Endowment Overview

Endowment gifts are intended to generate long-term income for specified purposes. The foundation invests the initial gift into the long term pool, which has a well diversified asset allocation. The spending allocation of 4.25 percent of the pool’s average value over the preceding 12 quarters provides cash that is made available for the intended purpose set forth by the benefactor. The investment return, net of an administrative fee used to fund fundraising and net of the spending allocation noted above, is added to the principal for growth and protection against the eroding consequences of inflation.

By using this model, the benefactor’s endowed fund increases in its market value and preserves the fund’s value against inflation. Most importantly, the endowment continues to fund the program for which it was established, even years after the benefactor makes a gift. 

Financial and Investment Objectives

• The primary financial objective is to preserve and enhance the pool’s inflation-adjusted purchasing power net of all investment management cost, while providing funds for current spending.
• The primary long-term investment objective of the pool is to attain an average annual real total return (net of all investment related fees) in excess of total expenditures (spending and overhead expenses), as measured over rolling ten-year periods.
  

Evaluating the investment program in relation to the objectives:

• This pool of assets requires a long term view and must be managed with this view.
• Asset allocation plays a critical role in preserving the assets, producing a relatively stable spending stream, and allowing opportunity for growth. These goals must be balanced in setting the asset allocation.