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College of Liberal Arts E-News: Biweekly news from the College of Liberal Arts

May 2013 Archives

CLA Budget 1001--Part 8: Donated Funds

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By Brent Gustafson, finance director

As we've noted a number of times in previous columns, most of the budget for the College of Liberal Arts comes from tuition and state appropriations. This column will focus on an important and more restricted source of money--donated funds. For CLA, like many higher education and non-profit organizations, donated money from fundraising is an important source of money to meet key priorities and can supplement and enhance the activities from larger sources of funding. In FY 2013, CLA has budgeted $9.3 million of spending from gifts and endowment earnings. At the close of the 2012 fiscal year, the total value of CLA donated funds was $215.9 million. The amount of spending from donated funds is small compared to the total amount of money that has been donated, and the reasons for this are explained below.

Donors and Donations
As the name implies, donated funds are resources that result from the philanthropic gifts of varying sizes from all types of donors (individuals, foundations, etc.). Some donors give sizable sums to CLA and other donors give smaller amounts. The manner in which they give can also vary--some gifts are unrestricted (or discretionary) as to their use, while other gifts have very specific criteria for how the money can be spent by the college.

Types of Donated Funds
Within the University's structure for donated funds, most of the money is held and managed by the University of Minnesota Foundation (UMF). Donated money that came to the University prior to establishment of the Foundation is held by the Treasury Accounting Department, a support unit within the Controller's Office.

Many organizations that raise private money have endowments. These endowments typically have constraints both in terms of what the money can be spent on as well as how much can be spent. The endowment funds within the college or within the University should not be thought of as one large balance, but rather they are a collection of many smaller endowment funds, each with its own intended purpose, as articulated by the donor. The types of funds can also differ:

"Permanent Endowments" are those funds for which the principal balance cannot be spent, but the spendable payout (4.5% of endowment balance, averaged over the prior 20 quarters) on that endowment creates a revenue stream that can be spent on the fund's intended purpose. At the University of Minnesota Foundation, a gift needs to be at least $25,000 to establish an endowment.

"Quasi Endowments" are quite similar to permanent endowments, but for these funds, a portion of the principal balance can be spent, in addition to the investment earnings.

Both permanent endowments and quasi endowments are held in longer-term investments and therefore subject to greater market risk. This can significantly affect the earnings and valuation of these funds over time.

"Demand Funds" are essentially cash accounts that can be drawn upon in full to meet the intended use and do not have provisions to limit the spending. Demand funds are held in short-term instruments with virtually no market risk.

The following table indicates CLA's donated fund balances at the close of FY 2012 by type of fund (click chart to see larger):

DonatedFunds1.png
Designated Purpose
The designated purpose of a CLA donated fund is recorded in a Memorandum of Agreement (MOA), which guides how funds are to be spent. These documents blend individual donor preferences with institutional goals and guidelines, and they must be adhered to when funds are allocated. Often, MOAs reflect the college's fundraising priorities. For example, in recent years, CLA has prioritized fund raising activities around undergraduate scholarships and graduate fellowships, and many of our MOAs restrict the use of donated funds to these purposes.

Below is a table indicating the breakdown of CLA's donated funds by types of activities the money supports:

DonatedFunds2.png
Stewardship
After funds are raised, the college has an important role in ensuring that donors' intentions are met through effective use of these funds. This stewardship function helps keep donors aware of activities associated with their gifts and can also help the college in its efforts to obtain future donations.

Earl Lewis's Speech at the 2013 ASE Commencement

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"Getting It Wrong"
University of Minnesota 2013 Graduate School Commencement Address

Good afternoon. Regents, deans, faculty, staff, alumni, family members and friends of the graduates, and graduates, it is a pleasure to be standing before you as this year's commencement speaker. Nearly thirty years ago I finished my dissertation at the University of Minnesota; it was December 1984 and I had a job and a new wife and it was winter, so I didn't stick around for the ceremony. I was determined to get to California and Berkeley as fast as possible. At that time I had no way of knowing the twists and turns ahead; nor did I know what I was missing by forgoing this ceremony. Few of my peers participated, no one in my immediate family had earned more than a bachelors degree, and my mentors gave me much sage advice but not about graduation. They, like me, delighted in the fact I had a job. So instead of marching, I and Jayne London, my wife at the time, loaded up our recently purchased Honda Accord, picked up our friend John Campbell, whom we were transporting to his family home in Ames, and commenced a multiday travel course west. A van had picked up our meager household possessions and we had a date to rendezvous in Emeryville.

Accolades May 9, 2013

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Professor Thomas Rose (art) has had his recent book projects Secrets, the collaboration with Chinese artist Lo Ching, and Time Frames acquired by the Whitney Museum of American Art. Time Frames has also been acquired by the Library of Congress and the Yale University's arts library special collections.

Professor John Freeman (political science) has received the Wallerstein Award from the American Political Science Association's Political Economy Section. The Wallerstein Award is for the best article in political economy published the previous calendar year. John and his coauthor, Dennis Quinn (Georgetown University), won the award for their article, "The Economic Origins of Democracy Reconsidered," which was published in the American Political Science Review, February 2012.

Associate Professor Carl Flink and Professor Ananya Chatterjea (both theatre arts and dance) are both recipients of 2012 McKnight Artist Fellowships for Choreographers. Now, in addition to that award, they have both received residencies for the 2013-14 season. Carl will spend six and a half weeks in residence at the American Dance Festival (ADF) in Durham, N.C. in June-July 2014. He will create a new work using dancers from the prestigious ADF Six Week School. His new work will premiere at the festival on a shared evening. Ananya will spend one week in residence with her company, Ananya Dance Theatre, at the Tofte Lake Center near Ely, Minnesota, in July 2014.