What it is:
The Endowment Income Funds Pool (EIFP) holds prior year accumulated fund balances from income generated by pure (from donors, not funds functioning as endowment) endowments. Current year payout is excluded from the EIFP payout calculation. EIFP income posts on object code 45605 (45610 prior to FY21), which rolls up under Investment Income, not Endowment Income. Therefore, EIFP is not forecast in the Tidemark Endowment Planning process.
The EIFP policy states that any prior year unspent balances in pure endowment income funds are invested by the university in short-term investments called money market funds. The resulting earnings from those investments are distributed to the endowments that have balances.
How to Forecast:
A way to forecast this activity is to estimate what your unspent pure endowment balances will be throughout the year. This will of course depend on your expenses and/or transfers to Operating Budget. Also, you would need to estimate what the money market rates will be in the upcoming year. It is quite challenging to guess the direction of interest rates. That said, they have ranged from over 2% in recent years to almost zero when interest rates are very low.
Given that both the volume (unspent balances in endowment awards) and the rate (money market rates earned by the university) are constantly changing, there is no systematic way to forecast this revenue.
One suggestion is to assume that unspent endowment balances will be the same as the prior fiscal year and then compare money market rates now versus over the prior twelve months. You can review historical money fund rates at https://fingate.stanford.edu/managing-funds/resource/money-fund-rate. If the current rates are lower than over the past 12 months, then we suggest reducing the EIFP payout estimate by the same percentage.
With all this said, EIFP is usually not a large revenue source for budget units. The policy on EIFP is describedin the Admin Guide 3.3.2.