For clients that begin using Fundriver with a loan against their endowment already in place, case by case decisions will need to be made regarding how to handle the loan in the Fundriver system. For clients that are just taking out a loan (after using Fundriver for a while or during the process of implementing Fundriver), there are some best practices to consider (below).
We recommend that loans are treated the same way as any other endowment investment, and handled accordingly. Whether or not an organization uses the Investment Portfolio Module determines how the loan is accounted for in Fundriver. Please see below for both methods.
More information on handling loans as investments can be found at the following link:http://www.beneschlaw.com/Files/Publication/07329c5a-fde0-4127-a966-ac812ea51267/Presentation/PublicationAttachment/1760ab62-cf04-413a-bdc0-b25ad1ffb2a7/Benesch_Perspectives_Sept2012_100112.pdf
Investment Portfolio Module Set Up Overview: The loan is set up as its own manager account in Fundriver. As interest payments and loan payments are received, the manager is adjusted. Every fund in the pool is impacted by the activity (interest/dividends) when it is allocated. The total endowment value should include the loan value. The loan is tracked and processed the same way as every other investment.