Inside Iowa State: Iowa State University

INSIDE IOWA STATE
May 3, 2002

Endowed funds use is appropriate

by Steve Sullivan
University endowment funds are being used appropriately and with the intent to comply with donor wishes, according to a committee reviewing how such funds are spent.

In a report to President Gregory Geoffroy, the Committee to Review Endowment Expenditures also made several recommendations to improve the use of endowment funds and compliance with memoranda of agreement.

Geoffroy created the committee last fall to review how endowment funds from the ISU Foundation are spent once they've been transferred from the foundation to the university and to ensure that donors' requests are followed.

"Based on our interviews and account testing, we conclude university account administrators are using expendable endowment funds for valid purposes and with the intent to comply with terms of the memoranda of agreement," the committee's report states.

The committee reviewed 66 endowment accounts that were selected from 1,007 active accounts created prior to June 30, 2000. Specifically, the committee selected accounts with little or no spending activity and relatively large unspent balances, negative balances or significant amounts of expenditure. The accounts were in the Office of Student Financial Aid, Office of Admissions, College of Agriculture, Parks Library, Office of the Vice Provost for Research and the ISU Foundation.

"I applaud this committee's work. They took this task very seriously and spent many hours reviewing accounts and policies," Geoffroy said. "The committee's recommendations will help improve our management of university endowments. At the same time, this report should reassure our donors that their wishes are being honored by the university."

The committee made 14 recommendations for improvement, including better training of account administrators to ensure they understand memoranda of agreement and the use of specific funds, and creation of a "red flag" system to alert the university to unusual account activity. Geoffroy has accepted and will implement the recommendations.

"We took an extensive look at these endowment accounts and feel confident that their overall management is sound," said committee chair David Hopper. "But there is room for improvement, and we hope our recommendations will be helpful to university staff who are responsible for administering endowments."

Hopper is a professor of veterinary diagnostic and production animal medicine, and past president of the Faculty Senate. Joining him on the committee were Jill Bystydzienski, women's studies; James Espenson, chemistry; Johnny Pickett, controller; and Sherryl Rippke, internal audit.