Endowment Fund Policies
Minimum gift levels for endowed funds
The Yale Endowment supports our faculty, provides financial aid for students, builds our libraries and collections, and sustains a myriad of programs and activities. Minimum funding requirements for endowed funds vary depending on the nature of the gift opportunity. For example, currently donors may support financial aid for students in Yale College or the Graduate School of Arts and Sciences by creating an endowed fund with a minimum gift of $100,000. A named visiting professorship in the Faculty of Arts and Sciences or athletic coach's position may be endowed with a gift of $1,500,000, an existing professorship with a gift of $3,000,000, or an incremental professorship, dean's, or director's position with a gift of $6,000,000. For examples of other giving opportunities, click here.
Spending rule for endowed funds
The university's spending rule has to balance two competing goals: the need to fund the operating budget at a rate that is stable and predictable year after year, and the obligation to protect the value of endowment assets against inflation. Yale combines a long-term spending rate of 5.25 percent of the total endowment value with a smoothing rule that adjusts spending gradually in accordance with changes in the endowment market value. In years in which the endowment is appreciating rapidly, the actual spending rate remains lower than the target rate. For the same reason, in a declining market, the actual spending rate can be higher than the target rate while the smoothing formula cushions the reductions in the amounts available to the operating budget. The payout formula also has a floor and a ceiling intended to prevent the spending rate from falling below 4.0% of endowment market value in years when market value is growing rapidly, or rising above 6.5% in years when market value is declining rapidly. The spending policy is reviewed occasionally by the Board of Trustees.
Administrative charge on endowed funds
Yale imposes a charge on restricted endowment funds which represents a pro rata portion of costs incurred by the university in carrying out the purposes of the funds. The administrative charge is adjusted annually, based on changes in the university's budgeted and actual expenses.
Stewardship of endowed funds
Donors who establish endowed funds receive periodic financial updates on the value of their funds and may also receive periodic reports from the university related to the individuals and activities which benefit from these generous gifts. For example, letters are sent annually to donors describing the background and accomplishments of students awarded scholarships from a particular fund. Individuals endowing professorships are notified of the appointment of each new chair and provided with periodic updates of the professor's academic achievements and research.