Current Spending and Payout Rates
The Ball State University Foundation Board of Directors annually reviews the spending, payout, and fee policies to maintain balanced investment and spending strategies that provide steady, continuous income while allowing for inflation and market conditions over time.
The board has approved a 4.5 percent Legacy Fund spending rate. The Foundation is no longer offering new Stable Value funds. The board has approved an annual payout rate of 2 percent for existing Stable Value funds. We will continue to closely monitor the economic environment and will be prepared to make adjustments as necessary.
Annually, the Foundation board authorizes the assessment of minimal fees to address the costs associated with raising funds, managing investments, and other administrative functions. Below is a description of the various fees.
Expendable contributions are assessed as a one-time tiered administrative fee at the time of the contribution or deposit based on the gift amount: 7 percent – Less than $100,000; 5 percent – $100,000 to less than $1 million; 3 percent - $1 million and above. Legacy Funds are charged an annual administrative fee of 2 percent; one-fourth of the annual fee is calculated quarterly based on the average quarterly balance prior to the rate of return calculation. Endowed contributions or deposits are assessed a one-time 2 percent administrative fee regardless of gift size.
Endowed and expendable matured planned gifts are assessed with an 8 percent fee.
Definition of Terms
Change in Market Value
Gains and/or losses from the Foundation’s investment portfolio, net of investment fees, attributed to Legacy Funds.
Monies encumbered for a specific expense but not yet dispersed.
Gifts by donors to a fund or endowment.
Monies added to a fund other than contributions (e.g. event fees).
Monies paid from the spendable amount for the purposes designated in the agreement.
Legacy Fund Balance
The fund balance includes the endowed amount, the available spendable amount, and the committed amount. The fund balance does participate in investment gains and losses.
Legacy Fund Endowments
The current market value of all endowed contributions (increased or decreased by investment returns), less fees, represents the endowed amount. The endowed amount, the available spendable amount, and the committed amount form a fund balance that participates in the earnings, gains, and losses of the Foundation’s investment portfolio on a total return basis. A percentage, as determined by the Foundation board, of the fund balance is available as a spendable amount for the purposes designated in the agreement. If investment earnings are insufficient during a period of time to provide for the annual expenditures, the Legacy Fund balance may decline below the total of cumulative endowed contributions. This decline will also result in a reduction of the amount available for support of the purposes designated in the agreement, but since there is no guaranteed minimum fund balance, support for these designated purposes will continue. Administrative fees are assessed as determined annually by the Foundation board. A fundraising fee determined by the Foundation board may be assessed to contributions. Currently, endowed contributions totaling $25,000 are required to establish a Legacy Fund.
Legacy Fund Endowment Spending Rate
A fund is eligible for the spending rate if the endowed contribution minimum has been met by the first day of the current quarter. The amount is calculated semiannually by multiplying the semiannual fund balance by one-half the current spending rate as determined by the Foundation board.
The amount available for purposes designated in the fund agreement.