The Role of Endaument Funds in Financing Social Expenses
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JOURNAL OF CRITICAL REVIEWS ISSN- 2394-5125 VOL 7, ISSUE 13, 2020 THE ROLE OF ENDAUMENT FUNDS IN FINANCING SOCIAL EXPENSES Kasimova Gulyar Akhmatovna Associate Professor of "Budget Accounting and Treasury" Tashkent Institute of Finance Republic of Uzbekistan, Tashkent city, Amir Temur street 60 A, 100000 Received: 22.04.2020 Revised: 24.05.2020 Accepted: 19.06.2020 ABSTRACT The article reveals the scientific and theoretical basis of financing the social sphere,investigates foreign experience in the use of endowment funds and, identifies its specific features. And also, recommendations have been developed for the establishment of endowment funds to finance social expenditures in Uzbekistan. Keywords: social sphere, state trust funds, endowment, endowment funds, health, education, budgeting, financing, taxation, forms of ownership. INTRODUCTION "Establishment of extra-budgetary state trust funds in the social sphere, attraction of foreign grants, use of endowments, technology parks and health insurance in the financing of health and education, as well as the use of" performance-oriented budgeting "in education and health will give good results"1. "Endowment" is a trust fund, which is intended for non-profit use in education, health and culture. Targeted capital fund is a new source of funding for research and innovation programs. Endowment - trust funds are widespread in foreign countries and have been operating for a very long time, the Nobel and Harvard funds are very large funds. When the Nobel Prize Fund was established in 1900, it had 31.0 million Swedish kronor, and in 2017 it increased to 3.1 billion Swedish kronor. According to the data, the target capital of another world-famous Harvard University in 2018 exceeded $ 32.0 billion2. LITERATURE REVIEW M.B. Gerard argues that public-private partnership combines the attraction of private capital and sometimes the attraction of public capital to improve the quality of social services or the management of public assets. According to A. Primer for Endowment Granmakers, published by the Ford Foundation (which is also an endowment fund), potential donors include: national and international government donors; national and international non-governmental (private) donors; national and international corporate donors. In many countries, the development of the endowment system is encouraged by the state through tax measures. For example, in the United States, Canada, and the United Kingdom, income from an organization's investment in an endowment fund is not taxable, and other tax benefits apply. For example, the amount or part of the contribution to the endurance fund is not taxed, thus increasing the interest of donors to the endurance fund. “The electronic encyclopedia (Wikipedia) defines a financial endowment as the transfer of money or any other property to an organization on the condition that the gift is invested and the main (initial) part of the gift is left untouched. This will have a positive effect on the preservation of the donation, rather than its immediate use"3. Concepts such as endowment, financial endowment, endowment fund are used in the same sense in foreign literature. In general, endowment means funds, assets. In other words, an endowment is the income that a fund raises as a resource donated or donated to an organization, group, or individual4. “The concept of‘ endowment ’can also be understood in the sense of setting up a fund at the expense of various property (property rights), including gifts and inheritance. Assets transferred to the trust fund (ownership 1Raxmonov D.A. Theoretical and methodological bases of financing the social sphere in Uzbekistan. www.interfinance.uz. \\ Electronic journal "International Finance and Accounting". -Tashkent. 2017. -№5. October. 2Bokareva E.V. Non-profit organization target capital: global experience of use and normative regulation in modern Russia. // Financial analytics: problems and solutions. 2013. No.15. –P.43-47. 3http:// en. Wikipedia. оrg/ wiki/ Financial endowment. 4http://financial-dictionary.the freedietionary. сom/ endowment. 1679 JOURNAL OF CRITICAL REVIEWS ISSN- 2394-5125 VOL 7, ISSUE 13, 2020 right) are assets. These assets and the proceeds will be used to meet government responsibilities and support budget organizations, mainly to pay for colleges, universities, as well as scholarships”1. RESEARCH METHODOLOGY The methodological basis of the research is the laws and principles of financing the social sphere. It is based on the collection, processing and analysis of data on endowment funds in the financing of social sector expenditures. Methods such as generalization, logical analysis, synthesis, induction and deduction, and systematic approach analysis were used in the research work. ANALYSIS AND RESULTS An established endowment is a trust fund that must include2: long-term - confidence in the sustainability of funding; Target - the fund can not perform any other functions, only to finance research work; strategic - should be focused on supporting the scientific activities of the higher education system, not on the implementation of any unforeseen projects; Simple to use. It should be noted that in the United States, "endowment" means a donation to a college or university. "The main document in the management of endowment funds in the United States is the unified law on institutional funds"3. (The Uniform Management of Institutional Funds (UMIFA) -1972); The new version of 2006 is called The Uniform Prudent Management of Institutional Funds Act (UPMIFA)4. The fund is established by the Institute for the purpose of donation. "According to UPMIFA, an endowment fund is an institutional fund or a certain part of it, and the donation (according to the donation agreement, not all funds are spent on current expenses of the institute")5. “The need for the artisans of the trust fund is a guarantee of transparency in the use of donated funds. In addition, the funds are not used for one year, but for a long time. The donor must be convinced that there is an institutional basis for the lifelong operation of these funds"6. From the above, it can be concluded that endowment, more precisely, endowment fund is an English term that means giving money to an organization, a particular group, an individual to use as a source of income or donating various other property. Proceeds from these will be used for purposes of public importance (to support the operation of hospitals, libraries, universities, colleges). An endowment fund is established on the basis of the received property. Basically, there are two conditions for the establishment of an endowment fund from the donor's funds: first, the gift must remain intact or the principal amount of the gift must not be used permanently or for a specified period of time; second, the funds donated must be invested. Table 1 Procedure for formation and use of endowment funds (target capital) in the USA and the Russian Federation7 Indicators Russian Federation United States Target capital- An endowment is money or property funds that are a part of the property donated to a nonprofit, provided that Endowment funds of a non-profit organization, given to the funds or property are (target capital) definition a non-profit organization for income subsequently invested and the on a trust basis, used to finance a principal amount is retained in its 1http:// columdia.the freedietionary. сom/ endowment. 2Leonov A.V. Endowment as a tool for long-term financing of higher education. // Modern science: actual problems of the theory of practice. 2012. No3. –S.18-20. 3http:// en. Wikipedia. оrg/ wiki/ Financial endowment. 4According to Annex 1 of UPMIFA, the American model of the endowment fund is indicated. 5The Uniform Prudent Management of Institutional Funds Act, july 7-14. 2006. DEFINITIONS- 2. 6 Shekova E.L. Endowment capital as a new source of financing the activities of non-profit organizations. // Management in Russia and abroad. 2012. No4. -FROM. 92-102. 7Leonov A.V. Endowments: a place in the system of financing higher education and application experience in the world and in Russia / A.V. Leonov // Modern studies of social problems (electronic scientific journal), No. 1 (09), 2012. - www.sisp.nkras.ru 1680 JOURNAL OF CRITICAL REVIEWS ISSN- 2394-5125 VOL 7, ISSUE 13, 2020 non-profit organization, as well as in original condition. the form of donations, donations Forms of investment of endowment Cash, securities, real estate and other Cash funds assets Endowment fund 3 mln.rub. $ 25,000 (target capital) minimum amount Endowment fund 10 years Not listed (target capital) minimum service life Endowment fund (target capital) to use their own Not allowed Allowed funds to form 1) endowment funds; 2) trust endowment funds - (funds used in whole or in part of the donation in the event of a certain situation or Endowment funds - (funds received after the expiration of the specified Endowment funds from external donors on the period); types of (target capital) condition that the donated principal 3) quasi-endowments - funds amount can be stored and not used) (university fund, which is not calculated or received from outside donor funds, the university decides to use as permanent capital) Provision of endowment grants to the public sector financed from the Not listed Allowed budget Within 3 years after the Every year after the endowment Deadline for submission of reports establishment of the endowment fund is established fund (then not required) Endowment fund funds may be Sanctions for misuse of funds Liquidation of the target capital fund included in the donor’s tax base 1) evaluation system of the grant Endaument is a condition for recipient organization management; receiving fund funds 2) grant application, with an appendix to the marketing plan Board of Directors, or Investment Endowment fund governing bodies Target Capital Use Council Commission Terms of transfer of target capital to Mandatory Optional, but it can be the case the management company “The need to diversify sources of funding for education and find optimal mechanisms for attracting private funds to reduce public spending is urgent.