Endowment and Memorial Fund Policies
The purpose of this section is to provide a clear explanation of the accounting and distribution policies related to the Cathedral’s Memorial and Endowment Funds (“Restricted Funds”). These policies are consistent with guidelines followed by most colleges, universities, and nonprofit organizations that manage endowment funds.
A) Endowment Fund
An endowment is a donation to Holy Resurrection Serbian Orthodox Cathedral in which the donor has directed that the income generated from the invested principal be used in accordance with the donor’s wishes. The level of restriction may vary—from unrestricted uses, to specific designations such as the Needy Fund or capital improvement projects.
All endowments are established with the understanding that the principal (the corpus) may not be spent. This ensures the preservation of the donor’s legacy.
B) Frozen Corpus
The Cathedral follows a policy of annually increasing the corpus of each endowment by the percentage change in the Consumer Price Index (CPI) as of November 30th, reflecting the preceding 12 months. This adjusted balance then becomes the new “frozen corpus.”
Any new donations to establish an endowment—or additions to existing endowments—received on or after January 1 of the subsequent year will be designated as part of the frozen corpus (or additional frozen corpus for existing funds).
C) Investment Income Accounting
Investment income consists of earnings generated by endowment assets. This income, accumulated annually, is available for distribution according to the donor’s instructions, provided that no less than 5% of income (net of the CPI adjustment) is distributed each year.
Income includes:
- Interest income
- Dividend income
- Realized gains from securities sales or redemptions
- Increase in fair market value (FMV) from December 31 of the prior year to December 31 of the current year
Income is reduced by:
- Realized losses from securities sales
- Decrease in FMV from the prior year-end to the current year-end
- Other expenses incurred
The net result is the income (or loss) for the year, allocated proportionately to each endowment fund based on its percentage of the total endowment pool.
D) Calculation of the 5% Annual Distribution
Each January, the restricted funds accountant will calculate the annual distribution by multiplying the endowment’s value as of January 1 of the prior year by 5%.
- Only endowments in existence as of January 1 of the prior year are eligible for the 5% distribution. Endowments established during the prior year will not generate a distribution until the following cycle.
- Under no circumstances may a distribution reduce the endowment’s balance below its frozen corpus as of December 31 of the previous year (or subsequent years if new principal contributions have been made). Such a withdrawal would constitute an invasion of principal, which is prohibited.
E) Annual Distribution of Income to the Cathedral
Each January, the restricted funds accountant will transfer the calculated 5% distribution to the Cathedral’s Endowments Distribution Account, covering the following groups of endowments:
- Memorial Funds
- Stewardship Endowments
- Education Endowments
- Other Restricted Endowments
At any time thereafter, the Executive Board may request distributions from this account, provided the use of funds aligns with the donor’s designated purpose.
Commitment to Proper Management
Endowment funds and trusts are subject to strict regulation within the financial sector. The Cathedral is fully committed to managing these funds responsibly, in compliance with applicable laws, and always in accordance with the expressed intentions of the benefactors.