Establishing an Endowment Fund at the United Board

Long-term Support, Enduring Impact

Some United Board donors have chosen to make their gift in the form of an endowment. Trudy Loo, the United Board’s senior manager for development, explains the benefits of this type of fund and invites interested supporters to start a conversation with the United Board on whether this fits with their priorities for supporting higher education in Asia.

Trudy Loo, Senior Manager for Development

In simple terms, what is an endowment fund?

An endowment fund is an investment fund established by a foundation or nongovernmental organization. It makes consistent withdrawals from invested capital in order to provide long-term support for a project or an institution. The time horizon is meant to be in perpetuity for a permanent endowment, or it could be a shorter period of time, such as 10 or 20 years, for a term endowment.

For donors, it’s a way to make and sustain a commitment to something about which they care deeply.  When donors establish an endowment through the United Board, they designate the support for a project on our list of approved projects. Their endowment fund may support something like a scholarship or faculty development or some other worthy cause.

What makes an endowment fund appealing to donors?

Many donors, especially those who know the United Board well, understand the impact of long-term support, so they want to make a commitment that extends beyond an annual gift.  An endowment fund can support future generations, and additional donations made to the fund will allow their support to amplify over time.  Often, friends and family will make additional contributions to a fund to honor an anniversary or pay tribute to a loved one.

People find special meaning in giving back to their college or university. Many United Board donors attended college or university when their institution was very young and their country was still quite poor. Yet, because of the education they received, these donors have gone on to build successful careers and they are now in a position to give back. Through their support, they believe the school can do the same thing for future students as it did for them. Or perhaps they really want to see their university maintain its position of leadership.

An endowment fund is often a meaningful way to honor a person or an issue that is close to the heart of the donor. For example, a donor may set up an endowment in memory of their parents or a loved one. Perhaps a parent was the first in the family to attend university, or the parent’s life was transformed by higher education, or he or she passed down their love of education. In this case, a donor may see an endowment fund as a lasting way to pay tribute to their loved ones.

How does the United Board steward the endowment fund?

Once the donor has made the gift, our United Board trustees review and approve the terms of the gift. Then the funds are invested in a pool that includes the United Board’s own permanent endowment. Our investment committee meets regularly to review the performance of our investment pool and ensure that these funds are prudently invested.

We also work with the school to make sure the gift is used according to the donor’s wishes. Each donor receives an annual report from the school and the United Board. We also provide recognition to the donor as they wish.

Compliance
Annual spending from endowments is reviewed with the Finance & Administration Committee of our Board of Trustees to ensure that we are in compliance with NYPMIFA, a law governing charities in New York State.

What advice would you give someone who is considering setting up an endowment fund?

First, think over what you would like to achieve in the long run. What kind of impact do you want to make with this gift? Is it helping a new generation of students finish their undergraduate degrees? Or is it helping an institution enhance its faculty? Have you considered supporting a United Board program that aligns with your interests and goals? Think broadly and don’t be afraid to think of new ways to support the school. Feel free to discuss these ideas with us.

Second, the United Board always advises donors to consult their legal and financial advisors before making a gift to establish an endowment. A new endowment fund at the United Board requires a minimum gift of US$100,000 for a permanent endowment. Often there are ways to make that gift that are beneficial to the donor’s tax planning, and the donor’s advisors are in the best position to know the current tax laws. Also, donors should discuss the gift with their families, as well as with the institution that will benefit from the fund.

Third, don’t be put off by the US$100,000 threshold for a permanent endowment. There are creative ways to reach that threshold over a period of two years. Or you could set up a term endowment over a shorter period, which does not have the US$100,000 minimum threshold.

Finally, feel free to start a conversation with the United Board! We want to know about the institutions and issues that are important to you, and we look forward to talking with you about how to support them.

Administrative Fee
As of 2015, a modest annual administrative fee is applied to new permanent endowment funds.