To start, what exactly are “endowments?” Endowments are funds that are donated to be held in perpetuity and invested, with only the earnings spent to support the endowment purpose. The principal/corpus of the fund is held in perpetuity.
The UT System Administration holds over 13,335 endowments with a market value of $8,012,429,489.40 that provide a reliable, long-term funding source for purposes such as student scholarships, faculty support, research and many other purposes as designated by the donor. Additionally, approximately 1,709 endowments, with a market value of $2,510,001,017.88 are held by external fiduciaries. Endowments are a great way to provide financial support in perpetuity. (Figures above as of 12/31/17.)
Because of the “forever” nature of endowments, it is important to have written documentation of the donor’s intention and terms for the endowment. Our office is pleased to provide draft agreements for the UT institutions to share with their donors for their consideration. All endowments are submitted to the Board of Regents for official acceptance and investment.
Here are some commonly asked questions regarding establishing endowments:
How Much is Required to Create an Endowment?
The UT System minimum funding level is $10,000; however, several of the campuses have opted to set higher minimums. You’ll want to check with a campus-based fundraiser to determine the minimums at each campus.
Do I have to complete funding all at once?
You have the option of fulfilling the commitment over a period of up to five years.
How Are Endowments Invested?
All endowments held by the Board of Regents are managed by The University of Texas/Texas A&M Investment Management Company (UTIMCO), and almost all are invested in the Long-Term Fund (LTF), a pooled fund in which units are purchased by each individual endowment. A set amount of earnings from each endowment is distributed quarterly to the benefiting UT institution, to be spent toward the designated endowment purpose.
Is a Fee Charged on Endowment Gifts?
There is no fee charged against endowment gifts. In connection with the administration and management of the endowment funds, an allocation may be made each year to the UT institutions from the entire endowment pool, in an amount of up to .60% (60 basis points), to be used by the UT institution to support development efforts to enhance the institution’s philanthropy.
Since its inception in 2001, the UT System Endowment Compliance Program has evolved into a national model for ensuring that donor intent is followed for the thousands of endowments held by the UT System Board of Regents and the UT-affiliated foundations. The program was designed to focus on strengthening stewardship; promoting compliance with endowment agreements, laws and policies; increasing effective use of available resources; creating greater transparency; and improving reporting to donors and UT leadership.
The program requires that each UT institution annually reviews and updates its risk assessment and reports on whether endowment earnings are being spent or are accumulating excessively. The program also monitors reporting to donors and training made available to campus staff to ensure that the endowments are being administered in accordance with donor intent.
For more information or questions regarding the endowment compliance program, please contact Charlotte Hambrick, Director of Endowment Compliance and Development Operations, at 512-499-4346, or Jean Bennett, Associate Director of Endowment Compliance and Development Operations, at 512-579-5142.