Endowment Overview
- What is an endowment?
- How are earnings from an endowment used?
- What is the current endowment spending policy of the George Mason University Foundation and how is its spending rate determined?
- How are the Foundation’s endowment funds invested and managed?
- What administrative fees are associated with the endowment or current-use gifts?
- Why is endowment important?
What is an endowment?
An endowment is a fund established by a gift with provisions that prohibit spending of the principal (gift). Endowments may be restricted as to purpose or unrestricted, depending on the donor’s intent. Endowments serve the University in perpetuity and also offer naming opportunities.
How are the earnings from an endowment used?
The earnings from an endowment are used for the purpose of the endowment as stated in a gift agreement, signed by the donor, the Foundation, and the University in accordance with University policy. Earnings from endowment help fund, for example:
- scholarship, fellowships, prizes, awards
- chairs, professorships, visiting lecturers
- library acquisitions and curatorships
- academic seminars
- curriculum development
- program development
- research initiatives
- facilities and equipment
What is the current endowment spending policy of the George Mason University Foundation and how is its spending rate determined?
The George Mason University Foundation endowment policy seeks to ensure that the present value of existing funds grows at a rate that exceeds inflation net of fees while generating a predictable stream of spendable income. Since July 1, 2002, the spending (or “payout”) rate has been 4 percent of the three-year rolling average market value. Any earnings in excess of this are reinvested in the endowment.
In conjunction with professional advisors, the George Mason University Foundation determines its endowment spending rate after considering several factors. It considers historical investment returns and inflation, and reviews the national average of higher education endowment spending rates. Its current spending rate of 4 percent falls within the national average range of 3.5 to 4.1 percent for endowments of comparable size.
The Foundation’s fiscal year begins July 1 and ends June 30.
How are the Foundation's endowment funds invested and managed?
The Foundation’s Board of Trustees, by recommendation of the Investment Committee, sets the investment policy of the George Mason University Foundation. Endowment assets currently are invested in a very diversified portfolio reflecting traditional and alternative equity strategies, international and emerging market strategies, traditional and alternative fixed income strategies, and real estate.
The Investment Committee determines investment strategy and hires managers. It meets a minimum of four times a year. Currently, the Foundation retains Citigroup Institutional Consulting to recommend and monitor managers in each asset class. Since 1995, George Mason’s endowment has grown from $14.8 million to nearly $55 million as of June 30, 2007, through gifts and investment returns.
What administrative fees are associated with the endowment or current-use gifts?
Endowments are currently charged a fee of 1.75 percent annually on the average market value of the endowment. Gifts received for endowment are exempt from a fee of 3 percent which is assessed on gifts received for current use and other revenues made to the George Mason University Foundation, Inc. per “George Mason University Foundation Policy on Administrative Fees,” which was effective July 1, 2004. The purpose of these fees is to partially cover the costs of services provided by the Foundation to the University.
Why is endowment important?
Endowment is vital to the future of George Mason University. The state budget and tuition and fees provide only a portion of necessary funding. Over a period of time, a healthy endowment provides stability of income, which can be counted on to advance the mission of the University.
For additional information, please contact the George Mason University Foundation at 703-993-8850.