Endowment Module Norm Peacock, Assistant Director ITS Indiana University Foundation Mary Wheeler, Kuali Project Specialist Cornell University.

Endowment Module

Norm Peacock, Assistant Director ITS Indiana University Foundation

Mary Wheeler, Kuali Project SpecialistCornell University

Kuali Endowment Module (KEM)

Least “mature” of the Kuali ModulesEnvisioned to cover – transactions of the individual investments– managing the unitized investment “pools”– administering the funds that are the “owners” of

the investments

The Design Process• Group of Endowment “Subject Matter Experts”

(SME’s) from the six Kuali Partner institutions• Demonstrations of 3 existing systems

– Michigan State University– University of Arizona– Indiana University Foundation

• Developed a “high-level” list of requirements

• Some record the individual security transactions in their systems – others record summary information

• Some provide information about competitive scholarships and prizes to their students

• Five follow GASB for financial reporting, one follows FASB

• The number of endowment and similar funds vary from less than 100 to more than 7000

Kuali Partner (Differing) Needs

• All follow some form of the Uniform Management of Institutional Funds Act (UMIFA) or similar state laws

• All currently or plan to manage some form of a “unitized” investment pool or multiple pools

• All have “separately invested” securities, or non-pooled investments

• All need to provide information about donor restrictions, anticipated income, and available balances to their departments

• All need to provide appropriate stewardship information to their donors

Kuali Partner (Similar) Needs

Desired Requirements:• Investment tracking and reporting

– number of shares, book, par and market values, CUSIP number, investment category (stocks, bonds, real estate, etc.), and capital commitments.

– purchases and sales of investments; income earned, collected, accrued; management and custodial fees and commissions; and other investment related data.

– compare investment policy allocation targets to actual allocations and incorporate pending transactions (i.e. rebalancing).

– track investment commitments for limited partnerships and contributions made against these commitments.

– Maintain database of key information for each investment manger

Desired Requirements (continued):• Investment participation management and reporting

including unitized transactions– Investment pool data (number of units, market value per unit) for

all funds that participate in an institution's investment pool(s). – Quantify units purchased and sold, and calculate the gain or loss

on withdrawal. – Record investment income, realized gains, unrealized gains, and

fees to the various funds, either in the specific fund or in high level accumulation accounts.

– Track the net asset balance of a true endowment fund between its components of historical book value and accumulated earnings.

– Allocate either a budgeted payout to the income accounts affiliated with a principal account (based on pooled units), or actual income earned on separately invested endowment funds.

Desired Requirements (continued):• Enable formula and/or actual income

projections– Project the budgeted payout (based on pooled units and

an approved spending policy) – Project the anticipated actual income based on declared

dividends, bond holdings, etc. – Update current year income projections– Create spending policy reports by fund, account #,

college, dept, etc.

Desired Requirements (continued):• Access to donor instructions

– Capture and electronically distribute the donor instructions for a gift or endowment fund

Desired Requirements (continued):• Scholarship Award System

– summarized set of available income and donor instructions searchable for external parties

– based on information from any agreement with a donor for a scholarship, whether endowed or expendable

– separate searchable data elements for common qualification criteria

– Ability for departments to grant, change or delete scholarship awards

Desired Requirements (continued):• Beneficiary disbursement process and tax

reporting – For “split interest agreements” – disburse

payments to beneficiaries– Provide data for annual tax reporting– Update the actuarial calculation of the liability

for accounting adjustments.

Out of KEM Scope:• Gift Records System

– fund raising activity - campaign goals and results– donor contacts– pledges- both conditional and unconditional– gift payments

However, data elements that provide linkages between an external gift system and the Kuali Endowment Module

will be necessary.

Outcome of Design Process

• The SME group was unanimous in its selection of the IU Foundation system. – viewed as the most organized and connected– contains nearly all of the processes and data

identified in the requirements document

Who is the Indiana University Foundation?

• The Indiana University Foundation (IUF) is a not-for-profit corporation dedicated to maximizing private resources for Indiana University (IU).

• Chartered in 1936, we partner with IU to raise an average of more than $100 million annually in contributions for IU from more than 100,000 donors.

• The majority of the monies we generate are held and invested by the Foundation for the benefit of IU.

The IUF Relationship with IU

• The IUF is independent of the university it serves.• Approximately 5000 individual accounts are

managed which benefit over 200 unique departments on 8 campuses.– Endowments– Expendable (Quasi) Endowments– Operating/Discretionary – Charitable Remainder Trusts and Charitable Gift

Annuities• Invested assets under management total over $1.1

Billion dollars.

Business Functions of the IUF

• Development– Fund Raising

• Campaigns, Annual Gifts, Major Gifts, Planned Gifts– Donor Relations

• Reporting, Stewardship

• Investment Management– Cash and Non-Cash gifts

• Pooled Investments, Real Estate, Stocks, Bonds– Charitable Trusts

• Account Administration– Account Management

• Payments from accounts, reporting– Gift Administration

Operations at the IUF

• Trust Banking method of operation for more than 10 years.• Automated daily sweep of cash into and out of an interest

bearing fund.• Automated periodic investment of cash and money market

investments in long term investments.• Automated distribution of income• Ability to receive deposits of cash or securities• Ability to distribute income automatically or on request. • Daily pricing of marketable securities.

IU Foundation System Overview

Donor DatabaseGift Processing(Both IU and IUF gifts)

Transaction ProcessingAccount Maintenance

Automated Cash InvestmentAutomated Income Distribution

Asset ManagementInternal Management Reports

Daily Transferof IUF gift totals

by account

Daily Summaryof Transaction

Totals (By Fundand Object Code)

Gift System

Endowment & TrustAccounting System

General LedgerBudget AccountingAccounts PayableEnterprise Funds

Fixed AssetsManagement Reports

General Ledger

CustodianBank Asset

Data

Pool Pricing andUnderlying Asset /Income Allocation

Database

IUF General System Requirements

• Flexible enough to change with our needs• Offered functionality to support our

business• Generated automated recurring processes• A single data source for endowment and

trust information • A fully relational database• Capable of interfacing to any gift or general

ledger system

Process Overview

ACCOUNT

DONOR DEPARTMENT

CREATES

AUTHORIZED SIGNERS

APPOINTS

ASSIGNED TO

OR

GIFTS

OTHER INCOME

GIVES

SECURITY

PURCHASES

CASH(Investment Income or

Proceeds From Sale)

PRODUCES

DEPOSITEDTO

SELLS

PAYMENTS

REQUEST

FROM

CASH

DISBURSES

PAYEE

TO

DEPOSITEDTO

Modular Design

ACCOUNTSECURITIES,

HOLDINGS AND CASH

TRANSACTIONS

RECURRING TRANSACTIONS

INDIVIDUAL

USER SECURITY

Account Module

Transaction Module

UPDATES

Create/MaintainAccount

Transaction UPDATES

Recurring Transactions

Module

RELATES TO

RELATES TO

CREATES

Create/MaintainIndividual

Individual Module

UPDATES

RELATES TO

REFERS TO

Security, Holdingsand Cash Module

Create/MaintainSecurity

UPDATES

UPDATES

RELATES TO

Modular Design

Accounts

• All relevant account administration data– Open and close records– Ticklers– Account type– Associations with Fund and Unit

• Instructions– Transaction Restrictions

• Account Status, Agreement Documentation Status, Restrictions and authorizations

– Investment Instructions• Automated Investing, Daily and Periodic

– Fees

Accounts

Accounts

Accounts

Accounts

Securities, Holdings and Cash

• Balances by account– Current and historical– Cash– Securities

• Units, Carry Value, Market Value, Accrued Income • Securities managed by the IUF

– Current Values• Units, Carry Value, Unit Value, Market Value• Security type• Interest rates and dividend per share, payment schedule

• Pooled Investment fund data – Current and historical unit values and distribution

amounts





Transactions

• Unique transaction types– Cash, Asset and Liability

• Purchases, Sales, Deposits, Disbursements• Increase, Decrease or Transfer

– Special types• Original Gift Value Adjustment• Holding unit adjustment• Corporate Reorganization• Trust Asset Transfer

• Multiple entry methods– Recurring transactions– Imported Transactions

• Gift transactions, Spreadsheets– Daily Processes

Transactions

Transactions

Transactions


• Investment Models– Cash Sweeps (Money Market Investments)– Pooled Funds

• Scheduled transactions– Transfers, Trust distributions

• Automated Processes– Daily, Monthly, Annual

• Pricing update, Transaction import, Accrual processing, Distributions, Sweeps and Investments

• History table updates



Other IncomeDeposit Cash Gift Deposit

ETA IncomeCash

ETA PrincipalCash

End of day, Invest In Pooled Short Term Fund

(Whole Dollars only)

Pooled Short Term Funds Reallocated to Pooled

Long Term Fund(25th of each month)

End of day, Invest In Pooled Short Term Fund

(Whole Dollars only)

CASH IN

DEPOSITED TO

SWEPT TO

REALLOCATED TO




Individuals

• Payees, Account Signers, Users• Name and Address records

– Home, Business, Campus, Seasonal• 1099 reporting

– Independent Contractor, NRA• Bank Depository

– ACH or Wire Transfer• Associated Accounts

Individuals

User Security

• Screen level– Read, Write , Exclude

• Defined Groups

User Security

Automated Processes

• Interfaces– Importing Gift Transactions– Security Pricing– Exporting General Ledger Entries– Updating Database used for Web Inquiries

Automated Processes

• Daily– Transaction Import– Large Batch Posting– Accrual Calculations– Accrual Transactions– Recurring Transactions– Pooled Fund Distributions– Automated Cash Investments– Cash Sweeps– Pooled Fund Accounts Summary Transactions– Change Reporting– Date Frequency Roll Process

Automated Processes

• Monthly– Cash Balance Archive– Holding Balance Archive– Seasonal Address Update– Fee Assessment Transaction Process

• Year-End– Update Original Gift Values

Investment Tracking and Reporting

SECURITY

PK,FK1,FK3,U1,I2,I1 SECURITY_ID

SECURITY_DESCRIPTION SECURITY_TICKER_SYMBOL SECURITY_UNITS_HELD SECURITY_ISSUE_DATE SECURITY_MATURITY_DATE SECURITY_RATE SECURITY_DIV_RECORD_DATE SECURITY_EX_DIVIDEND_DATE SECURITY_DIV_PAY_DATE SECURITY_DIV_AMOUNT SECURITY_INCOME_CHG_DATE SECURITY_INCOME_PAY_FREQ SECURITY_INCOME_NEXT_PAY SECURITY_UNIT_VALUE SECURITY_VALUE_DATEFK2,U1 SECURITY_CLASS_CODE COMMITMENT_AMOUNT PREVIOUS_UNIT_VALUE PREVIOUS_UNIT_VALUE_DATE UNIT_VALUE_SOURCE SECURITY_CARRY_VALUE LAST_TRANSACTION_DATE FOREIGN_WITHOLDING_PCT

HOLDING_TAX_LOT

PK,I1 ACCOUNT_NUMBERPK,I1 SECURITY_IDPK REGISTRATION_CODEPK HOLDING_LOT_NUMBER

HOLDING_ACQUIRED_DATE HOLDING_UNITS HOLDING_COST HOLDING_PRIOR_ACCRUED_INC HOLDING_FOREIGN_TAX_WITHH HOLDING_MARKET_VALUE LAST_TRANSACTION_TS HOLDING_ACCRUED_INCOME_DU

CLASS_CODE1

PK,I1 SECURITY_CLASS_CODE

SECURITY_CLASS_CODE_DESC SECURITY_REPORTING_GROUP SECURITY_ACCRUAL_METHOD OBJECT_CODE SECURITY_INCOME_POST_CODE

HOLDING_HISTORY1

PK,I2 ACCOUNT_NUMBERPK SECURITY_IDPK REGISTRATION_CODEPK,I1,I2,I3 HOLDING_HISTORY_DATE

HOLDING_TOTAL_UNITS HOLDING_TOTAL_COST HOLDING_ANNUAL_INC_EST SECURITY_UNIT_VALUE HOLDING_MARKET_VALUE QTR_AVG_MARKET_VALUE




TRANSACTION_SECURITY

PK,FK1 TRANSACTION_ID

SECURITY_UNITS SECURITY_ORIGINAL_COST SECURITY_PRICE_PER_SHARE SALE_SHT_TERM_GAIN_LOSS SALE_LNG_TERM_GAIN_LOSS SALE_PROCEEDS DONOR_ID REPRESENTATIVE DAILY_ACCRUAL_AMOUNT HOLDING_LOT_NUMBER OVERRIDDEN_CARRY_VALUE

TRANSACTIONS

PK,U4,U1,U2,U3,I1,I3 TRANSACTION_ID

U4,I10,I11,I1,I4 BATCH_IDU4,I10,I1,I4,I5 TRANSACTION_CREATED_DATEI9,U4,I10,I1,I4 TRANSACTION_TYPEU4,I10,I1,I4 TRANSACTION_ENTRY_STAFF_ID TRANSACTION_SUPER_STAFF_ID TRANSACTION_SOURCEI12,U3,I2 ACCOUNT_NUMBERI12,I6 TRANSACTION_POSTED_DATEI8 TRANSACTION_STATUSI12 OBJECT_CODE OGV_AMOUNT OGV_INDICATORI7 INCOME_CASH_AMOUNT PRINCIPAL_CASH_AMOUNT TRANSACTION_DESCRIPTION OLD_TAX_CODE TRANSACTION_REVERSED REVERSING_TRANSACTION_IDU1,U2 SECURITY_ID REGISTRATION_CODE OVERRIDE_EXPLANATION

• Income Accrual Methods– Automated Cash Management – This is the accrual mechanism for “money

market” type accounts. It will calculate daily based on the holdings of each date and add the amount to the total interest due to the account holder.

– Dividend –The total dividend amount to be paid to the holder of a security based on the ex-dividend record date, units held, dividend amount and payment date. These accrual amounts will be calculated periodically, based on the ex-dividend date.

– Treasury Notes and Bonds – Daily accruals are calculated based on the number of days in the six months prior to the semiannual payment date.

– Discount Bonds – Accruals are calculated daily but will never be paid to the account holder until the security reaches maturity or is sold.

– [Mortgage Pass-Through 30 –This is not a true daily accrual. The total income due is recomputed daily. It assumes that payments are made one month in arrears (30 days) on the 15th of the month.

– Mortgage Pass-Through 60 – Like the previous method except that it assumes that payments are made 2 months in arrears (60 days) on the 15th of the month.]

– Time Deposits – Simple interest calculations, not compounded. Payment frequencies will vary depending upon the instrument


Investment Participation Management






• Account Management• Investment Management• Automated Functions• Relational Database• Multiple Reporting Options

– ODBC – User-Designed Daily and On Demand Reports– Web Access

Endowment and Trust Accounting

Next StepsGet into the details:• Compare the requirements list to the IU

Foundation system in more detail• Identify gaps – if any• Describe and prioritize enhancements• SME group meeting October 12 and 13

Additional Next Steps

Answer the following questions:1. What changes will be required for the IU Foundation

system to fit Kuali architecturally (technical and overall system design).

2. How would the Kuali Chart of Accounts need to be changed (if at all) to incorporate the IU Foundation design into the Kuali Endowment Module (KEM)?

3. What is the fit of the Kuali GL with the Kuali Endowment Module?

4. What changes will be required in the electronic documents, lookups, routing, etc. for the IU Foundation system to become KEM?

Questions?

For progress updateswww.kuali.org

Endowment Module Norm Peacock, Assistant Director ITS Indiana University Foundation Mary Wheeler, Kuali Project Specialist Cornell University.

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