Section I - Purpose
To provide predictable and steady financial support for student scholarships and programmatic grants to Zane State College.
Section II -UPMIFA Endowment Spending Standards for Ohio
Subject to the intent expressed by a donor in the gift instrument, an institution may appropriate for expenditure or accumulate so much of an endowment fund as the institution determines is prudent for the uses, benefits, purposes, and duration for which the endowment fund is established.
The institution shall act in good faith, with the care that an ordinary prudent person in a like position would exercise under similar circumstances, and shall consider, if relevant, the following factors:
- duration and preservation of the endowment fund,
- purpose of the institution and the endowment fund,
- general economic conditions,
- possible effect of inflation or deflation,
- expected total return from income and the appreciation of investments,
- other resources of the institution, and
- the investment policy of the institution
To limit the authority to appropriate for expenditure or accumulate, a gift instrument must specifically state the limitations.
Ohio’s version of UPMIFA includes a “5% of fund value” annual spending safe harbor rule and replaces the “historic dollar value” standard of Uniform Management of Institutional Funds Act (UMIFA). Ohio UPMIFA states, “the appropriation for expenditure in any year of an amount not greater than 5% of the fair market value of an endowment, whether or not the total expenditures from it exceeds 5%, calculated on the basis of market values that are determined at least quarterly and averaged over a period of not less than three years immediately preceding the year in which the appropriation for expenditure was made, creates irrefutable presumption of prudence.” The safe harbor spending rule eliminates preexisting restrictions related to underwater endowment accounts and provides a threshold by which prudence can be measured.
Section III - Investment of Endowed Funds
Endowed funds are invested to grow and expand the assets of the Foundation and create the income needed to provide student scholarships and grants for specified College programs. These assets will be managed to offset the erosion of inflation and/or to provide an equal or higher value in the future. For details, please refer to the Zane State College Foundation Investment Policy. The Foundation may retain the services of a professional investment portfolio manager to insure consistently higher return on investment. In such a case, the Investment Committee will provide oversight and guidance to the portfolio manager as to an appropriate and prudent level of investment risk.
Section IV - Timing of Calculations
Newly created endowment funds must be invested for at least one year prior to the calculation date. Exceptions to this rule shall be approved by the Treasurer of the Foundation Board of Directors and the Foundation Executive Director.
Section V - Spending Rate
The spending allocation level from endowment assets is important to the long-term preservation and enhancement of real endowment value. Therefore, the Foundation adopts a policy of allocating an amount each fiscal year up to four (4%) percent, subject to annual Board approval, of the December 31 trailing twelve-quarter moving average of fair market value of its permanently restricted endowment funds, unless otherwise directed by the donor of a specific fund. For newly endowed funds that do not possess a twelve-quarter history the Foundation will distribute the spend rate from the average of the available quarterly market values.
In January of each year, each endowment account may be charged a one and one-half (1.5%) percent administrative fee of the endowment balance at the end of December which will offset investment management fees and administrative costs. Exceptions to these appropriation guidelines may be granted by the Board of Directors.
