• Section 1 - Purpose
• Section 2 - Scope
• Section 3 - Definitions
• Section 4 - Principles
• Section 5 - Diversified Management and Objectives
• Section 6 - Diversified Investment Approach / Strategy
• Section 7 - Diversified Investment Credit Ratings
• Section 8 - ACU Internal Rate
• Section 9 - Ethical Considerations
• Section 10 - Distribution or Spending
• Section 11 - Roles and Responsibilities
• Section 12 - Other Relevant Stakeholders
• Section 13 - Review
• Section 14 - Further Assistance

Section 1 - Purpose

(1) The purpose of the Endowment Management and Spending Policy is to ensure that endowed philanthropic funds are used in such a way as to maximize their benefits for the advancement of education at Australian Catholic University and for scholarship and awards recipients. An endowment is made up of gifts (including will bequests) that are subject to a donor requirement that corpus be maintained and invested to create a stream of income, with a portion of the average investment earnings expended to carry out the specified purpose of the endowment. Endowing a fund is a way that donors can ensure that their gift has a long-term benefit. (There are some exceptions that allow the corpus to be spent; refer to clause (31)).

(2) This Policy will:

1. ensure that the University is responsive to changes in the financial markets to safeguard capital while maximising returns available in the current market climate;
2. achieve stability and predictability in year-to-year spending; and
3. preserve the University’s competitiveness relative to other comparable universities; and provide for the periodic review of endowment funds to ensure that the use of such endowment funds are providing the maximum benefit and the objectives of the endowed gift agreements are being fulfilled.

(3) Creating transformative partnerships with donors and securing philanthropic income is a key priority of ACU. Philanthropic donations can significantly impact ACU’s research, teaching and learning, the student experience and our ACU communities. We are focussed on donations which will:

1. create the healthcare of tomorrow;
2. open minds through education; and
3. explore ethical questions that support or align with the ACU Mission, Identity and Values.

Section 2 - Scope

(4) This Policy applies to all University staff involved in establishing and managing philanthropic endowed funds.

(5) This Policy does not apply to funds / income management that is not philanthropic.

Section 3 - Definitions

(6) Terms used in this Policy are consistent with the Glossary of Student and Course Terms. In addition, the following words and expressions have the meanings listed below:

Section 4 - Principles

(7) ACU has established a clear approach to the investment and management of endowed funds and only establishes a limited number of endowed funds. Where a new fund is proposed it must be approved by the Director, Advancement and Alumni.

(8) ACU will only establish an endowment where there is sufficient capital to support associated administrative costs and where the gift impacts on ACU’s research, teaching and learning, the student experience and our ACU communities.

(9) There is a minimum capital outlay required to establish an endowment. For example, when the return is 2% the preferred minimum gift for establishing an endowment fund is $200,000 for an annual $4,000 scholarship payment.

(10) ACU endowed funds’ overall return consists of two management / return components:

1. Diversified Investment Yield – with a longer-term focus; and
2. ACU Internal Rate – with a short- to medium-term focus.

Section 5 - Diversified Management and Objectives

(11) The investment component will be managed through external investment managers JBWere and overseen by Financial Operations.

(12) The Investment Objectives include:

1. the time horizon for the investment portfolio is in excess of 5 years;
2. the target return for the investment portfolio is an average real return of 3.0% (CPI +3.0%) measured over rolling 5-year periods; and
3. chance of a negative return limited to not more than 1 in 8 years.

Section 6 - Diversified Investment Approach / Strategy

(13) The Strategic Asset Allocation (SAA) has been set to match the agreed risk profile and return objectives and represents the long-term average allocation to each asset class to achieve the investment objectives with minimum risk. A diversified strategy aligns with a balance growth profile.

(14) The overall performance of the investment portfolio will be benchmarked against the targeted return of CPI + 3% over rolling 5-year periods. Individual asset class performance will be assessed against the following benchmarks:

Section 7 - Diversified Investment Credit Ratings

(15) Investments within fixed income are to be Investment Grade as classified by Standard & Poor’s (S&P) or Moody’s Investors Service. 

Section 8 - ACU Internal Rate

(16) The ACU Internal Rate component is invested with National Australia Bank with 100% in Australian cash and fixed interest. The objective for this component is for capital protection and secure income with the S&P credit risk profile predominantly A and Above (with a lesser amount BBB+).

(17) ACU contributes an additional 1% interest to ACU Philanthropic funds. ACU contribution is reviewed annually and is at the discretion of the Chief Financial Officer.

Section 9 - Ethical Considerations

(18) Investments for both components will only be made with entities that have corporate practices that promote environmental stewardship, consumer protection, human rights, and employee diversity. Investments in the following activities will be specifically avoided:

1. Alcohol;
2. Tobacco;
3. Gambling;
4. Pornography;
5. Weapons; and
6. Fossil Fuels (where a material proportion of revenue is directly received from such activities).

(19) ACU will not knowingly invest in any companies that have exposure to these activities. Screens on the investment portfolio will be run quarterly by the investment manager.

Section 10 - Distribution or Spending

(20) Distributions to be made annually in May.

(21) An endowment can spend from prior years’ excess returns, also referred to as spending reserves.

(22) If there are no spending reserves available or when investment returns are low or negative, the distribution of funds will not take place for the dedicated gift purpose (an alternate strategy will be discussed with the donor as outlined in clause (23)).

(23) If there are no spending reserves available, when investment returns are low or negative, or the scholarship / award is unable to be award, ACU will consult with the donor on the best use of the funds including:

1. holding the distribution over for a period;
2. varying the conditions to a purpose closely matching the original apparent intention; or
3. as a last resort, terminating the arrangement. Unless the donor indicates otherwise, ACU will return any unexpended funds (excluding interest).

Section 11 - Roles and Responsibilities

(24) Approval Authority: Vice-Chancellor and President.

(25) Governing Authority: Finance Advisory Group.

(26) Responsible Officer: Director, Advancement and Alumni.

Section 12 - Other Relevant Stakeholders

(27) Chief Financial Officer.

(28) Associate Director, Financial Operations.

(29) Associate Director, Advancement and Alumni

(30) Senior Foundation Administrator

Section 13 - Review

(31) In line with the Policy Development and Review Policy, this Policy is scheduled for review every 5 years with reference to current economic climate.

(32) Unless otherwise indicated, this Policy will still apply beyond the review date.

Section 14 - Further Assistance

(33) Questions related to this Policy can be directed to Advancement and Alumni or Financial Operations via Giving to ACU Contacts or email: advancement@acu.edu.au.