Endowments: The reality

[blukeys]

Please forgive me if I am repeating information that is already known to most other posters but the subject of a school's endowment has come up on another thread and some significant ignorance was demonstrated.

Here are the facts:

1. A school may have a HUGE endowment but may not be able to dedicate a nickel to athletics.

2. 99.9% of endowments are left by deceased alumni who hire attorneys to assure the INTEREST on the endowed funds are spent within the accordance of the agreed trustee arrangements.

3. If I leave $1,000,000 to UD, the annual income to be spent per my instructions is only $40,000 to $60,000 per year depending on my instructions regarding the investment of my bequest.

4. There are enough smart lawyers in the U.S. (we have a ton of lawyers in Delaware) to assure that these bequests are ironclad.

5. In the Northeast most of these bequests are for academic subjects. For instance a bequest might be made to have a Chemical Engineering professor funded at UD (Imagine that!!!!!) The bequest will be invested and the proceeds of that investment willl fund the salary and other employment costs of one such professor. At today's rates and with good management a bequest of about $2,000,000 micght get you one top notch professor in Chem Engineering.

6. An endowment of $1 billion dollars in no way means there are that many dollars available for athletics or anything else the school may like to do.

7. Anyone wishing to see endowment dollars going to athletics needs to get off their butts and begin an Athletic Department or football endowment where the funding goes to athletics and not the Philosophy Department.

8. I'll give $100 to the first person who finds me one case where a bequest made to a University specifically for a particular purpose or academic department was "legally" switched to athletics. MPLSBISON begin your research. I will wait patiently.

9. Whole sections of very well heeled banks have some very high priced lawyers who write trust agreements that have not been broken for hundreds of years. The best Bank for this is Wilmington Trust who has the most dollars for managing trusts of any bank in the nation. Of course anyone who wants to take on this crew need only to contact Ivytalk.

To imply as some have done that after a certain period of time after the death of the one making the bequest, that the school spend the endowment however it damned well pleases ignores the rule of law and is unbelievably stupid in the University's attempt to raise money.

Why should I leave money in my will for my University if I believe that after so many years some flunky at the University is going to spend the money on whatever he thinks is important? I might as well give money to the SPCA since I know they will spend it on abandoned animals. (I could also leave it to my mother's cat who is still alive and since My Mom would have preferred that.)

This is my primer on endowments. Reprints are available just pm me. For those of you who need a dumbed down version of this primer, let me know.

[YoUDeeMan]

It is comforting to know that people associated with the University of Delaware are smart and well endowed. xthumbsupx xsmiley_wix

[blukeys]

It is comforting to know that people associated with the University of Delaware are smart and well endowed. xthumbsupx xsmiley_wix

YOU PEAKED WHILE I WAS DRESSING!!!!!xeekx xeekx xeekx xeekx xeekx xeekx xeekx xeekx xeekx xeekx xeekx xeekx xeekx xeekx xeekx

[Mr. C]

8. I'll give $100 to the first person who finds me one case where a bequest made to a University specifically for a particular purpose or academic department was "legally" switched to athletics. MPLSBISON begin your research. I will wait patiently.


MPLSBISON? Research? This is about the first time such words have been uttered together. Your $100 is safe.

[crunifan]

I've always wondered how endowments work. And how Grinnell College in Grinnell, Iowa has an endowment (of over $1 billion) larger than Iowa, Iowa State, and UNI combined.

[douglasdmb]

MPLSBISON? Research? This is about the first time such words have been uttered together. Your $100 is safe.

xlmaox

xlmaox

[colorless raider]

I've always wondered how endowments work. And how Grinnell College in Grinnell, Iowa has an endowment (of over $1 billion) larger than Iowa, Iowa State, and UNI combined.

He has been involved witrh Grinnells's endowement for years.

[Grizalltheway]

YOU PEAKED WHILE I WAS DRESSING!!!!!xeekx xeekx xeekx xeekx xeekx xeekx xeekx xeekx xeekx xeekx xeekx xeekx xeekx xeekx xeekx

As in "pitched a tent"? xeekx xeekx :o

[appfan2008]

thanks for the interesting information on how these things work!

[james_lawfirm]

Please forgive me if I am repeating information that is already known to most other posters but the subject of a school's endowment has come up on another thread and some significant ignorance was demonstrated.

Here are the facts:

1. A school may have a HUGE endowment but may not be able to dedicate a nickel to athletics.

2. 99.9% of endowments are left by deceased alumni who hire attorneys to assure the INTEREST on the endowed funds are spent within the accordance of the agreed trustee arrangements.

3. If I leave $1,000,000 to UD, the annual income to be spent per my instructions is only $40,000 to $60,000 per year depending on my instructions regarding the investment of my bequest.

4. There are enough smart lawyers in the U.S. (we have a ton of lawyers in Delaware) to assure that these bequests are ironclad.

5. In the Northeast most of these bequests are for academic subjects. For instance a bequest might be made to have a Chemical Engineering professor funded at UD (Imagine that!!!!!) The bequest will be invested and the proceeds of that investment willl fund the salary and other employment costs of one such professor. At today's rates and with good management a bequest of about $2,000,000 micght get you one top notch professor in Chem Engineering.

6. An endowment of $1 billion dollars in no way means there are that many dollars available for athletics or anything else the school may like to do.

7. Anyone wishing to see endowment dollars going to athletics needs to get off their butts and begin an Athletic Department or football endowment where the funding goes to athletics and not the Philosophy Department.

8. I'll give $100 to the first person who finds me one case where a bequest made to a University specifically for a particular purpose or academic department was "legally" switched to athletics. MPLSBISON begin your research. I will wait patiently.

9. Whole sections of very well heeled banks have some very high priced lawyers who write trust agreements that have not been broken for hundreds of years. The best Bank for this is Wilmington Trust who has the most dollars for managing trusts of any bank in the nation. Of course anyone who wants to take on this crew need only to contact Ivytalk.

To imply as some have done that after a certain period of time after the death of the one making the bequest, that the school spend the endowment however it damned well pleases ignores the rule of law and is unbelievably stupid in the University's attempt to raise money.

Why should I leave money in my will for my University if I believe that after so many years some flunky at the University is going to spend the money on whatever he thinks is important? I might as well give money to the SPCA since I know they will spend it on abandoned animals. (I could also leave it to my mother's cat who is still alive and since My Mom would have preferred that.)

This is my primer on endowments. Reprints are available just pm me. For those of you who need a dumbed down version of this primer, let me know.


I agree with everything you said, up until you gave it to your mother's cat. In North Carolina (don't know about other states) bequeaths to critters are deemed to be in "honorary trusts." In other words, it cannot go directly to the cat. Otherwise, this is good stuff.

[DetroitFlyer]

I seem to remember reading that Stanford had something like a $285,000,000 endowment specifically for football. Given the unique challenges of running an NCAA, FCS football program, I have never understood why every school does not have a football only endowment fund. In fact, if set up correctly, there would be nothing to prevent such a fund from funding rowing scholarships for the women's team to comply with Title IX. I suppose that is why such funds do not exist, because it would upset the ladies.... Soon, there would be an outcry for a women's bowling team endowment fund.... Oh well, maybe the best a school could do is to have an athletic endowment, separate from the general endowment funds. Thoughts?

[UAalum72]

I seem to remember reading that Stanford had something like a $285,000,000 endowment specifically for football. Given the unique challenges of running an NCAA, FCS football program, I have never understood why every school does not have a football only endowment fund. In fact, if set up correctly, there would be nothing to prevent such a fund from funding rowing scholarships for the women's team to comply with Title IX. I suppose that is why such funds do not exist, because it would upset the ladies.... Soon, there would be an outcry for a women's bowling team endowment fund.... Oh well, maybe the best a school could do is to have an athletic endowment, separate from the general endowment funds. Thoughts?
Title IX wouldn't care where the money comes from, just how much is spent. If a football endowment reached a point that it funded the entire program, the college would be free to refuse additional donations to the fund under those conditions, or suggest they go to a more flexible purpose.

[Brad82]

I read an article where it stated every single athletic scholarship @ UCONN is covered by endowments.

[DFW HOYA]

I seem to remember reading that Stanford had something like a $285,000,000 endowment specifically for football.

Stanford's athletics endowment benefits all its sports, and yes, it exceeds $250 million. No one is even close to it.

[colgate13]

I like what you've said, but I would disagree with this:

2. 99.9% of endowments are left by deceased alumni who hire attorneys to assure the INTEREST on the endowed funds are spent within the accordance of the agreed trustee arrangements.

It's a large percentage of endowment that fits your criteria, but it's not THAT large. First, there are a bunch of living folks giving to endowment. Second, the big push if possible from development folks is 'unrestricted' endowment support. They are trying to sell donors on giving a school flexibility in determining where their money goes. I don't know how successful they are, but schools, and some donors, are wising up to the chains (and hassles) that restricted money can bring.

Otherwise - good stuff!

One of the best things about endowments regardless of what is restricted is that they free up net tution revenue to pay for other things in the school's budget that is entirely up to their board of trustees. So even if it is a $1 million to chemical engineering, in theory that frees up money from net tuition revenue to pay for football scholarships. It is generally all good, with athletic specific endowment money being the best flavour to choose from.

[ucdtim17]

Stanford has a $375 million athletic endowment and a $75 million athletic budget

[UAalum72]

Stanford has a $375 million athletic endowment and a $75 million athletic budget
So their endowment probably pays for about half of the budget? (assume 10% earnings)

Rhodes scholarships were originally for men only, for almost 75 years. It took an Act of Parliament to break the endowment just to open them up for women.

[blukeys]

I like what you've said, but I would disagree with this:

2. 99.9% of endowments are left by deceased alumni who hire attorneys to assure the INTEREST on the endowed funds are spent within the accordance of the agreed trustee arrangements.

It's a large percentage of endowment that fits your criteria, but it's not THAT large. First, there are a bunch of living folks giving to endowment. Second, the big push if possible from development folks is 'unrestricted' endowment support. They are trying to sell donors on giving a school flexibility in determining where their money goes. I don't know how successful they are, but schools, and some donors, are wising up to the chains (and hassles) that restricted money can bring.

Otherwise - good stuff!

One of the best things about endowments regardless of what is restricted is that they free up net tution revenue to pay for other things in the school's budget that is entirely up to their board of trustees. So even if it is a $1 million to chemical engineering, in theory that frees up money from net tuition revenue to pay for football scholarships. It is generally all good, with athletic specific endowment money being the best flavour to choose from.


forgive the hyperbole. I was trying to make the point that Schools are largely limited about how to spend the endowments. Just taking a billion dollars and throwing it at football won't happen.

[ngineer]

Lehigh has been able to create a few endowed 'chairs' for athletics--such as football, and wrestling coaches, as well as the scholarship fund for the wrestling team, without which we would not have been able to continue on a D-I level. Blue is correct, unless the 'giver' specifically bequests the funds to go to the football program, or other athletic endeavor, the general endowment of the school is irrelevant to athletics.