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How an Endowment Works

Endowments are long-term accounts with a minimum balance requirement, in which the principal is invested and earned income distributed. MSU’s endowment accounts are pooled and invested as one Common Investment Fund. Currently, a portion of this annual income – which averaged 8.4% of the endowment pool’s market value over the last ten years – is distributed in accordance with guidelines set by the donor. The University programmatic spending rate currently stands at 5%. Net returns in excess of the spending rate increase the market value of the endowment pool. The pool is invested over an infinite amount time horizon with the goal of maintaining the value in real terms, thus providing a steady flow of income. In this respect, an endowment is a perpetual gift.

 

An example of how an endowment works:

msu-endowment

How You Can Make an Endowment Gift

There are many ways to establish an endowment, and the arrangements for every gift can be personalized to fit your specific needs. Gifts of cash and securities are traditional forms of support; however, planned gifts including bequests, charitable gift annuities and charitable remainder trusts may allow you to make significant contributions that may not otherwise be possible during your lifetime. All endowment gifts are 100% tax deductible.

For more information, please contact the Spartan Fund directly.

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