Is there a cost for managing my endowment gift?
University foundations across the U.S. apportion a small percentage of the gift as a fee for managing the gift and the endowment. At UND, an investment administration fee of 1.75% of the previous quarter’s market value provides discretionary support for the university and the foundation.
Does the Foundation charge any other fees on gifts?
The Foundation does not charge a fee on gifts** given to the endowment. This means that 100% of an endowment gift will be placed in the endowment fund to grow and be used for the donor’s designated purpose.
What is your policy on underwater endowments?
We consider endowment funds with a fair market value smaller than the original gift value “underwater.” Generally, what we have found is our old practice of immediate, non-averaged payouts of greater than 4% was not sustainable for some funds. Our goals have always been to earn an average 8% total return, which allows for the 4% payout with growing principal over the long term. Unfortunately, those goals were negatively affected by market losses, especially from the financial downturns in 2000 and 2008.
Our University of North Dakota Foundation Board of Directors has a stop-loss threshold for spending from underwater funds, so as to ensure in perpetuity the endowment survives with a goal to keep pace (increase) for inflation. The UNDAAF Investment Committee has been monitoring the values after the 2008 credit crisis, in hopes of seeing full recovery.
*As of June 30, 2016.
We have made changes so that this should not happen to new endowments in the future. Under our new stop loss policy, spending would be reduced if the fair market value of a fund, evaluated as of June 30 of each year, falls below 80 percent of the original gift value. This is a mechanism to provide the balance between supporting the institution and the commitment to prudent management.
The endowment fund for fiscal year starting July 1, 2015 will produce a reduced payout so less will be taken each year from principal, until the principal grows to within 80% of your gift. This will reduce the annual impact you make on UND, yet ensure your endowment will be sustainable and here in perpetuity.
**Gifts and pledge payments made by credit card are subject to a 2.75% credit card fee.