Limit on Income Accumulation for Named Chairs and Professorships

Type of Policy: 
Administrative
Effective Date: 
April 2011
Last Revised: 
February 2017
Review Date: 
February 2020
Policy Owner: 
Academic Affairs
Contact Name: 
Jennifer Herazy
Contact Title: 
Assistant Provost for Administration
Contact Email: 
herazy@gatech.edu
Reason for Policy: 

This policy provides limitations on the accumulation of income funds in support of named chairs and professorships. The limitations are to encourage the strategic management while preserving the resource within the spirit of the donor agreement.

Policy Statement: 

Faculty members holding named chair or professorship positions supported by an endowment receive an annual income allocation from the GT Foundation at the beginning of each fiscal year.  This annual income allocation can be carried forward up to two years.  This provides a total of three years of income allocation available for expenditure within each fiscal year (see attached table).

At the end of each fiscal year, the amount in the income allocation account exceeding the most recent two fiscal years’ income allocation amount will be returned to the corpus of the fund. To support strategic flexibility which fosters advances in research, named chairs and professors may request an exception to the two-year carry forward limit to access additional funds for viable support of their research and scholarly activities. Additionally, faculty members holding named positions and other positions of scholarly leadership may wish to borrow funds. The Office of the Provost may assist faculty members in this manner by seeking GTF and other Institute funds as appropriate and available. The terms of each such loan would be set on a case-by-case basis, but the Institute will seek repayment from discretionary funds available to the faculty member within a term of one to two years.

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Scope: 

Employees (typically academic faculty members) holding a named chair or professorship. 

Additionally, if the income of an endowed chair or professorship fund is split into multiple expendable funds to the benefit of other faculty members, it is expected those funds will be expended in a time-frame consistent with this policy.

Definitions:

Corpus The principal of an endowed fund
Income allocation The amount generated annually from an endowed fund
Maximum carry-forward amount The amount that can be carried forward at the end of each fiscal year for expenditure in the next fiscal year. This policy sets that amount at two years of income allocation.
Expendable Fund An expendable account (or subaccount created from the income allocation account of an endowment) that does not receive an annual income allocation and is typically awarded to a faculty member for a term of years. It is expected these funds will be expended in a time-frame consistent with this policy.
Procedures: 

 

5.1 Appointment of Faculty Holder to the Named Position
Offer letter At the time of appointment, the letter of offer shall include the specific amount to be provided, consistent with this policy, to the faculty member, and indicate that a maximum of two years of the income can be carried forward to the next fiscal year.

 

5.2 Annual Notification of Income Accumulation
Annual Income Allocation

The GT Foundation advises departments of the amount generated from each endowed fund annually. These funds are made available at the beginning of each fiscal year.

Calculation of maximum carry-forward amount The maximum carry-forward amount is the value of the most recent two fiscal years’ income allocation amount. Any accumulated balance over this amount is returned to the corpus of the endowment. See example under “frequently asked questions.”
Early notification of possible return of income In the spring of each year (around the third quarter of each fiscal year), the Georgia Tech Foundation notifies the Office of the Provost of any funds predicted to be over the income accumulation limit based on the following fiscal year’s income projection. The Office of the Provost notifies the relevant Deans offices.
Notification of return of income to corpus Following the close of the past fiscal year’s accounting, the Georgia Tech Foundation notifies the Office of the Provost of any fund with an income balance over the accumulation limit as well as the amount of income that will be returned to corpus. The Office of the Provost notifies the relevant Deans offices for communication to the related faculty members.
Exceptions to the two-year carry forward limit Deans may seek, on behalf of the faculty member an exception to the income accumulation policy. The exception request should include: the account name, account number, the amount requested as exception, the reason for the exception, the utilization plan to expend the funds within the current fiscal year, and the Dean’s support. A deadline to submit exceptions shall be provided.
Approval of exceptions and return to corpus The Provost will review all requested exceptions to the income return and communicate approval decisions. Any amount not approved for exception will be reported to the GTF and returned to the corpus of the fund.
Responsibilities: 

Provost
The Provost (or designate) is responsible to seek and secure information from the GTF about which accounts may be exceeding the accumulation limit and communicating this information to the Deans for action.

Dean
Upon notification, the dean (or designate) is responsible for notifying faculty members of income allocation over the accumulation limit and reviewing and endorsing exceptions to the policy as appropriate.

Faculty Member
The faculty member is responsible for spending the fund in accordance within the terms of the donor agreement, and this and other related Institute policies.

Enforcement: 

The Dean of the College or Provost is responsible to ensure that donated funds are stewarded within the terms of the donor agreement, and this and other related Institute policies.

To report suspected instances of noncompliance with this policy, please visit Georgia Tech’s EthicsPoint, a secure and confidential reporting system, at: https://secure.ethicspoint.com/domain/en/report_custom.asp?clientid=7508

Policy History: 

 

 

 

Revision Date Author Description
April 2015 Provost Office Codify Memo/Added to Policy Library
February 2017 Provost Office Codify Memo/Added to Policy Library