Essay on The Current State of Endowments

Submitted By Phidiva
Words: 3813
Pages: 16
Open Document
Current State of Endowments

An endowment is money that is given to an organization, usually for a specific purpose. Lapovsky (2007) says that endowments are not only a symbol of prestige, but also brings financial stability to an institution. Endowments generally are meant to be used for investments that will create indefinite interest income for the recipient. Endowments come in many types, and can be classified by their type of recipient, their purpose, or by the way the finances from the endowment are handled. Recipients of endowments typically may be a college or university, a library, or a hospital. Endowments may be true, or permanent, endowments or they may be term endowments ("Types of endowments," 2013).
Endowments are generally managed in four ways. A term endowment pays a designated recipient, but only for a predetermined amount of time, or until a specific event occurs. An example of an event that might end a term endowment is the death of the endowment recipient or closure of the organization receiving the endowment. This type of endowment may also be called a living trust ("Types of endowments," 2013).
Also according to the article on Types of Endowments (2013), another way to manage an endowment is to have an investor outside the organization invest the principal and then turn the income from the principal over to the recipient. This type of endowment is called a fund held in trust. A permanent, or true, endowment is a principal investment that provides interest income to an organization indefinitely.
Sometimes, an endowment can be classified by how an organization is allowed to use its funds, whether the spending is restricted or unrestricted. Restricted endowment funds, sometimes called restricted-purpose endowment funds, are financial gifts given to an organization for a specified purpose. Unrestricted endowment funds, also called quasi-endowments, provide general funding for an organization or department. Where an unrestricted endowment would allow an organization to spend money on anything the organization needed, a restricted endowment might give a specific gift, like new musical instruments for a high school music program. In science, a restricted endowment can be for a specific purpose within a specific area of study. In addition, institutions that establish quasi-endowments, may decide to move non-endowment funds, such as a gift or a bequest to the institution, into the institution’s endowment for investment and spending purposes. The institution can reverse the decision to create quasi-endowments and spend those funds in their entirety at any point in time (United States Government Accountability Office [GAO], 2010).
Within the academic world, another type of endowment is the endowed professorship. These highly-regarded, salaried positions are bestowed upon a faculty member by an institution of higher learning. Professors receiving this honor are considered to be ranked above a standard professor at that institution. An endowed scholarship is a restricted-purpose endowment given to students at an institution. Higher education institutions in Florida helps to fund 226 Eminent Scholar Chairs ("Matching Gift Program," 2005).
It is important to note that of the more than 2,400 public and private colleges and institutions, only about 30 percent of the public four-year institutions and 28 percent of the private institutions report endowments (Lapovsky, 2007). Keeping that in mind, growth trends for endowments over the past decade or so are widely varied. Also according to the information presented in the 2007 article by Lapovsky, the rate of return has been greater for large endowments compared small endowments. Lapovsky’s (2007) research further shows that from 1996-2006 the average return on extremely large endowments, those with assets greater than one billion dollars, nearly doubled the rate of return for small endowments, those with assets of 25
Show More

Related Documents: Essay on The Current State of Endowments

History Of University Of Texas Health Science Center

lead to the agreement signing for the new Life Sciences Institute that collaborated research as well as education partnership. In addition to the fore mention UT Health Science Center received their first public endowment of $200 million dollars given by the State of Texas, the endowment is what established the Children’s Cancer Research Institute. Further, donations continued to enhance the development of the UT Health Science Center, companies such as Valero Energy Corporation donated $5 million…

Words 1237 - Pages 5

AJS522Week5FinancialContingencyPlanningSourcesofFundingPaper 1

Financial Contingency Planning: Sources of Funding Tia Hunte AJS 522 Michael Walker June 8, 201 Financial Continency Planning Financial contingency planning is a very vital instrument for any substance addiction therapy Facility. There are many issues which can into play in the fiscal division of any corporation and could lead to higher expenditures of that corporation. Emergency preparedness is key to avoid a potential hazardous impact of a dangerous issue from occurring…

Words 1814 - Pages 8

Utah Symphony Strengths

Utah Symphony Analysis Financial Strengths: The Utah Symphony received approximately 5% of its incoming from their endowment fund annually. The organization raised $3,829 in revenue from rental fees, sets, props, costumes, box office, etc. However, the symphony believes that the fundraising contributions are sufficient enough currently to allow ticket prices to remain the same as the prior year is successful. The up side is that there was a $116,308 in surplus at the end of the year. Utah Symphony…

Words 5053 - Pages 21

Economic Opportunity DOCS Essay

an individual's economic opportunity is access to higher education. It follows, then, that equitable access to higher education is a crucial part of providing economic opportunity to all. But how well are we doing, and what more could we in the state of Michigan do to increase equitable access to higher ed? Read the following articles and respond, giving special thought to policies and programs that address the overlapping concerns of higher education access and economic opportunity. In particular…

Words 384 - Pages 2

Michael Krivo Essay

Effects of NAFTA Introduction Free trade is often viewed as beneficial to countries that allow it. The North American Free Trade Agreement (NAFTA) is the free trade agreement between the United States, Canada, and Mexico. The purpose of NAFTA was to eliminate trade barriers between the three North American countries. I will discuss the effects of NAFTA by looking at the GDP output per capital in the U.S. and Canada, investment activity in each country…

Words 2957 - Pages 12

Health Care and Fishers Lane Rockville Essay

bimonthly magazine you can subscribe to called Humanities, which is published by the National Endowment for the Humanities, 1100 Pennsylvania Avenue, NW, Room 410, Washington, D.C. 20506, phone number (202) 606-8443. This publication features listings of recent grants by discipline, a calendar detailing application grant deadlines and guide sections for those who are thinking of applying for a National Endowment of the Humanities grant - - and there are many! This magazine can give you tips to help you…

Words 5298 - Pages 22

Introduction to Actuarial Science Essay

[1] Question 10 Under which of the following contracts will investment risk to the life insurer be most significant? (You can assume the same present value of premiums will be paid to each contract). A. A with-profit endowment assurance contract B. A unit-linked whole life assurance contract C. A non-profit immediate annuity contract D. A with-profit immediate annuity contract [1] Question 11 A…

Words 1805 - Pages 8

Hershey's: Bitter Times in a Sweet Place Essay

Corporation, its employees, and the community of Hershey, Pennsylvania would not have profited substantially from the sale. In 2002, the Hershey Foods Corporation stock represented more than 50% of the Hershey Trust's $5.4 billion dollar endowment fund. The Hershey Trust Company’s board of trustees could have pursued diversification by selling only a…

Words 4126 - Pages 17

“Utah Symphony and Utah Opera: a Merger Proposal” Essay

Merger The financial state of the Utah Symphony before the merger was grim. It was understood by the symphony’s chairman of the board, Scott Parker, that the situation was getting worse. This was aggravated by the downturn of the economy and the event of 9/11. However, even before the economic downturn and 9/11, the symphony was very close to a deficit situation (Delong & Ager, 2005). Scott Parker assumed the chairmanship to try to mitigate the situation. The average endowment or contributions for…

Words 14813 - Pages 60

Essay about Index: International Trade and Free Trade Agreement

(such as making a specific product) more efficiently than another activity. The theory of comparative advantage is an economic theory about the potential gains from trade for individuals, firms, or nations that arise from differences in their factor endowments or technological progress. Foreign Exchange Market: The market in which participants are able to buy, sell, exchange and speculate on currencies. Foreign exchange markets are made up of banks, commercial companies, central banks, investment…

Words 865 - Pages 4