Annual Report 2010/11

Notes to the Consolidated Financial StatementsFor the Year Ended June 30, 2011 (thousands of dollars)Note 11EndowmentsEndowments consist of externally restricted donations received by the University and internalallocations by the University and the endowments are to be held for a period of not less than 10years.Investment income earned on endowments must be used in accordance with the variouspurposes established by the donors or the Board of Governors. Benefactors as well as Universitypractice stipulate that the economic value of the endowments must be protected by limiting theamount of income that may be expended and reinvesting unexpended income.Under the Post-secondary Learning Act, the University has the authority to alter the terms andconditions of endowments to enable:• income earned by the endowment to be withheld from distribution to avoid fluctuations inthe amounts distributed and generally to regulate the distribution of income earned by theendowment.• encroachment on the capital of the endowment to avoid fluctuations in the amountsdistributed and generally to regulate the distribution of income earned by the endowment if,in the opinion of the Board of Governors , the encroachment benefits the University and doesnot impair the long-term value of the fund.In any year, if the investment income earned on endowments is insufficient to fund the spendingallocation then the University has the option to defer the spending allocation, fund the spendingallocation from the University’s operating funds or fund the spending allocation throughencroachment of endowment capital.2011 2010Balance beginning of year $ 30,791 $ 25,446Endowment contribution 8,693 4,132Internal transfer and University support 11 100Investment gain / (loss) 392 1,113$ 39,887 $ 30,791Cumulative contributions $ 40,243 $ 31,491Cumulative encroachment (356) (700)$ 39,887 $ 30,791During the 2011 year, endowment investment income of $3,886 net of fees of $96 (2010 – income$1,104) was used to bring the beginning balance of encroachment $700 (2010 - $1,805) downto $356 and the remaining portion of the investment earnings are deferred and reinvested. Theinterest earned on Access to the Future Fund contributions of $27 was transferred to endowments.At June 30, 2011, $356 was cumulatively encroached upon the principal value of someendowments. To preserve the principal value of the encroached endowments, the Universitydecided not to disburse any expenses on these endowments in 2011/2012.The total endowments market value is $43,428 as of June 30, 2011. Accumulated contributionsand encroachments in the amount of $39,887 are presented in the Endowments and $3,541unused earnings is included in Deferred Contributions. Endowment bank holds $1,800,investments holds $39,000 in long term portfolio and $2,129 in cash, the balance of endowments$499 is held in University’s operating bank.52 grant Macewan university