Scholarships

A permanent fund, established by a donor, to support a program, scholarship or program initiative. Endowment funds are strategically invested to create a perpetual revenue stream; however, they are exposed to changes in investment markets which may impact the level of annual program support. Program support is calculated annually and, when available, transferred to an expendable fund.

A fund set up in conjunction with an associated endowment fund. Annually, the spending allocation from the endowment fund earnings is placed into the expendable fund, from which awards or distributions can be made. Expendable funds can exist alone, if a donor has pledged to continue to support the fund through annual expendable payments.

The spending policy is 4% of the average market value of the endowments for the previous 12 quarters (three-year rolling average). This rolling, multi-year average helps to smooth out market ups and downs to provide more predictable spending budgets. The cap on the spending budget prevents overspending during extended up periods in the market, and the goal is to ensure that the endowment maintains its purchasing power over time to support future generations.

The Foundation calculates the spending allocation annually based on September 30 market values. The amount of spending allocation from designated funds will be communicated to Marshall University departments around November 1 to plan for program expenses and scholarship awards for the following fiscal year, aiding in recruitment and retention of students and programs.

Appreciation/depreciation is the difference between the Market Value and the Corpus of the endowment. Appreciation represents an excess of investment return, both realized and unrealized, over the withdrawals for spending and for management fees. Depreciation represents a deficit where cumulative investment losses, both realized and unrealized, have reduced the market value below the corpus of the endowment. Appreciation is the customary funding source for endowment spending budgets. Generally, there is NO SPENDING ALLOCATION if there is NO APPRECIATION.

Appreciation is the customary funding source for endowment spending budgets. If the endowment guidelines prevent spending below the market value, then there is NO SPENDING ALLOCATION if there is NO APPRECIATION. Absent donor restrictions, the amount of spending available is calculated in accordance with the Foundation spending policy which includes factors from UPMIFA*, a floor of 90% of the corpus of the fund, and a ceiling of 7% of the market value of the fund.

For endowments which prohibit underwater spending, if the appreciation is less than the spending by calculation, the spending allocation will be limited to the amount of appreciation in the fund. For endowments without a restriction to underwater spending, the Foundation refers to the spending policy in determining the amount of spending that is prudent in accordance with the terms of UPMIFA*. Also, if the funds have NOT been invested for the full 12-quarter period, the spending allocation calculated will be less than the 4% target. If a portion of the spending allocation is returned to corpus, based on the guidelines, the next spending allocation will be less than 4%.

To maximize the speed of the impact and consistency of available awards, it is recommended that both the endowment and expendable accounts be funded simultaneously. Designating 80% of the total gift or pledge amount to the endowment and 20% to the expendable allows the fund to make an immediate impact, ensuring five to six years of award distribution while the endowment fund is built and invested. Until the minimum endowment level is reached, payments to the endowment builder will be held in a cash account.