The Arch Foundation for the University of Georgia, Inc. accounting system is designed to identify and provide the necessary accounting and reporting information applicable to each fund group. There are three separate and distinct fund groups in Financial Services system.

1. Unrestricted funding is designed to support two types of accounts.

a. The operating fund represents the development and alumni relations operating arm of the University of Georgia and The Arch Foundation for the University of Georgia, Inc. This group is budgeted and funded by gifts not restricted in their use and other revenue sources designed to support the general operations of The Arch Foundation for the University of Georgia, Inc.

b. The discretionary funds are funded by The Arch Foundation for the University of Georgia, Inc. operating fund for scholarships, special projects, and other academic support purposes. Each project is budgeted separately. TOP

2. The restricted fund group is funded primarily by gifts that have been restricted by the donors as to the purpose for which the funds may be used. There are four classifications of funds in this group.

a. Endowed funds are the perpetual funds held in trust by Arch. Only the investment return can be expended for purposes specified in the respective trust agreements. These funds are subject to both outside investment management fees and internal administrative fees. This group of funds is invested for long investment performance (long-term portfolio), and, as such, is at risk. TOP

b. The quasi-funds consist of funds that may expend the principal or retain the principal of these gifts as though they are endowment assets. Amounts within each fund are invested in the long-term portfolio and therefore are subject to investment risk. These funds are assessed an internal administrative fee and outside investment management fees.

c. The non-endowed "in and out" funds are designed to handle gifts of relatively small amounts made for a specific purpose, to be disbursed on a one-time basis. These are generally expected to be expended within twelve months of the fund's establishment, as set forth in the agreement. The restricted funds earn no return from investments and are assessed no fees.. TOP

3.  The deferred fund group refers to those gifts that involve estates, trusts, or life insurance policies that are not yet realized. Once realized, they generally establish a new fund based on the deferred giving arrangement. This new fund could be an unrestricted or restricted fund, as described above. TOP

Each new fund that is established in Arch requires a fund agreement (see V.C.). The type of fund agreement depends on the purpose of the fund and the total amount anticipated. If the purpose of the fund is for it to continue into perpetuity, the fund will be established as an endowment (see 2.a. above). TOP