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You might just "Memo" the account's fmv, and carry the balance based on actual amounts deposited or withdrawn.