Spending Policy

Spending Policy

The Fund Investment Tool offers Spending Policy calculations using Asset or Liability GL accounts from the finance system.

A Spending Policy defines how to distribute money from an endowment fund. The goal of a spending policy is to provide a steady cash disbursement while protecting the endowment fund's principal. A spending policy links a nonprofit's endowment with the mission and long-term plan of the organization and gives donors an assurance that their contribution will have lasting impact.

How to Calculate Spending Policies

1. Go to the Spending Policy Tab

2. Click New Batch

3. Select the spending policy pool from the drop-down, the effective date and post-date, then click Save.

• Effective Date: The date that the spending policy calculations start.
• Post Date: The date that will be used as the post date for the spending policy journal entries which will be sent to the finance system.

4. After clicking save, you will see the new spending policy batch in the list:

5. Click the ellipsis button next to the batch and choose Calculate or choose Open and click Calculate from within the batch:

• The batch status will change from New to Calculated

When clicking calculate, you will see a confirmation message, click Yes to proceed:

You will see this message appear on the bottom right after clicking Yes:

6. Go to the Audit Sheet to see the calculation results:

• The Audit Sheet displays the basis for the fund balance and the appropriate spend amount.
• Average Daily Balance, Ending Balance, or Rolling Balances (month, quarter, year) are supported as a basis.
• Click Excel Download to download the audit sheet.

7. Go to the Journal Entries tab to see the journal entries created from the spending policy calculations:

• Click Excel download to down the journal entries
• Click Send Journal Entries to Finance System to send the journal entries to Financial Edge. When the journal entries are sent to Financial Edge, they will appear in Financial Edge in General Ledger > Journal Entry as a new open batch.
• Click Mark as Posted to mark the entries as posted.