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Endowment 101

Donor stewardship is of the highest priority to Lander University and The Lander Foundation. We welcome your questions and strive to provide you, the donor, with relevant and current information regarding the impact of your endowment.

The Level Up Campaign for Lander is a comprehensive capital campaign to support Lander students and faculty with scholarships, professorships, facilities, technology and enhanced opportunities for learning and research. Through initiatives that drive innovation and build a knowledge-based economy, a Lander education will propel the leaders of tomorrow.

 

DEFINITIONS

Endowment: A fund established through one or more gifts to Lander University or The Lander Foundation.

These gifts are invested to generate financial support for purposes agreed upon by the donors and the University. The initial gift—the corpus—is intended to remain invested rather than spent. A portion of the fund’s total return, which includes investment earnings and market appreciation, is made available for use according to the spending policy.

Fund Agreement: This is a written, signed document outlining the purposes for which a specific endowment’s funds may be used.

Distributions may only be spent on the purposes outlined in this agreement or in donor-approved amendments to the agreement.

Corpus or Principal: The original gift or gifts used to establish or add to an endowment, along with any additional contributions made over time.

For a permanent endowment, the corpus is preserved in perpetuity.

Spending Policy: The guidelines that determine how much of an endowment’s total return may be used in a given fiscal year.

For example, a policy might allow an annual spending allocation equal to 4 percent (4%) of the endowment’s average market value over the previous three years. This percentage -known as the payout rate- is determined annually by the LUF Board of Directors for endowments held by the Lander University Foundation and Lander University.

State law governs the management of institutional funds. UPMIFA rules govern investment of the funds of charitable organizations and total return expenditure of those funds.

 

FAQs

First, the endowment must meet any minimum requirements set forth in its fund agreement or by financial policy. If there are no minimum requirements, a payout will be generated for the second fiscal year after the endowment was created. If there are minimum requirements, a payout will be generated for the second fiscal year after the requirements are met.

In other words, an endowment created and/or meeting all its minimum requirements in fiscal year one would have a payout for fiscal year three.

Market factors greatly influence when an endowment generates a full budget. Generally, an endowment’s payout is calculated seven months in advance of spending, based on the three-year average fund balance of the endowment.

The three years that are used for the calculation are the three fiscal years prior to the time of the calculation. Therefore, a full payout will be generated in the fifth year after an endowment is fully funded. For this reason, many donors provide annual gifts to supplement the purpose of their endowment for this interim period.

Two fundamental responsibilities accompany being the beneficiary of an endowment: (1) the responsibility to use the funds for the purpose(s) for which each endowment was established; and (2) commitment to appropriate stewardship, which entails communications with donors regarding how donations are making an impact on students and faculty.

These responsibilities apply particularly to the specific department/unit and individuals benefiting from an endowment, since donors expect to hear from those who are most directly benefiting from the funding being provided.

On an annual basis after the close of the fiscal year, The Lander Foundation prepares and mails endowment statements to the endowment’s designated contact.