Endowment Fund

We are just converting to fund accounting and is in the process of determining the starting fund balances for 2010.


1. Is it correct to use the 2010 budget amount plus any carryover from 2009 as the starting fund balance for 2010?

2.What do we use for Endowment Fund balance? Do we use the original amount or the current market value? Or do we use both plus the earned dividend?

Thanks for your help.


Vickey's Reply

I use what is actually in each fund at the beginning of the year.

As far as the endowment fund balance question, here is the reply from a CPA...


I would book the Endowment Fund at the "original amount" - i.e. you need to track the corpus at all times. Usually there are restrictions on spending from the corpus, which is why I want that amount identified.

Then, I would have the earnings (whether thru Dividends, Interest, etc. or from increases in market value of the investments) as an unrestricted balance that could be spent.

I think the entries might look like this:

To establish on the books:

Dr Cash/Inv acct (for the full bal in the acct) $22,450.00

Cr Endowment (restricted fund bal) (for the original contribution or designated amt) $20,000.00

Cr Endowment (unrestricted fund bal) (for earnings, etc not yet spent) 2,450.00

Current year's activity:

Dr Cash/Inv acct (for dividend income) 1,200.00
Cr Dividend income 1,200.00

To adjust the balance to the year-end fmv: (assume fmv is only 20,450.00)
Dr Unrealized loss on investments - Endow Fund 3,200.00
Cr Cash/Inv acct 3,200.00

This isn't something that I deal with, but this seems to me to be one way to handle an Endowment acct.

You might just "Memo" the account's fmv, and carry the balance based on actual amounts deposited or withdrawn.







Comments for Endowment Fund

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Nov 10, 2011
question for you
by: Anonymous

simple answer please. I receive restricted endowment money.
My entry I believe is debit cash-restricted funds and credit a defered revenue or liability account. Can you please confirm there is no credit to any income or expense account upon receipt. thank you

Jul 11, 2012
Endowment Fund
by: Anonymous

Depending on how your books are set up, your credit entry would be to a libility (restricted funds) or (my preference) to a Net Asset account (which would be the equity section in a for-profit entity). The new FASB codification now specifies three Net Asset Accounts to be used in the Statement of Financial Position instead of Funds. They are "Net Assets Unrestricted", Net Assets Temporarily Restricted", and "Net Assets Permanently Restricted". This is found in ASC 958.

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