sure we receipt, acknowledge and use donor's gifts properly as well as manage the university's endowment to maximize returns. The Foundation also provides a means, through membership on the Board of Directors, to engage prominent alumni and community members in the life of the university.
Why do we need the SF State Foundation?
The SF State Foundation will provide direct management of the university's endowment. It will streamline the donor receipt process and provide for better accountability and stewardship of the university's endowed funds.
Who oversees the SF State Foundation?
The President of the SF State Foundation is Robert J. Nava, Vice President of University Advancement. The Managing Director is Venesia Thompson, who is the Chief of Operations of University Advancement and works closely with the SF State Foundation's Board of Directors. The Advancement Services unit reports to the Chief of Operations and is charged with collection, reporting, acknowledgement and stewardship of funds received.
What are the different types of endowments managed by the Foundation?
The Foundation manages three types of endowments:
- Permanent (true) endowments: For these endowments, the principal/corpus must remain inviolate (not used) for perpetuity. A minimum of $25,000 is required to establish a permanent endowment.
- Temporary (term) endowments: For these endowments, all or part of the principal can be used after a period of time or occurrence of specified purpose, per donor’s wishes.
- Quasi-endowments: These are board-designated endowments and can only be established by the Foundation board. Quasi-endowments are treated like permanent endowments in that they are to remain inviolate until they are amended or dissolved by the board.
- It is the Foundation’s policy that all gifts of $25,000 or more from wills, trusts, planned giving instruments are to be quasi-endowed unless donor specifies otherwise.
What if a donor does not have the minimum required?
Donors who do not have the $25,000 minimum to establish a permanent endowment are allowed some flexibility in doing so. In such cases, the donor would make an initial minimum gift of $5,000 towards the establishment of the endowment. The donor would then make annual gifts of $1,000 for immediate use, while continuing to fund the endowment (the endowment must be fully funded within five (5) years).
If the donor forfeits the agreement, the existing funds may be: 1) merged with another endowment fund that best meets the intent of the donor or 2) deposited in the Foundation’s general endowment account or 3) placed in a spending account to be used for the original purpose of the former endowment.
When the endowment reaches the $25,000 threshold, the endowment is considered fully funded and the donor’s commitment is fulfilled.
What is the process for establishing an endowment? Is there a form for establishing an endowment?
Please review the Foundation's Endowment Policy for guidance on establishing a new endowment. University Development's major gift officers will work with the donor and you to establish a new endowment. A signed gift agreement from the donor and a completed Endowment Agreement form are required and should be submitted to the Foundation. University Development will work with the donor to complete the gift agreement. To find the University Development contact for your college, please visit the University Development contacts page.
How is the Foundation funded?
The Foundation’s revenue comes from a fee that is assessed quarterly on the endowments. Also referred to as an Endowment Administration Fee, this fee covers the Foundation’s core operating costs, which include staffing support, finance and accounting, audit, insurance, legal, travel and hospitality, among other things. The Foundation is also required to have six (6) months of operating reserve, so whatever funds not used in a given year goes toward the reserve. The endowment administration fee is currently 1.25% of the endowment balance.
What fee does the SF State Foundation charge and when is it taken?
The Foundation assesses an annual endowment administration fee of 1.25% for its core operations. The endowment is also charged investment management fees, which is paid to investment managers. These two fees total approximately 2% annually. These are the only fees that are charged to an endowment. The fees are deducted on a quarterly basis.
How long does it take for endowed gifts to be eligible for a distribution?
An endowment must be established for 12 months before a distribution can be made (not 12 months from receiving the gift). For this reason, it is critical that project directors complete the necessary paperwork (Endowment Fund Agreement (EFA) and Special Project Agreement (SPA) immediately upon gift agreement execution, so that the account can be established as soon as possible.
Once the endowment has been established for a year (maturation date), the distributions are available during the fiscal year following the maturation date.
Endowment administrative fee and investment management fees are always assessed on the endowment balance. That is, during the first year the endowment is established and subsequent years.
How are endowment distributions (payouts) determined?
Because endowments are intended to exist permanently, and because they are subject to market conditions, it is extremely important that the capital is preserved. Therefore, the Foundation has instituted a spending policy that allows up to a 4% maximum annual distribution from endowments.
The payouts are determined by the March 31st quarter but take effect in the upcoming fiscal year. Therefore, if an account was established in July 2014, it becomes eligible for a distribution July 2015. However, because it became eligible after the payouts were determined (March 2015), the project director would have to wait until the next fiscal year for payouts.
Sample Endowment Payout Timeline
|Establishment Date||Maturation Date||>Payout Period|
|July 2014 - June 2015||July 2015 – June 2016||FY 16-17|
|July 2015 – June 2016||July 2016 – June 2017||FY 17-18|
|July 2016 – June 2017||July 2017 – June 2018||FY 18-19|
|July 2017 – June 2018||July 2018 – June 2019||FY 19-20|
|July 2018 – June 2019||July 2019 – June 2020||FY 20-21|
|July 2019 – June 2020||July 2020 – June 2021||FY 21-22|
Note: The payout amount is based on the endowment balances at March 31st.
What are the payout levels?
We look at the March 31st average daily balance of each endowment to determine how much payout to award, as follows:
- For endowments where the balance is more than the contribution by 4% or more, we distribute 4%.
- For endowments where the balance is more than the contribution by 1% - 4%, we distribute 2%.
- There is no distribution when an endowment is underwater (i.e. when the balance is lower than the contributed amount).
Reports are submitted to the donor(s), regardless of the endowment status.
How does the project director know if the endowment is underwater?
Generally, an endowment is underwater if the account balance is less than the total of all gifts/donations (e.g., the principal) made to the endowment.
What happens to obligations when an endowment is underwater?
The Uniform Prudent Management of Institutional Funds Act (UPMIFA) allows the Foundation to make a distribution from an endowment that is underwater, when the Foundation deems it prudent, based on the circumstances. The legislation does not define “prudent” but leaves that interpretation up to the Foundation. The Foundation will look at the gift agreement, amount needed compared to the principal, and other factors, as needed.
Is there an investment policy available?
Yes. The Foundation's Investment Policy can be found under the Policies link on the left hand side of the Foundation's web site.
How do I access my financial reports for the endowment accounts I manage?
Financial reporting for the endowment accounts will be the same process as the one used for University Corporation. The new finance reporting application using Oracle Business Intelligence Enterprise Edition (OBIEE) technology has been recently implemented and has replaced the PeopleSoft Financial Management System (FMS) reports. This new reporting solution is immediately available to all current FMS users. Please visit the fiscal affairs web site to obtain more information about this new finance reporting application.
When will I receive my first endowment report?
Endowment reports are mailed out annually around the fall.
What is the process to transfer funds from the endowment to the scholarship or campus program spending account?
The Project Director should complete the Request to Transfer Funds from Endowment Fund to Spending Account Form and submit it to SF State Foundation. We will review the request and once approved, will forward it to Auxiliary Business Services for processing. In order to receive the payout distribution for July/August 2011, your form must be submitted by June 30, 2011. Forms received after this date will be processed accordingly, but there may be a lag in the timing of the distribution of funds.
How does the SF State Foundation differ from the University Corporation, San Francisco State?
The SF State Foundation and University Corporation will work closely together. The SF State Foundation will manage all activities related to the university's endowment. This includes being the legal recipient of all endowment contributions; managing the distribution of the spending payouts; investing the endowments to maximize returns; and stewarding the funds and reporting back to donors. The University Corporation will continue to be the auxiliary organization charged with receipt and oversight of all federal and state contracts and grants, in addition to managing business services which support the university. It will also be the legal recipient of all non-endowed contributions and have financial administrative oversight of the non-endowed funds and endowed spending accounts.
Who provides the financial administrative functions for the SF State Foundation?
Similarly to University Corporation, the SF State Foundation does not have any central office employees but instead will contract out the financial and administrative functions to the Auxiliary Business Services unit of the university.