Endowment Top Off FAQ S

Endowment “Top Off” FAQ’s

 What is a “Top Off” Endowment?

A Top-off Endowment is a departmental contribution of internal funds up to 25% added to an endowment in order to bring endowment up to the University minimums for establishment. Certain requirements need to be met before this endowment can be opened. Please see the policy that governs the process of “Topping Off” Newly Established Endowments for additional information. Link to policy below:

http://www.finance.umich.edu/system/files/Policy_to_Govern_the_Topping_Off_of_En dowments_0.pdf

 May unrestricted gifts be used to “Top Off” an endowment:

o Yes, unrestricted gifts or gifts made for the same purpose may be used to “Top Off” an endowment. The funds will be put in a “T” fund and considered permanently restricted by UM Policy. The combined value of all funds in the “T” fund can’t be greater than 25% of the required minimum funding level for the endowment being established.

 Can my “Top Off” endowment distributions go to any fund other than 30000 fund:

o When funds are placed in a “Top Off” by UM policy they are considered restricted funds (regardless of funding source) and must have distributions go to same location as True Endowment distributions.

 Can a “Top Off” Endowment be withdrawn if the True Endowment reaches a fully funded level in the future?

o No, a Top off will be considered a permanent addition to the endowment and may not be withdrawn.

 Is a “Top Off” based on Book Value or Market Value of the Endowment?

o Top offs are based on the Book Value of the endowment.  How long does funding need to be solicited for, before a “Top Off” can be opened?

o Funding must be solicited for a least one year before a Top off could be opened.

 Is there any special approval needed to open a “Top Off”?

o Yes, a School, College, or Unit will be required to have approval in writing from the Provost Office (via the Office of University Development) before topping off an endowment.

 May my unit use multiple funding sources to create a “Top-off”?

o Yes, top off endowments may be established with any combination of 40000, 5XXXX or 30000 (as long as it meets donor intent). The funds will be placed into a “T” fund and considered permanent by UM Policy. The combined value of all funds in the “T” fund can’t be greater than 25% of the required minimum funding level for the endowment being established.