Long-Term Investment Fund - Endowment Fund -

1. Long-Term Investment Fund- Endowment Fund - Budget Analysis & Review Committee’s (BARC) Financial learning Series

2. General Takeaways • There is only one investment account • Minimum to get started - $25,000* • An endowment can be used to or support multiple purposes • Establishment of an endowment should be part of the budget process, unless established from a gift, donation or fundraising campaign. • See General Fact Sheet on Treasurer’s Page http://ala.org/ala/aboutala/governance/financialdata/treasurerspage.cfm *Discussions are currently underway by the Endowment Trustees to raise the minimum to $50,000

3. Concept #1 – Why Start an Endowment? • To Honor Someone Dedicated to the Profession of Librarianship or a Library Activity - Leo Albert - William Morris - Betty Turock - Life Membership - Arthur Curley - FYAN - T. Geisel (ALSC) • To Support an Association, Division, Roundtable Initiative or Special Interest - Spectrum - Boyd Military - Cultural Communities - AASL - ALA General Scholarship - GBLTRT - YALSA Leadership

4. Concept #2 – How Can Proceeds be Used? • Programs - YALSA’s Teen Read Week Project ($14,917) - PLA Leadership Development & Webinars • General Operations - Division Activities (PLA - $26,373) - Division Activities (ALTAFF - $3,631) • Scholarships and Awards - Schneider Family Book Award ($5,000) - Rozkoszka Award ($3,000) - Spectrum Scholarships ($142,5000) • New Initiatives - Membership Campaign - Continuing Education Course Development

5. Concept #3 – How Does the Endowment work? The Generation of Revenues and Expenses • One Investment Account - Merrill Lynch Consults Program (Investment Advisor) - Endowment Trustees -Finance Staff • Investment Performance is Impacted by Numerous Factors - General Economic Conditions i.e. GDP growth, interest rates etc. - Asset Allocation in the Portfolio as Determined by Endowment Trustees - Performance by Portfolio Managers (12) i.e. stock picking • All Income*, Capital Appreciation** and Portfolio Bank Fees are Allocated Proportionately to Your Endowment in the portfolio - There are 72 individual funds within the endowment fund *Interest/Dividends **Realized/Unrealized Gains and Losses

6. Concept #4 – What Does it Take to Start an endowment? • Minimum to Start an Endowment - $25,000* - This amount will generate a modest amount of income and barely cover bank fees. -The higher the corpus i.e. principal the greater the income • Need a Defined Purpose for the Endowment - Why is the endowment being established? • How Will the Funds Will be Used? • Are Earnings Enough to Meet spending Needs Without Invading Principal? -See ALA Spending Policy 8.5.1 *Currently under discussion by the Endowment Trustees to be raised to $50,000

7. Concept #5 – Principal Needed for a Scholarship or Award *Spending rate determined annually by Endowment Trustees ranging from 3% - 5%. **Approximately

8. Concept #6 – Endowment ClassificationASC* 958 Reporting Requirements • Unrestricted Assets - No limitation on the use of funds • Temporarily Restricted Assets - The use of funds are limited until certain conditions/restrictions are met. • Permanently Restricted Assets - Use of funds are restricted by explicit donor imposed requirements *Accounting Standards Codification

9. Questions can be submitted on ALA Connect. To find additional information on this webinar and any other financial related information, please go to the Treasurer’s web page look under the heading of “Financial learning.” Other topics include: Budget Cycle & Process Operating Agreement Organizational Structure – Roles & Responsibilities Additional Financial References