Question

List 6 kinds of contraints(equation) when making endowment fund and write a brief explanation.

Answer 1

Ans.

An endowment fund is a financial asset, typically held by a non-profit organization, which contains the capital investments and related earnings leveraged by the non-profit organization to fund the overall mission.like notably associated with organizations such as hospitals, universities, churches, and scholarship funds. While specific rules and obligations apply, the most common trait of a fund is the organizations inability to leverage the principal balance for operations, rather, only income generated by the capital investments is available to the organization for use in operations.

The investment decisions of the typical endowment or foundation fund revolve almost exclusively around building its asset base and maintaining “intergenerational equity” (perpetual purchasing power). This is necessary to maximize future distributions from For educational institutions, endowments are important for a number of reasons.

First and foremost, a large endowment typically provides the margin of excellence that both private and public educational institutions aspire to achieve. In addition that an endowment provides educational institutions with a certain level of independence. Endowments provide operating funds for student welfare of these funds are used

A booming industry has sprung up around the management of endowment and foundation investments. Most endowments and foundations do not manage money in house, but they use outside managers that focus on individual market segments such as U.S. large-cap growth stocks, small-cap stocks, hedge funds or private equity. Consulting firms such as the Common Fund provide asset allocation advice and assist in evaluating, retaining, and replacing portfolio managers. For the purpose of selecting the best portfolio managers .the major constraints are

The making endowment fund consist of six administrative units :-

1)In charge of contacting individuals and charitable organizations fund the propagate to organizations charitable and reinforces also It. support partial or full for projects present and kingdom the in universities at funds other with cooperation charitable relevant international and, regional, local with and charitable organizations.

2)To purchase, acquire, alter, improve, charge, protect, renew, take on lease, exchange, use, hire, sell, let or otherwise dispose of lands, buildings, constructions, any other movable or immoveable assets and any rights and privileges whatsoever necessary for the use and objectives of the Fund;The capital of the Fund shall be invested in term deposits and/or Government approved investment schemes giving due consideration to risk coverage/risk diversification in the light of investment policy approved by the Governing Body.

3) To co-operate with other charitable trusts, societies, associations, institutions and charitable organizations formed for any or all of these objectives and statutory authorities operating for similar purposes and to consider exchanging information and advice with them.

4)To take such steps by personal or written appeals or otherwise as may from time to time be deemed expedient and permitted under the law for the purpose of procuring contributions to the Fund in shape of donations, annual subscriptions or otherwise and to promote, assist in the promotion of the objectives of the Fund.

5)Establish and, when deemed necessary, recommend modifications to the Endowment Investment, Spending & Usage Policy to the Governing Body for approval; Select specific investments, professional investment managers, brokers, and administrators, and negotiate and monitor terms and conditions of their services; To nominate persons to represent the Fund at conferences, government bodies and other gatherings of relevance;

6)To obtain any Federal or Provincial Rule, Order, Statute, or other legislative provision or enactment for enabling the Fund to carry out its objectives into effect, or for any other purposes which may seem expedient and to oppose any proceedings or applications which may seem calculated directly or indirectly to prejudice the interest of the Fund. Conduct meetings regularly.The incomes of the Fund shall be utilized for the promotion of its aims and objectives in the light of Spending & Usage Policy approved by the Governing Body. Normally, twenty-five per cent of the total income of the year will be reinvested to keep the principal safe from inflationary loss and secure its purchasing power.