Fundriver Balance Knowledge Base

There are a couple options for handling an endowment fund that should not receive an allocation of investment earnings.  

1. Funds can be configured in Balance so they do not receive an allocation of investment earnings. There is a net asset classification that the Balance support team can set up in your database. The fund would be assigned to this net asset classification, and it would prevent the fund from receiving an allocation. 

2. A 2nd option would involve setting up the fund in a separate investment pool in your database. Investment activity would not be recorded in this investment pool.  So, any funds assigned to the pool would not receive an allocation of investments earnings.  

To help choose the correct solution, ask yourselves this question- Will the fund eventually receive an allocation of investment earnings?

If the fund will eventually receive an allocation, the above options both come with complications.  

In the first option above, funds assigned to a special net asset classification will not receive an allocation. But these funds will not have any units. In Balance, units and unit share in the pool are the basis for calculating the allocation of investment earnings. For the fund to receive an allocation, you will need to close the existing fund. Then, you would add a new instance of the fund to Balance with a different net asset classification. Once the new fund is added to your database, you would transfer the current balance to this fund. The balance transfer would establish units and allow the new fund to begin receiving an allocation of earnings. However, historical values for the fund would remain associated with the closed fund and cannot be transferred over to the new fund. This could be problematic for the fund’s spending calculation. Also, it could be an issue with reporting as fund historical values would be broken up between two different funds in Balance. 

The second option would not have an issue related to units. However, the fund may need to be moved into your main endowment pool to participate in the investment earnings allocation process. This would require closing the fund in its current pool and moving the fund balance over to a new instance of the fund in your main endowment pool. The complications noted above for option one would also apply in this case for the spending calculation and reporting as fund history cannot be moved from the current pool to the main endowment pool.   

The best option to select will depend upon the circumstances related to the fund and your endowment pool. Please reach out to the Balance support team and we will help you determine the option that will work best for the endowment fund.