How are the endowment funds accounted for?
Although donors may have established endowment funds for a particular purpose, essentially all funds are commingled for investment management purposes, using a market-value unit system similar to that of a mutual fund. The unit system is a way of assigning a value to each recipient’s participation in a commingled long-term investment pool. New gifts are used to “purchase” additional units, or shares, in the investment pool. To determine unit value, we calculate the value of the investment pool and divide it by the number of units outstanding at any given time. The value of each unit is driven by the investment performance of the portfolio’s underlying assets.
