What is Endowment?
An endowment at a charity is a pool of assets set aside and invested. Assets (the principal) may include cash, securities, real estate and real property. Investment strategies balance income and growth.
The term "endowed fund" is often used to describe a named portion of a larger endowment, for example, "The Smith Endowed Fund for Scholarships."
In most cases, a portion of the annual investment income is used by the organization, and the remainder is added to the endowment principal. St. Lawrence uses income equal to 5.5% of the value of the endowment averaged over the past three years. All income over this 5.5% level is reinvested to increase the value of the principal, and increase income the next year. Thus, in any given year, if the value of the return on investment is 8%, 5.5% is used and 2.5% is added to the principal.
Portions of endowment may be permanent, (principal cannot be spent), or "quasi," (principal may be spent). Portions of endowment may be restricted to specific purposes. For example, a donor may create a permanent endowed fund to provide scholarship support. In this case, the principal cannot be spent, and the spendable income is restricted to scholarships.
Gifts of any amount may be made at any time to existing endowed funds. A minimum gift or pledge is required to create a new endowed fund ( see minimum Endowed Fund Levels below). A pledge may be fulfilled within 5 years.
When an endowed fund is created, guidelines are drafted to determine how the income may be used. Guidelines may be specific (e.g. scholarships to females from the North Country area), or broad (e.g. general support for an academic department).
Endowments are often planned as bequests. Guidelines may be drafted and retained on file until such time as the gift is received and the endowed fund created. These are often created as a legacy or memorial (e.g. "The Jones Family," or "Jane Jones Memorial Endowed Fund").
St. Lawrence Endowed Fund Minimum Levels
Naming Opportunity |
Endowment Level |
Annual Expendable Income at 5.5% |
| Full Professorship |
$1,500,000 |
$82,500 |
| Associate Professorship |
$1,000,000 |
$55,000 |
| Assistant Professorship |
$750,000 |
$41,250 |
| Head Coach's Position |
$500,000 |
$27,500 |
| Visiting Lectureship |
$100,000 |
$5,500 |
| Scholarship Fund |
$75,000 |
$4,125 |
| Faculty Development Fund |
$75,000 |
$4,125 |
| Academic Department Fund |
$50,000 |
$2,750 |
| Academic Equipment Fund |
$50,000 |
$2,750 |
| Student Research Fellowship |
$50,000 |
$2,750 |
| Desktop Computer |
$30,000 |
$1,650 |
| Student Enrichment Fund |
$25,000 |
$1,375 |
| Library Acquisiton Fund |
$10,000 |
$550 |
This web page does not provide legal or financial advice, nor is it intended as a comprehensive review of the topic. You should consult your attorney, tax advisor and St. Lawrence before making or planning your gift.
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