Monies received by the USM Foundation and held on behalf of the institutions are invested in either the Operating Pool or Endowment Pool depending on the type of account to which the funds are credited. Monies stay invested in the pools until an actual disbursement from the account occurs.
Endowment Accounts:
All income (interest, dividends), realized and unrealized gains and losses and expenses (USM Foundation management fee, external investment manager and investment consultant fees, custodian fees, other third-party service provider fees) allocated to endowment accounts on a monthly basis based on a unitization allocation methodology.
Operating Accounts:
Realized Income, net of fees, on Operating funds is allocated to USMF on a monthly basis
based on each institution’s total portion of the USMF Operating pool balance for that month-end. Earnings on these accounts are used to fund USMF’s operating budget in lieu or charging a fee for the administration of these accounts.
A unitized endowment pool has mechanics similar to that of a mutual fund. Each endowment owns individual units in the pool and the units are valued monthly based on the total market value of the pool divided by the total number of units in the pool. New monies coming into an endowment account purchase units in the pool based on the current month-end unit value. Monies disbursed from the pool sell units based on the prior month-end unit value. Earned Income (interest and dividends) and fees buy or sell units in the pool based on the current month-end unit value. Realized and Unrealized gains and losses do not impact the number of units but adjust the value of the units each month and establish the new per unit value for the next month.
On an annual basis (typically in September/October) the USM Foundation charges each endowment account with two assessments. These assessments are: 1) an Endowment assessment, which is the USM Foundation's fee for asset management and administration services; and 2) an Institutional assessment, which is used to support the fundraising efforts of each campus, and which is charged at the direction of a campus. These fees are treated as disbursements for endowment accounting and performance purposes.