The CSULB 49er Foundation is bound by regulations and laws governing charitable organizations. The Foundation is overseen by a Board of Directors, and they are responsible for wisely managing and investing funds contributed by private donors. Since an endowment is to be held in perpetuity, the board has a fiduciary duty with its endowment to ensure both the current and future needs of the university are being met.
The University’s endowment is comprised of hundreds of individual funds. Each was created by an agreement between the Foundation and a donor(s) for a particular purpose. The donor is allowed to place restrictions on how the funds are to be spent; these are called restricted funds. In the very rare instance where the donor does not specify a restriction, the University may use the funds for purposes the University President deem the most pressing; these funds are called unrestricted.
In the past, many funds were created by faculty or departments because they wished to have “surplus funds” invested. Those accounts are not true endowments, but can be deemed “Board Designated Endowments” under the generally accepted principles of endowments. However, these funds would then be subject to the same distribution requirements as a true endowment.
Because of the required reporting and accounting, endowed funds will only be established with a minimum $25,000 account value. Some fund purposes have a higher minimum.
How do they work?
The Foundation has an Investment Policy that seeks to maximize long-term real returns with minimum risk. The Foundation invests with the intent to earn the annual spending policy distribution amount, plus account for inflation, plus cover any fees incurred. By investing to cover the rate of inflation and fees, the purchasing power of the endowment can be assured for the future.
Each donor-created endowed fund is allocated as a percentage of the overall endowment, much like an owner of a mutual fund owns “units”. The CSULB 49er Foundation may distribute an amount up to 4.5% of each endowment fund’s corpus based on a 36-month moving average market value. The valuation date shall be December 31 for the following fiscal year’s allocation. Once the annual spending allocation is calculated, the Foundation shall transfer these funds into a safe, liquid investment until the distribution is made to the respective beneficiary.
At the time of valuation, no distribution will be made from an individual endowment if its corpus value is equal to or less than 80% of its historical gift value. Partial distributions will be made as long as a distribution shall not cause the historical gift value to drop below 80% (e.g., if an endowment’s corpus is 82% of its historical gift value, a partial distribution of only 2% will be made.)
Once the funds are transferred to the endowment’s associated operating account, the faculty member (or administrator) responsible for those funds (Project Director or Principal Investigator) may utilize the funds in accordance with the terms and conditions of the endowment. Funds should be spent directly from that associated operating account to facilitate easy reporting back to the donor as to how their funds were spent. This report is done annually in the form of an endowment report, following the close of the fiscal year.
Funds in an operating account are there to be used. Faculty and administrators are encouraged to spend those funds so we can demonstrate to the donors the importance their funds have on the University. Development staff will then encourage donors to add to their endowment. The faculty is encouraged to assist the development staff with identifying potential donors. Donor prospects are often alumni, retired faculty and community friends who have an interest in supporting students or a particular area of study.
New endowed funds must meet the minimum required for that type/purpose of endowed fund before an annual distribution will commence. Endowed funds created prior to June 30, 2008, will make an annual distribution subject to the above policies, even if they don’t meet the current minimum requirements.
New endowments must meet the minimum for that type of fund. The minimums were developed with an extensive vetting process after careful consideration of:
- the purpose of the funds;
- the amount of an annual distribution that would be considered impactful given the associated costs of the purpose ($2250 is generated off of a $50,000 endowment—towards the total student fees/tuition of $5,000+);
- the costs associated with investing, accounting, reporting, and distributing the funds in perpetuity;
- a comparison of other institutions; and
- a consideration of what the “donor market” would support.
Endowment Minimums
- Dean’s Chair $2.5 million
- Endowed Chair $1 million
- Endowed Research Fellowship $250,000
- Endowed Graduate Scholarship $100,000
- Endowed President’s Scholarship $100,000
- Endowed Scholarship $50,000
- Endowed Student Award $25,000
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