Endowment Definitions

 
Endowment Fund
A fund established with a gift or gifts from one or more donors to the Purchase College Foundation and Charitable Entities, including the Friends of the Neuberger Museum of Art, to exist in perpetuity. An endowment is invested to generate financial support for a purpose or purposes mutually agreed to by the organization and the donor(s). (See also: Endowment Agreement)

As mandated by accounting standards, each endowment fund is divided into three components:
 

1. Corpus
   The gift(s) made to establish an endowment fund as well as any additional gifts made to increase the endowment. The corpus is held in perpetuity and is not intended to be spent. The corpus is invested according to policies set by the Purchase College Foundation and Charitable Entities and in keeping with state law.
    
2. Total Return
   The interest, capital gains, and dividends less fees and the budgeted spending amount over a fiscal period, such as a year.
    
3. Spending Amount
   The amount available to be spent for the endowment’s agreed-upon purpose(s) in a fiscal year.

 
Endowment Agreement
The written and signed document stating the mutually agreed-upon purpose(s) for which a specific endowment’s distributions can be spent. Distributions cannot be spent for purposes not included in either the fund agreement or donor-approved amendments to the fund agreement.

Fiscal Year
The Foundation’s fiscal year is a 12-month period that begins July 1 and ends on June 30 of the following year.

Market Value
Current value of the fund in today’s market. This includes the corpus plus the total return for the life of the endowment fund.

 
Spending Policy
The rules governing how much of an endowment’s total return will be made available for distribution in a given fiscal year. 
 

The distribution calculation occurs annually, after June 30, based on the previous twelve-quarter average performance of the investment. The goal of the spending policy is to sustain the endowment value, against inflation, for long-term use.

The Foundation’s current spending policy, based upon a careful analysis of market trends and conditions, will reduce the distribution rate over three years from 5% to 4.5%. The 4.5% target will be available for spending in FY27/28.
 
Additionally, an endowment is assessed an administrative management fee that covers expenses related to securing, raising, investing, and administering endowment funds in accordance with policies and procedures of the Foundation in effect at the time. The current annual is 1.75%.

 
Quasi or Board-Designated Endowment
A fund established by the board to function as an endowment. The board has the authority to determine the use and may terminate the fund at any time.

 
Underwater Endowment
An endowment fund is “underwater” when its market value falls below the value of the corpus.