|
Endowment and Investment Glossary
Definitions:
Advised Bequest
Cornell has been notified that it will be named as a beneficiary in one's will.
Back to Top
Appropriation
Funds allocated through an operating budget allocation process. Examples are general, state, or federal appropriation accounts.
Back to Top
Agency
Exchange transaction in which the reporting organization acts as an agent, trustee, or intermediary for a donor or donee. Assets received as an agent are not revenues of the agent, nor are disbursements made as an agent expense of the agent.
Back to Top
Annuity
Deferred giving agreement. Agreement whereby money or other property is made available to an institution on condition that the institution bind itself to pay periodically to the donor and/or donor-designated individuals(s) stipulated amounts, which payments are to terminate at a time specified in the agreement. Upon termination, the principal of annuity funds is transferred to the fund group designated by the grant or, in the absence of such a designation, to unrestricted current funds revenue and accorded the same treatment as unrestricted expired term endowments.
Back to Top
Annuity Trust
Trust created by a donor irrevocably transferring money or securities for the benefit of a charitable organization in exchange for a fixed dollar amount to be paid at least annually to a designated beneficiary or beneficiaries for their lifetimes or for a fixed term not to exceed 20 years. At the death of the donor or the last surviving beneficiary, the trust terminates and assets of the annuity trust are transferred to the charitable organization for which the trust was created.
Back to Top
Award
A prize or reward. Form of financial aid for undergraduate or graduate students. Awarded on the basis of merit in open competition; they are not need-based.
Back to Top
Bequests
University has been named as a beneficiary in a will upon the death of the donor.
Back to Top
Book Value
Historical dollar amounts invested in an account.
Back to Top
CF & PC
Capital Funding and Priorities Committee.
Back to Top
Charitable Gift Annuity
An arrangement / contract between a donor and a nonprofit organization in which the donor contributes assets to the organization in exchange for a promise by the organization to pay a fixed amount for a specified period of time to the donor or to individuals or organizations designated by the donor. No trust is established under a charitable gift annuity arrangement. The assets received become the assets of the institution when they are received, as opposed to being placed in a trust.
Back to Top
Charitable Lead Annuity Trusts
The nonprofit organization periodically receives a specific dollar amount from the trust. Cornell does not receive the corpus.
Back to Top
Charitable Lead Trust
An arrangement in which a donor establishes and funds a trust with specific distributions to be made to a designated nonprofit organization over a specified period. The nonprofit organization receives distributions from the trust until termination of the agreement at which time the remaining assets in the trust are paid out to the donor or other beneficiaries named by the donor. The present value of the estimated future distributions equals the gift. (Note: nonprofit does not receive the corpus).
Back to Top
Charitable Lead Unitrusts
The nonprofit organization periodically receives a distribution of a fixed percentage of the trust' fair market value determined each year.
Back to Top
Charitable Remainder Annuity Trust
Distributions to the beneficiary are for a specified dollar amount.
Back to Top
Charitable Remainder Trust
An arrangement in which a donor establishes and funds a trust with specified distributions to be made to a designated beneficiary or beneficiaries over the trust's term. The nonprofit beneficiary receives its interest in the donated assets after the donor or another beneficiary has received benefits for a specified time period. Upon termination of the trust, a nonprofit organization receives the assets remaining in the trust. The value of the assets contributed less the present value of the payments to be made to beneficiaries' equals the gift.
Back to Top
Charitable Remainder Unitrust
Beneficiary receives a stated percentage of the fair market value of the trust, determined annually.
Straight Unitrust a donor irrevocably transfers money, securities, or property to a separate trust having a charitable remainderman, with payments to be distributed to named beneficiaries at least annually in an amount equal to a fixed percentage of the net fair market value of trust assets determined annually. On the death of the last beneficiary, the trust terminates and assets are distributed to the charitable remainderman. A stated percentage of the market value of trust assets must be distributed annually regardless of whether this amount is earned by the trust in the form of interest and dividends. The payments retain their character in the hands of the beneficiaries and are taxed to them accordingly.
Net Income Unitrust is similar to a straight unitrust except that payments to beneficiaries are limited to the actual income earned by the trust up to, but not exceeding, the fixed percentage stated in the trust agreement. Once the initial investment is made, investment activity in such trusts must be executed with care in order that income payments are not reduced.
Net-Plus-Makeup Unitrust, payments are limited to ordinary earned income as in the case of the net income unitrust except that payments may exceed the stated percentage up to but not exceeding the amount required to make up any accumulated deficiencies from prior years. Usually will be chosen by younger donors seeking capital appreciation until retirement and maximum income thereafter.
Back to Top
Contributed Services
Volunteer services. Should be recognized as a contribution if it meets one of the following criteria (1) they create or enhance non-financial assets. (2) They require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation.
Back to Top
Contribution
Unconditional transfer of cash or other assets to an entity or a settlement or cancellation of its liabilities in a voluntary non-reciprocal transfer by another entity acting other than as an owner. Other assets include securities, land, buildings, use of facilities or utilities, materials and supplies, intangible assets, services and unconditional promises to give those items in the future.
Back to Top
Corpus
The principal amount of a gift or trust. Usually refers to the portion of a split-interest gift or an endowment fund that must be maintained over a specified period or in perpetuity.
Back to Top
Cy-Pres
Action to gain relief from the impractical restrictions or to depart from the original terms to the extent necessary to make the fund useful while adhering, as nearly as possible, to the donor's original intent.
Back to Top
Deferred Living Agreement
Principal of funds generally cannot be expended for the benefit of the institution until the death of the donor and/or donor-designated beneficiaries and income is not available to the institution for its use. Annuity payments begin at a specified time in the future. The length of the deferral period as well as the effect of compounding determines the size of the annuity: the longer the deferral period, the greater the annuity when it does begin.
Back to Top
Donor
One who gives a contribution.
Back to Top
Donor-Imposed Condition
Specifies a future and uncertain event on which a contribution depends. The condition is effectively a barrier that must be overcome before a promised gift is considered a contribution.
Back to Top
Endowment
A gift accepted with donor stipulations that (1) the principal be maintained intact in perpetuity, for a specified period, or until the occurrence of a specified event and (2) the income earned by investing the principal can be expended.
Back to Top
Endowment Fund
An established fund of cash, securities, or other assets that provides income for the support of a not-for-profit organization.
Back to Top
Fair Value
The proceeds in a current sale between a willing buyer and a willing seller, that is, in a sale other than a forced or liquidation sale. Measured by their market value if an active market for them exists. If no active market exists for the assets transferred but a market exists for similar assets, the selling prices in that market may be helpful in estimating the fair value of the assets transferred.
Back to Top
Fellowship
Grant of money for further study.
Back to Top
Funds Functioning as Endowment
Designated funds established by the board to function like an endowment fund but which may be totally expended at any time at the discretion of the governing board.
Back to Top
Foundation (Cornell University Foundation)
The Cornell University Foundation is a "donor-advised fund". This foundation is convenient for individuals who make substantial gifts to charity and have a number of charitable interests, including Cornell.
Back to Top
Funds Held in Trust by Others
Represent resources neither in the possession nor under the control of the University, but paid and administered by outside trustees, with the University deriving income or residual interest from the assets of the funds. Funds held in trust by others are recognized at the estimated fair value of the assets or the present value of the future cash flows when the irrevocable trust is established or the university is notified of its existence.
Back to Top
Funds Held in Trust for Others
Funds that Cornell invests as custodian for others but which they do not have the rights to. Independent trustees are responsible for the funds and for the designation of income distribution.
Back to Top
Gift Annuity
See Charitable Gift Annuity
Back to TopBack to Top
Gift Instrument
A will, deed, grant, conveyance, agreement, memorandum, writing, or other governing document under which property is transferred to or held by an institution as an institutional fund.
Back to Top
Gifts-In-Kind
Non-cash gifts.
Back to Top
Grant
The principal purpose of the relationship is to transfer a thing of value to the recipient to carry out a public purpose of support or stimulation authorized by a law of the United States instead of acquiring property or services for the direct benefit or use of the United States Government.
Back to Top
Historic Dollar Value
Value of the original gift (or gifts) that established the endowment.
Back to Top
Income Shares
Represents income entitlement in the pool. Changes in income shares for an account in the LTIP are based on the change in permanent shares multiplied by the income allocation rate (below). Changes in income shares for an account in the STIP are based on the change in dollars multiplied by the income allocation rate (below). Income allocation rates are as follows: July 92%, Aug 83%, Sep 75%, Oct 67%, Nov 58%, Dec 50%, Jan 42%, Feb 33%, Mar 25%, Apr 17%, May 8%, Jun 0%.
Back to Top
Lead Interest
Receives distributions or benefits during the term of the agreement with assets being returned to the donor or distributed to beneficiaries when the agreement term expires.
Back to Top
Letter Agreement
A letter signed by the University and the donor that describes the agreement and intention of the donor's gift, restrictions, endowment, etc.
Back to Top
Life Income Agreement
An agreement whereby money or other property is made available to an institution on condition that the institution bind itself to pay periodically to the donor and/or donor-designated individual(s) the income earned by assets donated to the institution for the lifetime of such beneficiaries. If there is no money left, Cornell is not required to continue payments.
Back to Top
Life Income Funds
See also Pooled Life Income Funds
Deferred giving agreement. Contracts that provides that an income be paid to the donor, the donor's designee, or a combination thereof for the lifetime of the recipients(s) or for a fixed period of time. The income payments are based on earnings of the donated assets. At termination of the contracts, the funds become available for general institutional purposes or for any restricted purpose designated by the donor in the contract.
Back to Top
Life Tenant
One who possesses a life-use right of property, frequently used in connection with a split interest agreement.
Back to Top
Living Trust Funds
See also Life Income funds and Annuity Funds.
The donated funds income is payable to one or more beneficiaries during their lifetime. On the termination of life interests, the principal becomes available for university purposes. The university's living trust agreements with donors consist primarily of charitable gift annuities, charitable remainder trust, and pooled income funds for which the university serves as trustee.
Back to Top
Long Term Investment Pool (LTIP)
Similar to a mutual fund. The portfolio includes both domestic and global investments; all securities are handled by outside managers. Includes true endowment, funds functioning as endowments, and other expendable funds that are not expected to be spent for at least three years. The objective of the pool is to produce a reasonable return coupled with capital appreciation.
Back to Top
Market Value
What the value of the account would be today if all of the funds were liquidated.
Back to Top
Master Trust Plan
The purpose of the master trust is to provide uniform reporting and enables the University to spread the investment performance and risk of multiple investment managers evenly to all plans.
Back to Top
Membership Dues
Exchange of cash or other assets for a defined set of benefits.
Back to Top
Net Assets
The excess or deficiency of assets over liabilities, classified according to the existence or absence of donor-imposed restrictions.
Back to Top
Outside Trust
A trust not administered by the University. Example would be a perpetual trust.
Back to Top
PLIF
Back to Top
PLIF A
Cornell PLIF that is invested in high yield funds that seeks to provide consistently high income with preservation of principal.
Back to Top
PLIF B
Cornell PLIF that is invested in balanced funds that benefit donors interest in growth of income over the long term.
Back to Top
PLIF C
Cornell PLIF that is invested in managed funds. This PLIF is no longer available.
Back to Top
PR
Back to Top
Permanent Shares
Represent ownership in the LTIP. Calculated by dividing the dollar amount of the transaction by the market value share rate.
Back to Top
Permanently Restricted
Donated assets be maintained permanently or invested in perpetuity. A permanent restriction can never be removed by actions of the organization, although the restriction can be removed by court order.
Back to Top
Perpetual Trust
A trust administered by an individual or organization other than the not-for-profit beneficiary (held by a third party). Under the terms of the trust, the not-for-profit organization has the irrevocable right to receive the income earned on the trust assets in perpetuity, but never receives the assets held in trust. The donor may restrict distributions received by the organization.
Back to Top
Pledge
A written or verbal statement of intent by a donor to make a gift to the university.
Back to Top
Pooled Life Income Funds
A trust to which donors make irrevocable gifts of money or securities that are commingled with property of other donors who have made similar transfers. Each donor retains a life income interest, as do one or more named beneficiaries living at the time the gift is made. Each beneficiary is entitled to a pro rata share of the pooled fund's earnings each year for his or her lifetime. At the death of the last beneficiary of any one donor, the charitable organization severs the donor's share of the pooled fund and uses it for its charitable purposes. The value of the assets contributed, discounted for the estimated time period until the donor's death equals the gift.
Back to Top
Promises to Give
Written or oral agreement to contribute cash or other assets to another entity.
Back to Top
Quasi-Endowment Funds
See Funds Functions as Endowment.
Back to Top
Quid Pro Quo
Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices commensurate value. An example would be a sale of merchandise at The Cornell Store.
Back to Top
Remainder Interest
The organization receives assets at the expiration of the agreement term and beneficiaries receive benefits while the agreement is in effect.
Back to Top
Remainderman
The recipient of the corpus (remaining principal) of a trust upon termination.
Back to Top
Retained Life Use
Gift where the donor retains the right to use the assets during their lifetime. Examples include residence, vacation home, or farm.
Back to Top
Separately Invested Funds
Funds where the assets are of a type that require special handling, or if a donor requires that their funds be separately invested. Examples include unitrusts, closely held stock, certain bonds, real estate, jewelry and coins.
Back to Top
Short Term Investment Pool (STIP)
Includes cash balances and other funds invested for the production of income where the funds are expected to be on deposit for less than three years. The objective of the pool is to produce a high level of income while protecting principal value. The pool is invested in marketable, prime quality debt securities, at least 50% of which mature in three years.
Back to Top
Split Interest Agreements
Created when a donor contributes assets directly to a nonprofit organization or places them in a trust for the benefit of the nonprofit organization, but which the organization is not the sole beneficiary.
Back to Top
Sponsorship
Transfers of assets from one entity to another entity for the support of an event. Contractual agreement with a corporate, federal, or state agency where deliverables are involved rather than a gift.
Back to Top
Stipend
Fixed pay that a student may receive as part of their research or teaching assistance.
Back to Top
TR
See Temporarily Restricted.
Back to Top
Temporarily Restricted
Donated assets may be used only after a specified date or only for a specific purpose, or both. The restriction is satisfied either by the passage of time or by actions of the organization.
Back to Top
Term Endowment
Funds for which the donor has stipulated that the principal may be expended after a stated period or on the occurrence of a certain event.
Back to Top
True Endowment
Gifts for which donors have stipulated, as a condition of the gift, that the principal must never be spent. Only the income generated from the investment of these funds may be used as directed by the terms of the gift.
Back to Top
Trustee
One to whom property is entrusted for management.
Back to Top
UR
Back to Top
Unitrust
Beneficiary's income fluctuates annually with the fair market value of the trust.
Back to Top
Unrestricted
There are no additional limitations or stipulations made by the donor for the use of the funds.
|
