Where the money goes: Endowment

Chris Bottoni

Several weeks ago at a University senate meeting, the University’s endowment fund was brought to the forefront as the initiatives behind the endowment were clarified. In addition, efforts to increase the amount the school possessed were also discussed. In the last 10 years, Villanova’s endowment has shown signs of significant growth, but among other schools our endowment continues to pale in comparison. Junior Paul Gladney commented on not understanding the endowment and the schools operating budgets. “I would like to know if any of my tuition goes to the endowment of of its used to pay the football coaches,” he said.

The basic idea of an endowment is a pool of contributions aside from tuition, room and board, made to a university, wherein the principal is put aside into various investment options with hopes of gaining a five percent return on the initial investment. There are two ways individuals usually give toward endowment, which are classified on amount alone. The first type of donation is referred to as an unrestricted gift to the current fund. These gifts are part of what is known as the Annual Fund and are usually no larger than $10,000. These types of gifts are added to the operating budget for the current year and are dispersed accordingly based upon the wishes of the donor.

Anything larger than $10,000 goes to the endowment. Under the school’s current spending policy, the University expenses roughly five percent of the gift principal per year so that the majority of the principal is left to gain interest and grow over time. The total amount of the endowment fund is broken down into three sections. The first part of the endowment is comprised of the gifts that the school receives from year to year. The contributions made to the University are most often from individuals who have been a part of the Villanova community as a student, parent or faculty member. The second part is the total amount that past gifts have appreciated in a year’s time. The last component of the endowment, is the planned savings that fund intends to budget throughout the fund’s life. The five percent that goes toward the operating budget for a particular year can be used to endow a faculty position, sponsor a scholarship or any other University related-program. Some may believe they will never see our endowment at work but they must consider that a heavy portion of the fund goes to advancing the type of faculty by whom we are taught.

Currently, the University’s endowment stands at $175 million, which is a large figure by itself but encompasses only 80 percent of the schools operating budget. Rick Seiber, vice president of Financial Affairs, he explained that schools such as Lehigh, Boston College and Lafayette all hold endowments of three to four times their respective operating budgets.