Establishing a Restricted Endowed or Expendable Fund
Restricted gifts may either be endowed in perpetuity or established to be spent as needed.
In your journey as a donor to the University of Oklahoma, you may decide to deepen your legacy at the University by establishing a fund that creates opportunities in specific areas near and dear to you. A named fund can memorialize you, your family or someone important to you. Naming a scholarship, faculty position, lecture program, or an academic program starts with a few basic steps.
Contact an OU Development Officer– When you establish a fund that is restricted in purpose, your first step will be to contact an OU development officer. Most OU development officers reside in colleges and know about their area’s specific needs and opportunities.
Make a Gift– Both endowed and expendable funds may be established through donations of cash, securities, and bequests.
Develop an Agreement– The Office of University Advancement and the University of Oklahoma Foundation work hand in hand to offer donors a variety of options to create funds that meet individual preferences. With your instructions, an agreement will be crafted that provides the Foundation with specific direction to administer the fund according to your intentions as the years go by.
In making your gift and preparing the agreement, consider the following:
- What will be the name of your fund? Would you like the name to honor you, your family or someone who is important to you?
- What will be the fund’s purpose? If the fund is a scholarship, what are the criteria for selection? Are the criteria broad enough so that a scholarship award can be made easily each year?
- How much would you like to provide annually?
- What type of fund will it be – endowed or expendable?
Practically, endowed funds help the University to diversify its budget by providing a consistent and stable income source that will keep pace with inflation. Philanthropically, endowments are particularly fitting for donors who want to make a difference far into the future.
Endowed Fund ABCs
A restricted endowment requires an agreement and is assigned a separate account to ensure that the endowment maintains its uniqueness for commitments and for historical and ongoing reporting purposes. There are two sides for every endowed fund:
- The principal, held and invested in perpetuity
- The annual distribution that can be spent for the fund’s intended purpose.
Endowed funds are invested in the Foundation’s Consolidated Investment Fund (CIF) according to a prudent investment policy based on diversification of assets and long-term performance benchmarks.
At the beginning of each fiscal year (July 1), the Foundation applies its spending policy by paying an annual distribution, currently 4.5% of the market value of the principal (averaged over the previous 12 quarters), to the spending account. Any excess return remains invested in the endowment principal to increase its value and to protect the future income stream against inflation.
The University of Oklahoma Foundation trustees and staff follow the Uniform Prudent Management of Institutional Funds Act (UPMIFA) by developing investment and spending policies that preserve the purchasing power of the principal over the long term. The Foundation’s fee for investing and administrating the endowment is one percent of the market value of the Consolidated Investment Fund (CIF).
The full balance of an expendable fund can be accessed at any time, which is helpful for immediate needs like building facilities, acquiring equipment or starting a special project. This type of gift appeals to the donor who wants to make an immediate difference at the University by providing a large onetime gift or a generous annual gift of a set amount.
Expendable Fund ABCs
An expendable fund with specific intent requires an agreement and is assigned a separate account to ensure uniqueness for commitments and for accounting and reporting purposes.
Expendable funds are conservatively invested in the Foundation’s Expendable Investment Pool (EIP). 100% of the gift will be spent on its designated purpose.