Beginning of the Month 2 (BOM2): First, fund level activity (i.e., gifts, transfers, distributions) buy or sell units based upon the prior period ending unit value. Second, investment earnings are allocated across the endowment funds in the pool. The adjusted units (after current period activity) are used to determine the share percentage used for the earnings allocation. New gifts will receive an earings allocation in the same period they are added to the pool.
When changing posting frequency you will want to consider how frequently your organization transfers cash from endowment activity to and from your investment portfolio. Under a quarterly posting process, the End of Month model would result in a significant lag between a new gift being recorded and the receipt of an investment earnings allocation. (Example: New gift comes in August, would not receive earnings allocation until next quarter-end of December).
Is your organization using a Percent Average spending rule? If you are using a monthly average to calculate and switch to posting quarterly, your average spending rule will no longer calculate monthly.
Will changing posting frequency work with your reporting needs? When are you running reports? What time periods do you typically produce reports for? All items to consider before switching posting frequency.
Multiple Investment Pools:
All pools need to have the same posting frequency if they are in the same database.
Locked Periods: all prior periods will be locked down for editing once the posting frequency change is made. Therefore you will be unable to reopen prior periods from the lock date. Ideally, we recommend clients change posting frequency at year-end and after your audit concludes.
If your organization has any custom posting processes or custom reports, these may be impacted with switching posting frequency. Fundriver will need to complete an internal review of your database prior to switching posting frequency.
You may be asked to delete transactions posted in your current open period and repost after posting frequency has been changed.