Endowment Fundamentals

College and university endowments are collections of funds that support students and faculty, as well as the institution’s teaching, research, and public service missions. Endowment funds are essential to an institution’s financial strength and are designed to be sustainable over the long term. Every contribution to an endowment creates a new fiduciary relationship between the donor and the institution, making an endowment a complex investment mechanism that requires detailed record keeping and management. This self-paced course will explore the roles and responsibilities related to endowments, growing endowments through fundraising, and fiduciary and policy responsibilities.

Learning Objectives

After completing this course, you will be able to—

• Discuss how asset allocation and spending policies can support an institution's mission
• Explain the fundamentals of and uses for college and university endowments
• Identify key strategies for endowment fundraising and governance

Modules

Each module is about ten minutes and features college and university endowment experts sharing their knowledge on each respective topic. Complete the course however it fits into your busy schedule—one module at a time or in one sitting. Either way, you’ll earn 1 CPE credit for completing the whole course and gain wisdom that will help you along your higher education journey.

Note: the videos used in this course were recorded prior to the onset of the COVID-19 pandemic.

Module 1: How Endowments Work

College and university endowments are collections of funds that support students and faculty, as well as the institution’s teaching, research, and public service missions. Endowment funds are designed to be sustainable over the long term. Institutions follow legal requirements, governance policies, and spending rules to honor donors’ intent for their gifts to last forever. Module 1 takes a deeper look into endowments, how colleges and universities use them, and why they are important to higher education institutions.

After completing Module 1, you will be able to—

• Explain some elements of and uses for college and university endowments

Module 2: Asset Allocations

When a college or university receives a contribution to its endowment, it accepts responsibility for ensuring the funds fulfill their intended purpose in perpetuity. Institutions often do so by employing an asset allocation model, an investment plan designed to help the endowment’s portfolio generate current income and long-term capital gains. In Module 2, you'll hear from a campus expert about asset allocation and the role it plays in endowments and foundations.

After completing Module 2, you will be able to—

• Outline some ways the asset allocation model can support an institution's mission to generate current income and long-term capital gains with endowment funds.

Module 3: Spending Policies and Practices

When managing an endowment, an institution’s governing board determines a special set of rules, called spending policies or spending rules, to outline how the funds will be spent. These spending policies aim to achieve donor's wishes and comply with guidelines to balance the desire for current operating income with the need to preserve the future purchasing power of the gift. In Module 3, you'll look at how spending policies and practices can help colleges and universities fulfill their missions now and into the future.

After completing Module 3, you will be able to—

• Identify spending policy functions for college and university endowments

Module 4: Fundraising

Colleges and universities with endowments meet today's needs with earnings from funds they were given in the past. Development officers work hard to help ensure gifts continue flowing, both for today’s needs and tomorrow’s demands. Except for the very largest endowments, new gifts to endowments are the primary drivers of endowment growth. These new gifts are often designated for faculty support, student support, or facilities.

Gifts that support endowments are almost always the result of extensive donor cultivation, involving multiple visits with advancement professionals and campus leadership to build strong and enduring relationships. Presidents, deans, provosts, members of the board of trustees, and business officers may take an active role in cultivating endowment gifts. The amount of time required for this process varies widely, and large gifts are sometimes years in the making. Gifts to endowments often come as planned gifts, that is, gifts that are given to the institution through the donor’s estate or will, so the institution may not receive the gift for many years. Donors may choose to structure their gifts in different ways with some portions of the gift given today, pledged over several years, or included in their estate plans.

The Council for Advancement and Support of Education, or CASE, conducts an annual Voluntary Support of Education survey that reports a wide range of data on charitable giving to educational institutions, including information on giving and the economy, annual giving, endowment giving, and trends in survey respondent results. In Module 4, you'll learn more about the survey and how it can be helpful for business officers.

After completing Module 4, you will be able to—

• Outline some key players in endowment fundraising and how business officers contribute to this process

Module 5: Governance

Among the fiduciary responsibilities of a college or university's governing board is ensuring the institution's endowment funds are allocated properly and spent as intended. Most governing boards delegate ongoing authority for the governance of their institutions’ endowments to a finance or investment committee, and the two groups must work in partnership to manage the endowment while navigating the complexities of today’s economic climate and responding to stakeholders. Module 5 will cover some of the key elements of endowment governance and its importance to higher education institutions.

After completing Module 5, you will be able to—

• Discuss the key elements of endowment governance

Last Updated: May 14, 2021

CPE Available Per Module: 0.2 Credits in Finance

CPE Available for Full Completion of Course: 1 Credit in Finance

Each individual must register for and complete the course separately to earn credit.

NACUBO is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website www.nasbaregistry.org

Course Information

• Prerequisites: None
• Level: Intermediate
• Type: Nano Learning
• Length: 50 minutes

How to Earn CPE Credit

To earn CPE credit for this microlearning course, you will complete the following tasks under the Modules tab:

1. Watch the videos in each module.
2. Pass the quizzes in each module.
3. Download your CPE certificate.

Note: Interviewee titles are listed as they were at the time of the recording and may have since changed.

• Tom Heck, chief investment officer, Ball State University Foundation
• Ann E. Kaplan, senior director, Voluntary Support of Education, Council for Aid and Support of Education
• Michelle Matis, chief financial officer, Northern Arizona University Foundation 
• Maeesha Merchant, senior vice president, finance and operations, chief financial officer, chief innovation officer, California Institute of the Arts
• Cathleen Rittereiser, executive director, Commonfund Institute