Finance Glossary

Financial Terms

Assets: Amounts reported in a balance sheet for the items an organization owns (e.g. cash, investments, property, etc.) or is owed (receivables).

APC: Associated Program Costs

Audited Financial Statements: Financial report of an organization, comprised of balance sheet, statement of activities, statement of cash flows, and accompanying footnotes prepared in accordance with generally accepted accounting principles (GAAP); audited by an independent accounting firm.

Balance Sheet: Financial statement of an organization that presents its assets, liabilities, and net assets (for a for profit entity this last piece would be "shareholder's equity").

Balanced Budget: When revenues minus expenses are greater than or equal to zero.

Budget: A plan used to decide the amount of money that can be spent and how it will be spent; listing of an entity's planned revenues and expenditures for a given period of time, usually a fiscal year.

Budget Committee: A standing committee co-chaired by the Provost and the Executive Vice President (EVP). The committee considers resource and budgetary issues for the institution, and provides advice and recommendations to the President, Provost and EVP on an ongoing basis.

Budget Model: Set of rules that allocates a (typically large) fraction of the budget; remainder of budget allocated according to discretion of leadership.

Business Model: Set of fundamental operating principles that generate the financial activities of an organization, typically includes the products the organization produces, the markets it serves, its value proposition for stakeholders, its sources of capital, its governance and corporate form, and its revenue and cost generating activities.

Capital Investment: Usually a relatively large expenditure for the acquisition, creation or renovation of a long-lived asset, such as a building or piece of major equipment.

CAGR Compound Annual Growth Rate: An annual year-over-year constant growth rate over a specified period of time.

Chart String: Six segments that make up a GL chart string; so each chart string holds up to six pieces of information about a transaction. 

Corp Card Corporate Pay Card: A Dartmouth College program designed to improve efficiency for travel and entertainment and other business-related purchases.  The Corporate Card is a Visa Card and can be used to make purchases for travel, entertainment, and other business expenses with merchants who accepts the Visa Card. When used for non-travel business related purchases the per item purchase limit is $2,499.00. Personal expenses are prohibited on the Corporate Card.

CPI: Consumer Price Indexrate of change over time in the prices paid by consumers for a market basket of consumer goods and services.

DCF: Dartmouth College Fund, annual giving to the College

DDAF: Dartmouth Donor Advised Funds are a vehicle that allows Dartmouth can receive, invest, and administer gifts to Dartmouth and other charitable organizations on a donor's behalf.  Operating somewhat like a private foundation, the DDAF is an increasingly popular vehicle among philanthropic individuals and families.

Debt Financing: Borrowing from a lender to acquire, construct, or renovate a long-lived asset; or borrowing to provide cash to pay bills. Debt financing requires repayment and is accompanied by a cost to borrow, known as interest expense.

DELC: Dartmouth Education Loan Corporation is a separate corporation operated by Dartmouth College for the purpose of granting education loans and scholarships.

Direct Costs: Sponsored research costs that can clearly be linked to one project (e.g. researcher salaries, travel costs, lab supplies or equipment).

Distribution Rate: Withdrawal from an endowment fund expressed as a percentage of endowment market value at the beginning of the fiscal year to which the withdrawal applies. Endowment distribution rates often range from 4.5% to 6.5%.

DPC: Direct Program Costs

ECI: Employment CostIndex --a quarterly report from the U.S. Department of Labor quantifying changes in employee compensation in the form of wages and benefits. Calculated based on a fixed basket of occupations. Considered by some to be an indicator of inflation.

EFLP: Educational Foundations Leadership and Policy

Endowment: A pool of money owned by a nonprofit organization that is permanently invested to generate an annual return for the support of the organization's operations. Often, but not always, the money has been contributed by a donor and may come with restrictions regarding its usage. Usually the endowment is structured so that the original principal amount is kept intact while the investment return is available for use annually in perpetuity. Endowment expenditures and investment decisions are managed according to state law known as the Uniform Prudent Management of Institutional Funds Act (UPMIFA).

Endowment Distribution: Dollars provided to an institution's operating budget annually from the endowment.

F&A Costs - Facilities & Administrative Costs: sponsored research costs related to research facilities and administration that cannot be easily be billed to any one project (e.g. electricity, shared equipment, admin efforts).

FASB: The Financial Accounting Standards Board is a private, non-profit organization standard setting body whose primary purpose is to establish and improve Generally Accepted Accounting Principles within the United States in the public's interest.

Fringe Benefits: Portion of compensation that is provided by an employer as a benefit to employees but not paid directly to the employee in the form of salaries and wages; includes items such as access and subsidy for medical care, pension and retirement funds, disability insurance, wellness programs, etc.

Fund Accounting: Type of accounting that government and non-profit organizations use to track money according to the level of donor or legal restriction that governs the use of the money.

Funded Budget: When revenues minus expenses is less than zero, but an organization has existing cash reserves to pay for the deficit.

Fungible: The ability of a good or asset to be interchangeable with other another good or asset.

GAAP: Generally accepted accounting principles, or GAAP, are a set of rules that encompass the details, complexities, and legalities of business and corporate accounting. The Financial Accounting Standards Board (FASB) uses GAAP as the foundation for its comprehensive set of approved accounting methods and practices.

GL: General Ledger

Higher Education Price Index (HEPI): An inflation index issued annually by Commonfund Institute designed specifically to track the main cost drivers in higher education. HEPI is a more accurate indicator of changes in costs for colleges and universities than the more familiar Consumer Price Index as it measures the average relative level of prices in a fixed basket of goods and services purchased by colleges and universities each year through current fund educational and general expenditures, excluding research.

Income Statement: Financial statement of an organization that presents a fiscal year measure of revenues and expenses.

Inflation: The average change in the price level of goods and services or a change in the purchasing power of the standard unit of currency.

IRA: The Institutional Reporting and Analysis (IRA) tool is used to access data in the data warehouse and allows for standard and ad hoc reporting of financial and other institutional data.

Liabilities: Amounts reported in a balance sheet for amounts an organization owes to others (i.e. employees, vendors, lenders)

LIT: Life Income Trust (charitable gift annuity) is a contract between a donor and Dartmouth where in exchange for assets irrevocably transferred to the College for its eventual use, the donor and/or another beneficiary receive regular fixed payments for life, backed by the resources of the College.

Net Assets: Amounts reported in a balance sheet as the net difference between the assets and liabilities of a nonprofit organization; net assets may be unrestricted as to use or may be restricted temporarily or permanently as to use by donor or law.

Net income: Revenues minus expenses (known as "surplus/deficit" for non-profits).

Non-operating Funds: Amounts in the financial statements that are not associated with the recurring annual activities of the organization, including the acquisition or creation of long-lived assets and activities in investment pools such as the endowment that are held for a long period of time.

Operating Expenses: Costs associated with the annual recurring activities of an organization.

Operating Funds: Amounts in the financial statements that are associated with the recurring annual activities of the organization, including the generation of operating revenues and expenses.

Operating Revenues: Earnings associated with the annual recurring activities of an organization.

Operating Surplus (Deficit): Operating revenues minus operating expenses.

OGA: Oracle Grants Accounting is a financial accounting system specifically designed to address the unique reporting and management needs of sponsored projects.

Owner's Equity: Invested capital and retained earnings; known simply as net assets or reserves for non-profits because there are no "owners."

P-Card Procurement Card: A Dartmouth College program designed to improve efficiency in processing low dollar value purchases ($2,400.00 or less) while providing adequate documentation of expenses appropriate charging of expenses, and approvals.

PTAEO Project, Task, Award, Expenditure Type and Org: Used in Oracle Grants Accounting to track income and expenses. 

PWC: Price Waterhouse Coopers, external audit firm

Purchasing Power: Inflation-adjusted value of assets; expresses asset values in terms of amount of goods or services that it can buy.

Reserves: Another term used to describe the net assets of a nonprofit organization; typically on a cash basis.

RFM: Restricted Funds Management, a classification system has been created to categorize specific endowment funds based on their degree of restriction from the donors. The ranking system has four levels, with Category 1 being least restrictive and Category 4 being most restrictive.

ROI Return on Investment: Net amount of earnings derived from the investment of cash in an activity or acquisition of an asset. ROI is typically expressed either as a net dollar amount or as a rate of return over a long period of time.

RTM: Return to Market

RTP: Return to Principal

Signature Authority: Identifies which Dartmouth College employees are authorized to enter into transactions with external parties on behalf of Dartmouth and to submit requisitions for purchases through Dartmouth's internal procurement system.

Sponsored Research: Research that is performed by an organization and which is funded by another party, such as federal or state agency, or a private corporation or foundation.

SBRI: Strategic Budget Reinvestment Initiative

SPUD: Sponsored Projects Upload Tool (SPUD) is used for uploading journal entries for grant or combined grant and non-grant-related funding. SPUD uploads the financial transaction to the Oracle Grants Accounting (OGA) system and General Ledger (GL)

Subvention: Non-restricted funds.

Support Costs: Expenses incurred by a nonprofit organization on activities (such as administration, computing, libraries, etc.) that facilitate the activities that are directly associated with the primary mission of the organization, i.e. teaching research, community service.

WebADI: An Oracle product that allows Excel content to be uploaded the Oracle General Ledger (GL). Used for non-grant related corrections (journal entries) and large electronic payments.

WCM: The goal of Working Capital Management is to ensure that a firm is able to continue its operations and that it has sufficient ability to satisfy both maturing short-term debt and upcoming operational expenses.

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