Fundriver has an option we call Spending Bucket Function which treats the available spending balances like a budget. 

 When you “Create Distributions” within Fundriver, this produces the Spending Bucket (budget) transfer amount based on the spending rule parameters.  The Spending Bucket does not receive separate investment income or earnings. The amount allocated to the Spending Bucket is still part of the Market Value of the original parent fund. This fund will continue to receive earnings. Only when actual distributions are posted does the fund’s market value decrease. When posting a Spending Bucket transfer, cash flow is not impacted because the monies are moving from the Endowed Fund to the Spending Bucket within Fundriver. Cash is not physically getting pulled out of the endowment pool at this point in time.

When you are ready to spend, distributions are posted as the expense occurs. This reduces the cash in the pool and reduces the Spending Bucket (budget) amount available.

Below is an example Spending Bucket Rollforward report out of Fundriver. Beginning Balance is the Fund's total available budgeted spending. Spending Bucket Transfers is the amount of the Spending Policy calculation that is available to spend for the reporting period.  The Distributions are the amount actually spent during the reporting period. Ending Balance is what is remaining that can be spent.  Any unused balance becomes the beginning balance for the next period.

 

 There are three methods that can be used to set up the Spending Bucket Balances in Fundriver:

 1.  Manual Method - User will post their calculated budget amounts using the transaction type ‘Spending Bucket Transaction’ via ACTIVITY > TRANSACTION ENTRY. Entries can be posted one at a time on the Transaction Entry tab or in bulk on the Copy From Excel or GL Import tab. For instructions on how to post transaction see THIS article. 


2. Automated Method- User will set up a new spending rule to calculate the available spending bucket amounts. A transaction type of ‘Spending Bucket Trans’ will be used in setup as opposed to ‘Distribution.’ Next, distributions will be posted in Fundriver by going to ACTIVITY  > DISTRIBUTE (this will take what is populated on Estimated Spending report and automatically post as a Spending Bucket Transfer). To do this, the user will:

 

  • Set up a new spending rule: To create a new spending bucket balance, you will need to set up a new spending rule by going to ORGANIZE > SPENDING RULES. The calculated available spending bucket amount for each fund will be based on the spending rule parameters:


 

  •  The Transaction Type needs to be ‘Spending Bucket Trans’ (if you do not see this option, please reach out to Fundriver Support).  
  • The ‘Auto Reinvestment for Spending Thresholds not met’ box needs to be UNCHECKED. By having this box unchecked, Fundriver will not generate an available spending bucket amount for any fund that has either a reinvestment threshold amount or reinvestment date that has not been reached.

  

  • Assign the funds as a spending rule: Once the spending rule is created, the funds can be added to the spending rule. Users that have all funds using spending buckets, can setup the spending bucket rule as a primary rule: ORGANIZE > SPENDING RULES > ASSIGN PRIMARY RULES (tab). 

 

  • If your organization has a mixture of funds that use spending buckets and funds that do not use spending buckets, the rule can be added as a secondary rule: ORGANIZE > SPENDING RULES > ASSIGN SECONDARY RULES: 

 


 

  • Create the spending bucket balances: Use the DISTRIBUTE function to enter the new fiscal year spending bucket balances. Go to ACTIVITY > DISTRIBUTE, select your spending rule from the drop-down list, select your fund values as of date and select ‘CREATE DISTRIBUTIONS’ button. 


       

3. Data Load Template Method – For users that want to load their beginning balances as of their load date (during implementation) they can do so via the ‘Transaction History’ tab on the Data load template. 

 


Reviewing the Transactions 

You can view the spending bucket transactions, for any of the above methods, by going to ACTIVITY > VIEW/EDIT TRANSACTIONS: 



Once the spending bucket balances have been established, the user will load actual ‘Distribution’ transactions within each period for each fund.  These ‘Distribution’ transactions will reduce the available spending bucket balance.  ‘Distribution’ transactions will reduce the actual Market Value of each fund as well.

 

Reports

As part of the set-up for Spending Buckets, Fundriver Support will add an additional report to your database.  Existing Spending Bucket clients can reach out to support to have the new report added to your database.  Users can run the Spending Bucket Report to confirm the beginning spending bucket balances.  The report can show transactions netted together, or break out the spending bucket and distributions transactions.   The period in which you posted/processed your spending bucket transactions needs to be closed prior to running this report.

 


 


End of the Year

If you do not want your remaining spending bucket balances to roll over into the next fiscal year, you can clear out the balances in the last period of your fiscal year.  

 

  • Run your ‘Spending Bucket Report’ for the last month of the fiscal year to view the ending spending bucket balance for each fund.  We recommend downloading this report to excel.

  

  • Using the ending balances from the report, post/upload negative ‘Spending Bucket Trans’ transactions to each fund in order to zero out the balances. To enter the transactions, go to ACTIVITY > TRANSACTION ENTRY.  The transactions can be entered individually, or in bulk by using the Copy from Excel function or the GL Import option.

 

   

 

Once those transactions are entered and the period closed, user is ready to enter the new spending bucket balances for the new fiscal year.