What is an endowment?

For those of you who might be wondering (like I was) what an "endowment" is exactly, I thought I'd offer a definition and try to explain how it works with Universities like N.A.U.

Basically, an endowment is an investment fund created by a University or College from donations of cash, stocks or property that earns interest. A percentage of this interest is used to fund a variety of programs at the University. The funds can be used to "endow" a particular scholarship (in the case of our Stephen Hild Design Scholarship), or it can be used to fund a professorship or any other standard college programs.

The University will typically make about 9% or 10% on their invested funds. They will then spend about 4% or 5% to create an endowment. This allows them to keep making money on the investment ahead of the money they are spending. In other words, the endowment begins to fund itself because the percentage return on investment.

Some Universities require a lot of money to start an endowment. Many have a starting amount at $50,000. We are fortunate that Northern Arizona University has a endowment start of $10,000. This is an amount that a bunch of out of work theater people can manage (with planning, of course).

So, our goal with the Stephen Hild endowment fund is to raise $10,000 in FOUR years so that we can put a scholarship check into the hands of a design student when we get together for our next reunion in five years. Notice that we are trying to raise the funds in FOUR years? Why is that? Well, the university has rules about endowments and they require at least a year for the full endowment amount to mature in the investment fund before they can release any funds. That's why we are trying to get
all of the money raised in only four years instead of five.

Up Next: Where the Hild Endowment stands and how we want you to help us raise the money.

PS if you are interested in finding out more about endowments here are some links I used to learn about this topic.

http://en.wikipedia.org/wiki/Financial_endowment

http://www.foreverlsu.org/gifting/endowments.php

http://www1.usu.edu/develop/priorities/endowments.asp

http://en.wikipedia.org/wiki/Financial_endowment

http://www.forloveandhonor.org/waystogive/endowment.htm

http://www.uncg.edu/dur/endowments.html

Up Next: Where the Hild Endowment stands and how we want you to help us raise the money.