Endowments

Policy Statement

It is the policy of Adelphi University to adopt and adhere to standards that are designed to ensure the proper management, administration and compliance of restricted endowment funds.

Reason for Policy

The purpose of this endowment policy is to set forth principles and procedures that are designed to ensure the University complies with its responsibility to properly manage and administer its endowment funds.

The primary objectives of the management and administration of endowment funds are to:

• Ensure that all endowment gifts are properly recorded on the books and records of the University (General Ledger).
• Ensure that the income from endowment funds is spent in accordance with the donor’s intent.
• Ensure that the endowment spending policy approved by the Board of Trustees is properly calculated and allocated to each fund.

Who Is Governed by this Policy

Staff

Policy

Endowment Funds consist of True and Quasi-endowment Funds:

• True Endowment is created with a gift in which the donor’s intent is to preserve the principal in perpetuity and be invested for the purpose of producing present and future income which may be either expended or added to principal.
• Quasi-Endowment (funds functioning as endowment) are designated funds that retain the spirit of long-term investment and principal preservation, yet permit more flexibility as financial planning tools. Quasi-endowment funds are designated by the Board of Trustees and permit principal and income to be expended. Since these funds are internally designated, rather than externally restricted, the Board of Trustees has the right to decide at any time to expend the principal. All withdrawals from the Quasi-endowment fund require approval by the Board of Trustees.

Endowment Fund Procedures

1. A specified endowment fund may be established upon receipt of appropriate documentation. For example, a gift fund agreement, signed by the Office of University Advancement and External Relations (ADVEX), donor and other parties (if appropriate).
2. An endowment fund is established to provide financial support for University priorities.
3. All inquiries regarding establishing an endowment should be directed to ADVEX for initial discussion.
4. Guidelines on Charitable Gifts and Solicitation and Acceptance of Charitable Gifts, should be included when ADVEX provides information on establishing an endowment.
5. Contributions accepted in support of an endowment will be considered part of the principal of the fund. Unless specifically stated in the memorandum of understanding, principal will not be invaded. The income generated by the investment of the fund will be available for the particular use and support of the endowment.
6. The investment of endowment funds will be at the direction of the Board of Trustees through the Finance and Investment Committee.

Endowment Fund Naming Opportunities

1. The Board of Trustees establishes minimum endowment fund levels, which can be found in the Naming Policy [link to https://www.adelphi.edu/policies/naming-of-facilities-properties-and-streets/]. Generally, a minimum initial gift of $25,000 is required to establish an endowment.
2. The Board of Trustees may designate the name of the endowment when the endowment fund has no principal donor.
3. Endowment funds may be established through a testamentary bequest, trust agreement or an outright cash gift. (An endowment fund established through an outright gift will be documented to designate the particular terms and conditions which will apply to the principal donor and Adelphi University with respect to the use of the funds contributed to the particular endowment). (See number 1 above).
4. It is recognized that in rare instances the need for the established endowment fund may cease to exist, in which event the following procedure will be substantially adhered to:
   • Notify the principal donor, if still available, that the Board of Trustees of Adelphi University has determined that the particular endowment fund can no longer serve the purpose originally intended.
   • Have the principal donor select such other form of endowment, which may then be available for immediate implementation by Adelphi University.
   • The use of the original endowment fund will be transferred to the selected endowment and shall bear the name of the original principal donor.
5. If for any reason the original donor is unavailable or should there be no agreement as to the disposition of the endowment fund as originally contemplated, then in that event said fund shall be transferred to be used for Adelphi University purposes as the Board of Trustees of Adelphi University may determine.

Endowment Income Spending

Endowment income is generally spent on scholarships, professorships, lecture series, or other purposes. A full list can be found in the Naming Policy [link to https://www.adelphi.edu/policies/naming-of-facilities-properties-and-streets/].  To ensure that all income distributions are used for purposes consistent with donor intentions, the following procedures are in place:

• Funds will be awarded in accordance with donor intent, as stipulated in a signed gift fund agreement.
• Scholarships – the One-Stop Student Services Center, in collaboration with fund-managers in Schools, Colleges, and Departments, is responsible for awarding out the funds for endowed and restricted scholarships based on donor intent. The University reserves the right to award income from endowed funds to augment financial aid packages or to offset existing institutional grant aid.
• All other Uses – the Grants Accountant will review and approve all expenditures (other than scholarships) to ensure compliance with donor intent.

Spending Policy

The University’s annual operating needs are financed partially by distributions from the Endowment Fund. The University’s endowment spending policy is predicated on
the following principles:

• Preservation of Capital – the endowment’s purchasing power, at a minimum, must be preserved in perpetuity. Therefore, the Endowment will be invested in a diversified asset portfolio that is expected to produce an average annual total return that at least equals inflation plus endowment spending without assuming undue risk.
• Intergenerational Equity – A balance must be maintained between the needs of today and those of tomorrow to ensure endowment spending for current and future generations is equitable.
• Stability – To provide a measure of predictability in year-to-year distributions, and to mitigate the short-term volatility inherent in the financial markets.

Annual spending from the Total Endowment Portfolio

In the context of these principles, annual spending from the total endowment Portfolio will be targeted at 4.5% of its average market values as of August 31 each year, over the trailing 5-year period. The Endowment Portfolio will make monthly distributions based on its stated spending policy.

Unspent income from endowed funds may roll over and accumulate for awarding in a subsequent fiscal year.

Pooled Endowment Assets

New endowment gifts and pledge payments are invested in the University’s Endowment Portfolio at the end of each month.  At the end of the fiscal year (August 31), each fund’s new gifts and pledge payments are converted into shares. The share price is the pool market value share at the beginning of the fiscal year in which the gift and pledge were received. The fund’s income allocation for these shares will begin in the fiscal year after the gifts and pledge payments are received.

Endowments Underwater

At the end of each fiscal year, those endowment funds where the market value of the fund is below the fund’s historic dollar value, will be considered “underwater.” The fund will not be allowed to spend any of the next fiscal year’s income allocation, up to the amount of the deficiency. In this case, the income for the “underwater” funds will be reinvested back into the Endowment Fund principal balance. When the fund’s market value is greater than the historic dollar value, then the fund can begin spending its income allocation.

Reporting

ADVEX will send acknowledgments out to each donor upon receipt of the donation. Activity Reports are also sent to donors of endowed funds upon the donor’s request. Activity Reports provide detailed information about individual endowments and typically include:

• Title of the endowment fund
• Fund Summary – a detailed explanation about the endowed fund’s purpose
• Award recipients, if applicable
• Financial Summary – states the original gift, subsequent gifts and market value as of the close of the previous fiscal year
• Income Activity – states the amount of funds available for spending at the beginning of the fiscal year; income earned by the fund, calculated according to the University’s spending policy; and amounts spent or distributed during the fiscal year.
• Endowment Summary – provides rates of return and market values on the University’s total true and quasi-endowment.

Matching Campaigns

The Adelphi University Board of Trustees has periodically approved matching campaigns to support our strategic plan and generate additional endowment funding. Generally, the parameters of each campaign are designed to align with the True Endowment, with a few exceptions:

• Share market value is calculated using the Quasi (Board Controlled) Endowment value.
• Income allocation does not begin until the fiscal year following the gifts and pledge payments received meet the minimum matching requirement.
• Income allocation will be reinvested back into the Matching Quasi fund if it is deemed “underwater” (below the historical Quasi value). This is an independent calculation from the True Endowment “underwater” calculation.

Definitions

This policy does not have definitions associated with it at this time. Upon periodic policy review this area will be evaluated to determine if additional information is needed to supplement the policy.

Procedures

This policy does not have definitions associated with it at this time. Upon periodic policy review this area will be evaluated to determine if additional information is needed to supplement the policy.

Forms

This policy does not have forms associated with it at this time. Upon periodic policy review this area will be evaluated to determine if additional information is needed to supplement the policy.

Related Information

Financial and Administrative Reference Guide (FARG)

Document History

• Last Reviewed Date: April 2, 2024
• Last Revised Date: April 2, 2024
• Policy Origination Date: Not known

Who Approved This Policy

Executive Leadership