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Questions about Endowments

What is an endowment? Why is it important?

An endowment, or endowed fund, is a gift that is held in perpetuity for the benefit of an educational or charitable institution. The gift principal is invested to provide a stream of support for a designated purpose (such as scholarships) or for general support of the institution. For donors, creating an endowed fund is a way to put their wealth to work for a cause in which they believe, while establishing an enduring personal legacy or memorial for a loved one. For the institution, endowed funds furnish a crucial source of strength and stability by providing continuous funding for high-priority needs.

The University of Denver endowment—the aggregate pool of all of the University’s endowed funds—constitutes one of its most critical permanent assets. It is professionally managed to provide a reliable stream of support for critical needs and achieve long-term capital growth. Once a gift has been received to establish a new endowed fund, the gift principal is invested, and from that point on, a percentage of the fund balance—currently 4.5%—is released to support the designated purpose. The DU endowment provides support for scholarships, faculty chairs and professorships, key academic and research programs, student health and wellness initiatives, and other important priorities.

Because they are established in perpetuity, endowed funds have the ability to touch many lives over time. Donors often derive immense satisfaction from witnessing the ongoing impact of their gifts. Whether an endowment is established to create a lasting personal legacy for the future, memorialize or honor an individual, or support particular research, educational, or programmatic interests at DU, it offers an extraordinarily meaningful way to dedicate a portion of one’s personal wealth for the benefit of generations to come.

How are the funds managed?

Each endowed fund is administered according to the provisions of a written agreement approved by the donor and the University at the time the fund is established. This agreement sets forth the name and purpose of the endowment, and is developed through discussions with the donor in conjunction with the Office of University Advancement.

Endowed funds are pooled for investment to contain costs and maximize returns. A separate accounting is maintained for each separate endowed fund to track growth, expenditures, and additional contributions—thereby preserving the identity and purpose of each fund. The investment pool is overseen by the University’s Investment Committee, which employs the services of Monticello & Associates, a leading investment consulting firm, to provide advice regarding asset allocation and the selection of professional investment managers. Earnings in excess of the amount expended from each fund (a maximum of 4.5%) are retained in the fund to provide the basis for continued growth.

How can I establish an endowed fund?

In considering the creation of an endowed fund, you should ask yourself what amount of annual support you would like the fund to provide each year for its designated purpose. Multiply that figure by twenty, and you arrive at an estimate of the endowed principal that will be needed to establish the fund at the level you envision. For example, if you wish to establish a scholarship fund that will provide an award of $5,000 each year, you will need to donate approximately $100,000 in endowed principal ($5,000 x 20 = $100,000). Certain minimum commitments are required to establish a new endowed fund; a listing of these may be obtained from the Office of University Advancement.

If you prefer, you can create a “term endowment” that is designed to last a limited time (e.g., 20 years). Or you can establish a “flexible endowment” with a customized payout that varies from the University’s standard annual payout of 4.5% (e.g., an annual payout of 8.0%; or one that increases over time).

Endowed funds can be established all at once or over a period of up to five years. They may be established with donations of cash or other property such as appreciated securities or real estate. They may be established through outright gifts, or through a deferred gift plan such as a bequest from your estate, a retirement plan designation, or a charitable remainder trust. After creating a fund, many donors choose to augment their original gift with annual contributions during their lifetime, and often include a bequest to the fund in their estate plans. Gift planning specialists and other staff from the Office of University Advancement are available to help you decide what makes the most sense for you—and how you can maximize the impact of your gift.

How will I know what’s happening with my endowed fund?

The Office of University Advancement provides donors of endowed funds with an annual report each fall that reflects the financial status and activities of the fund for the previous fiscal year (July 1 – June 30). Donors may also arrange with University Advancement staff to meet students, faculty, or others in the University who benefit from the fund’s support.

Who can I talk to for more information?

For information on endowments for scholarships, faculty chairs, programs, and other gift opportunities, please contact:

UNIVERSITY OF DENVEROffice of Gift Planning 2190 E. Asbury Ave.Denver, CO 80208303-871-2739 / 1-800-448-3328FAX 303-871-2600Email: gift-planning@du.eduWebsite: www.giftplanning.du.edu

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