Policies & Procedures

I. PURPOSE

Local funds are restricted and unrestricted funds which include gifts to the University, investment earnings, endowment income and private support, and other types of non-state deposits. Local funds are deposited and disbursed through independent banking and finance activity by the University and are not included in funds appropriated by the General Assembly, such as Educational and General (E&G) funds.

II. OBJECTIVES

Local funds provide flexibility for University outlays, and local funds should only be used for purposes 1) that directly benefit the University and 2) are consistent with donor intent or any other relevant parameters.

III. POLICY

Use

Consistent with the purposes and objectives above, prudent judgment and reasonableness shall govern the general scope of allowable expenditures from local discretionary funds, in keeping with University budgeting. Local funds may be deployed at the discretion of the University for administrative or overhead expenses such as salary costs and relevant operations;however, departments, offices, and units can expect that local accounts funded through annual giving are, within their annual budgets, to be utilized to specifically advance the department, office, or unit and for purposes such as student activities or awards, faculty/staff professional development, or travel, goods, services, or compensation enhancements, all in coordination with a given area’s vice president rather than pursuant to University-wide decision-making. Local funds may not be used for expenses of a purely personal nature nor at the individual discretion or direction of a donor (as distinct from a donor’s right at the time of providing a gift to place restrictions on the eventual use of funds), and any personal benefit must be clearly pursuant to the purpose of benefiting the University.

Investment

Local funds may also be invested. Investment objectives for Longwood University local funds include preservation of capital, investment liquidity, and maximum income return.

Investment Instruments and Quality Guidelines

In the event that local funds are invested, the investment instruments and the quality of the investment instruments employed by Longwood University local operating funds shall comply with Virginia Code §64.2-1101 (Standard of Conduct). All investments should be set up with sufficient transparency satisfactory to the Board.

Liquidity

Liquidity of the portfolio is to be monitored by the Vice President for Administration and Finance and is based on specific cash needs of the University. In order to achieve the required liquidity, amounts not subject to immediate needs may be invested in instruments having a maturity rating from overnight to 90 days, or in long term investments as deemed appropriate. The balance of local funds will be invested in overnight instruments.

Diversification Guidelines

No more than 10% of the portfolio may be invested in the obligations of any one issuer other than money market funds, U.S. Government issues, and repurchase agreements. No more than 25% of the portfolio may be invested in any one industry.

Management

In the event the University takes steps to invest its local funds, an investment committee will be appointed by the Vice President for Administration and Finance. The objectives of the investment committee are as follows:

Invest portfolio assets in order to earn a return net of fees in excess of the rate of anticipated inflation, rate of spending, and a cushion to provide for a shortfall and ensure the growth of assets.

Diversify the portfolio among various asset classes to reduce the volatility of return, and among various issuers of securities to reduce principal risk.

Divide assets between short-term and long-term investments so as to ensure that funds will be available to meet short term obligations as well as grow investments assets over the long term.

Monitor cash flows to ensure adequate liquidity in order to meet University cash needs.

The investment committee maintains appropriate records of its activities. Investment results shall be reported to the Board of Visitors at least annually, to include the composition of portfolio assets and the performance of all portfolios.

Approved by the Board of Visitors, March 24, 2007.
Revised and approved by the Board of Visitors, June 15, 2012.
Revised and approved by the Board of Visitors, June 7, 2024