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Policy: IX.D.11

Issued: May 12, 1993

Owner: University of Virginia Investment Management Company (UVIMCO)

Latest Revision:

CAPITALIZATION OF INCOME IN ACCOUNTS ELIGIBLE FOR STATE MATCHING FUNDS

1.0 Purpose

The purpose of this policy is to establish investment guidelines for the capitalization of unexpended income in Eminent Scholars and Virginia Graduate and Undergraduate Assistance Program (VGUAP) accounts. Generally, in an endowment account, there is no prohibition against a donor specifying that unexpended income be added to principal. The problem appears when the donor also designates that the fund qualify for state matching funds. The University has acted with the understanding that only income from principal (i.e. the gift) may qualify for state matching under the two programs noted above. Therefore, once the scholarship or Eminent Scholars Chair is established, the income from capitalized income will not qualify for state matching funds. The following policy defines the "point of establishment."

2.0 Policy [Top]

2.1 Investment Policy

Unexpended income earned in either an Eminent Scholars account or a VGUAP account may be added to principal (i.e. capitalized), until such time that the chair or scholarship is formally established by the University. The terms "formally established by the University" shall be defined as the date when the chair or scholarship is approved by the Board of Visitors. At such time that the chair or scholarship is formally established by the University, unexpended income may be capitalized (a new account may be established for such purposes), but income on this account will not be eligible for matching by state appropriation.


2.2 Minimum Needed To Qualify

A minimum of 50% of the total amount needed to meet the Board of Visitors' established guidelines for the chair or a scholarship will be required before gifts may be invested in one of the University's endowment funds. Exceptions to such policy require approval of the President of the University of Virginia Investment Management Company (UVIMCO).

3.0 Definitions [Top]

4.0 References [Top]

5.0 Approvals and Revisions [Top]


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