What is an endowment and what does it mean to the University of Nebraska?
An endowment is a collection of gifts given to the University of Nebraska Foundation wherein only the income earned on those gifts can be used by the university.
What is the advantage of an endowment?
Because the principal is never touched and only the income used, the gift becomes perpetual. Also, endowed funds are invested so they grow over time, providing increased support for the university.
What makes up the endowment at the University of Nebraska Foundation?
The foundation endowment consists of some 4,000 individual funds provided by since 1936. The majority of these funds are designated by donors for a specific use. Some donors establish funds for scholarships while others create funds for research, faculty stipends or awards.
What are endowment payouts?
A payout is how much of the endowment a foundation uses to support the university it serves. Currently, the University of Nebraska Foundation’s policy is to pay out 4.5 percent of the endowment’s average market value over 20 calendar quarters. This moving average helps to smooth out the effect of market fluctuations.
Aren’t private foundations required by law to pay out at least 5 percent each year?
Yes they are. However, the University of Nebraska Foundation is a public charity and is therefore not bound by the 5 percent payout. The foundation nonetheless has averaged a 5 percent payout annually over the last several years. This is because the foundation’s board of directors has allocated additional funds to make this possible after looking at capital gains available in the endowment.
How does the University of Nebraska Foundation determine its payout policy?
The foundation follows a careful payout policy that provides current support while also growing the principal to ensure future students receive the same benefits as those today. We believe the right thing to do is preserve equity for students of every generation.