Based on University of Minnesota Foundation's Finance Committee review and in consideration of declining interest rates, the guaranteed annual interest rate for demand funds (crediting rate) has been changed to .1% effective February 1, 2009. If you have questions, please call Gracie Davenport at 612-624-0346.
Note that the crediting rate changed to .5% (from 2%) effective February 1, 2008. The crediting rate is applied to demand funds and also to available balances for endowments and quasi-endowments at the UM Foundation. This does not apply to University (formerly Asset Management) endowments.
What does this mean for UM Foundation funds in your unit? For demand funds, you will see little investment return, similar to what has occurred during the past year. In addition, the cash balance is not at risk due to negative fluctuations in the market. For endowments and quasi-endowments, the "available balance" is not at risk due to negative fluctuations, however the principal remains at risk when investment return is less than the 4.5% payout. When projecting FY10 payouts on endowments and quasi-endowments, you can expect about the same amount of spendable income as received in FY08 and FY09. (Exceptions would be for endowments created during the past two years. Those need to be reviewed on an individual basis by reviewing the monthly spendable transfers found in the fund statement.) If you have questions about how particular funds may be impacted, contact Rose Pederson, 6-7611, email@example.com.