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To: Campus Unit Finance Leads, University Business Managers, Finance Department Staff

From: Chandrika Rao, Interim Executive Director of Associated Entities and Associate Controller

The purpose of this memorandum is to provide campus information on the June 2020 payout distribution to University and UNC-Chapel Hill Foundation Inc. endowments.  The approved distribution rate each year is targeted to be approximately 5 percent of market value, but the actual distribution could be lower if the endowment is underwater.   The term “underwater endowment” is used to mean one in which the endowment’s total market value is less than its historic book value or principal – i.e. the actual dollars contributed to the fund.

Due to the recent volatility in the investment markets, some endowments, especially ones created in the last two years, could fall underwater.  An endowment’s underwater status will be determined based on its May 31, 2020 Chapel Hill Investment Fund value and its distribution will be adjusted according to the procedures outlined in the attached university policy 407.  This approach was endorsed by the boards of The Endowment Fund of the University of North Carolina at Chapel Hill and The University of North Carolina at Chapel Hill Foundation, Inc.

If you have any questions, please contact John Carlson, Foundation and Investment Accounting Manager, at or 843-4476.  Thank you for your collaborative efforts regarding this important issue.

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