Spending and Substantiating the Appropriate Use of a Fund
Learn about spending and substantiating the appropriate use of endowment and gift funds at Columbia University.
As endowment and gift funds are given to Columbia by our donors, we are legally obligated to spend the funds in accordance with their terms and restrictions. Substantiation is the process of providing documentation demonstrating that expenditures meet the terms of each endowment and gift fund.
How an endowment or gift fund may be spent depends on the terms and restrictions of each individual fund. The terms of gift agreements may limit the nature and types of expenses that can be funded. In addition to complying with the terms of spending, schools and departments must ensure that any reporting or stewardship obligations agreed upon are fulfilled.
If you have reviewed the donor agreement and correspondence and have questions about the appropriate use of a fund, please contact the Senior Director of Endowment Compliance who will work with you, in conjunction with the Office of the General Counsel and Office of Alumni and Development, as appropriate, to answer your questions about the fund’s purpose.
Schools have been authorized by the Trustees to charge an administrative fee of no more than 10% of expenses to gifts and/or endowment payout to help schools recover a portion of administrative and central costs. These support costs may include maintenance and financing of space and the costs of other day-to-day business functions. Schools have chosen rates that currently range up to 10%, as approved by the Office of Management and Budget. With the exception of CUIMC, the rates for each School are programmed into ARC so the system will automatically charge an administrative fee as expenses are incurred. CUIMC utilizes a different method for allocating support costs, so if overhead fees are allocated to a gift or endowment, they may not exceed 10% of expenses incurred.
If Columbia cannot use an endowment fund according to its terms and restrictions, we may seek to modify the restrictions in one of the following three ways:
- Work with Development to obtain the written consent of the donor;
- In cases where the gift agreement contains a provision addressing modification of fund purpose, modifications can be made in accordance with the process, and within the limitations, set forth in the gift agreement;
- Successful application to a court for a modification of restrictions that have become illegal, impracticable or impossible to fulfill (a “cy pres” proceeding).
As outlined in the Endowment and Gift Fund Administration and Compliance Policy, expenses incurred for endowment and gift purposes should be charged directly to the applicable fund. However, we understand that transfers may at times be needed.
After a thorough review of the restrictions of each fund to confirm a transfer would be necessary and appropriate, the endowment or gift transfer entries must be approved by a Senior Business Officer. Schools or departments must keep detailed documentation to substantiate appropriate use and demonstrate that expenditures meet the terms of each fund. Documentation substantiating appropriate use must be attached to the endowment or gift transfer entries in ARC. This will ensure that our financial system of record contains all information necessary to evidence that an endowment or gift fund has been spent in accordance with its terms.
The Controller’s Office and Office of General Counsel have developed, for your convenience, the Endowment and Gift Substantiation Form to assist in documenting such instances. When transferring occurs, Schools/Departments can utilize this form to substantiate the appropriate use of the funds. This form may be completed and attached to the entry in Accounting and Reporting at Columbia (ARC), along with other supporting documentation that evidences compliance.
Finally, to ensure both appropriate stewardship and accurate accounting, expenses for purposes supported by donor-restricted gift and endowment funds should be covered first from those relevant funds. Unrestricted funding should be applied after gifts and endowment payout restricted to these purposes have been fully exhausted.
Specific inquiries should be directed as follows:
Questions regarding the financial administration of endowment and gift funds:
Office of the Controller
Contact: Jacqueline Erickson
Director, Endowment and Gift Administration and Compliance
Email: [email protected]
Phone: (212) 854-9689
Questions regarding legal issues (e.g., legal interpretation of terms and restrictions, modifying restrictions):
Office of the General Counsel
Contact: Remi Silverman
Associate General Counsel
Email: [email protected]
Phone: (212) 854-0287
In addition, the Office of University Compliance provides a compliance hotline website for confidential, anonymous and open communication of any compliance concerns or suspicions of business misconduct.
For comprehensive guidance on how to manage and spend endowment funds, the University has developed the following policies:
- Endowment and Gift Fund Administration and Compliance
- Decapitalizing Endowment Funds
- Designating Endowments as Central/Current
- Endowment and Gift Compliance and Administration Certification (instructor-led)
- Endowment Project ChartField Requests (job aid)
To access your Term Sheets, visit endowmentadmin.columbia.edu.