Calculation Source: FACTS

The FACTS calculation technique addresses certain inconsistencies present in the G/L method. For example, The G/L method is based on General Ledger balances (usually averaged over time). This trailing quarter average balance basis is meant to minimize the impact of transient changes in Fund balances due to market fluctuations. For established endowments that have not received substantial recent contributions, it is effective. But a Fund which maintains a low balance over a number of quarters, then receives a large contribution in a recent quarter, will receive a relatively low Cash Requirement amount for Grant making, compared to a Fund of equal balance that was established during that same quarter.

The FACTS method addresses this issue by calculating the average dollar value per unit of an investment Pool over time, and multiplying it by the Spending Rate to arrive at a spending amount per unit. This per-unit amount is multiplied by the units currently held by a Fund in the Pool to get the Cash Requirement value for the Fund. In this way historical market fluctuations are averaged out, but Funds of equal value will be given an equal available-to-spend amount. Contribution timing does not affect the calculation.

The system will automatically total values if the Fund participates in multiple Pools. It will not reflect non-pooled assets, but you can set up non-pooled asset accounts as single-fund pools. Since invested assets are the basis, you can eliminate available assets only if they are kept in a non-pooled asset account.

Note: You do not need to take any special action to exclude Pledged assets, which are always non-pooled.

Note: The following procedure shows the fields for calculating using the Standard method. If you choose to Compare Spending Policy methods, there will be an additional Evaluation Method field and two Spending Policy fields that open next to the Fund fields. You can choose the policies that you want to compare and then choose either Min or Max to determine whether to apply the minimum or the maximum of the two values.

To calculate a spending policy based on FACTS:

1. From anywhere in FIMS, select View > Spending Policy > Spending Policy Calculations.

2. In the Calculation Source section, select FACTS.

Tip: The fields that display change when you switch to FACTS.

3. Enter the Year to Apply Spending Policy to determine which year’s Fund summary history records will hold the calculated Cash Requirement values.

Note: Unlike the G/L method, you are not required to enter the G/L Year Calculation is Based, nor Spending Policy code’s Beginning Month field. The range of FACTS cycles from which pool ending unit values will be averaged is determined by the # of Quarters to Avg, going back from the last reconciled cycle. For example, if you want to average twelve monthly cycles ending in October, you would need to run the calculation before the November FACTS reconciliation, with # of Quarters to Avg set to 4.

4. Select the Rounding method you want to use: Dollar, Penny, Ten Dollars, or One Hundred Dollars.

5. (Optional) In the Funds From / Through fields, enter the desired range of Fund ID codes.

6. In the Spending Policy From / Through fields, enter the code or range of codes associated with the desired Funds.

7. Click OK to open the Spending Policy Calculation report in the FIMS Viewer.

8. Review the report to make sure it is correct, and then click Create Spending Policy on the FIMS Viewer toolbar.