For clients that begin using Fundriver with a loan against their endowment already in place, case by case decisions will need to be made regarding how to handle the loan in the Fundriver system. For clients that are just taking out a loan (after using Fundriver for a while or during the process of implementing Fundriver), there are some best practices to consider (below).

We recommend that loans are treated the same way as any other endowment investment, and handled accordingly. Whether or not an organization uses the Investment Portfolio Module determines how the loan is accounted for in Fundriver. Please see below for both methods.

More information on handling loans as investments can be found at the this link. 

Investment Portfolio Module Set Up Overview:The loan is set up as its own manager account in Fundriver.  As interest payments and loan payments are received, the manager is adjusted. Every fund in the pool is impacted by the activity (interest/dividends) when it is allocated. The total endowment value should include the loan value. The loan is tracked and processed the same way as every other investment.

Go to ORGANIZE > INVESTMENT PORTFOLIO.  Click the green ADD button and add the loan as if it were a new manager.  Enter NAME, choose a GLID, and choose an INVESTMENT TYPE of INTERNAL.  Click SAVE.

In this example, we chose to name the manager LOAN AGAINST ENDOWMENT to avoid confusion as to the manager's purpose.  The manager can be named anything the client chooses, however, we recommend something straightforward that reflects the purpose of the manager.

Go to ACTIVITY > INVESTMENT ACTIVITY. To establish the loan originally, choose the INVESTMENT POOL and the new INVESTMENT MANAGER name. In both the ENDING MARKET VALUE and NET CASH FLOW fields, enter the full amount of the loan. Save values.

Next, go to the record of the manager from where the loan will be originating. Enter the loan amount as a negative number in the NET CASH FLOW field. This is the cash flow out of the manager to establish the loan. Save values.

When interest and/or principal payments are received, go back into your LOAN AGAINST ENDOWMENT manager and enter those amounts. Interest is entered in the INTEREST/DIVIDENDS field and the full payment amount (including interest) is entered as negative NET CASH FLOW. The loan outstanding is reduced by the payment.

Click SAVE VALUES. The DIFFERENCE shown should be the new ENDING MARKET VALUE (or Outstanding Loan Against Endowment). Enter it in that field. SAVE VALUES.

The DIFFERENCE should now be zero.

Next, the manager that receives the principal and interest payment from the loan will need to record NET CASH FLOW. Navigate to that manager. This payment should be shown as a cash flow within the manager statement. Enter the payment as a positive NET CASH FLOW. Note: This is an illustration for this loan payment's cash impact. SAVE VALUES. The loan payment and interest have been successfully recorded in Fundriver.