How do endowments work?
Financial endowments are donated funds which are invested to create an enduring source of revenue, year after year. A sizeable endowment creates sustainability and affords the institution the opportunity to plan strategically for the long term. The principal of the gift is invested and a portion of the investment income is used annually to fund specific initiatives such as scholarships, awards and bursaries, faculty chairs and research.
How does Waterloo's endowment strengthen the University?
It provides the stability to advance Waterloo’s place nationally and globally. A strong endowment is a critical component to help us fulfil our vision of attracting top scholars and renowned academics, and in providing the resources to develop strong programs that contribute to the welfare of society.
Who oversees and manages the endowment portfolio?
Waterloo’s Finance and Investment Committee consists of up to nine members, with the majority being external members of the Board of Governors. All members bring financial expertise and experience. The committee is supported by the University secretary; the vice-president academic and provost; and the vice-president administration and finance.
The committee exercises general oversight of the financial affairs of the University; reviews Waterloo’s investment policies, objectives and strategies; reviews the portfolio and performance of the fund managers; and reviews administrative structures, policies and practices. The committee reports annually to the Board of Governors, recommending changes as required.
What are the minimum endowment levels to create a named fund?
|
Endowment Category |
Endowment minimums/ranges |
|---|---|
|
Chair |
$3 million minimum |
|
Professorship |
$1 - $3 million |
|
Faculty Fellowship |
$500,000 |
|
Lecture Series Fund |
$500,000 |
|
Graduate Student Fellowship |
$250,000 |
|
Ontario Graduate Scholarship (OGS) Award |
$125,000 |
|
Graduate Bursary, Scholarship or Award |
$50,000 |
|
Undergraduate Bursary, Scholarship or Award |
$40,000 |
When will an endowment start to provide funding?
The timing of the first payout from a new endowment can vary. It depends on the size of the endowed gift relative to the amount needed to carry out the fund’s purpose. Typically, an allowance of 1 to 5 years is needed for the fund to generate sufficient revenue to allow a payout to be made. While the fund is growing, some donors make annual contributions to support payouts until such time as the fund can generate enough income to sustain their intentions.
Are donors subject to a fee for establishing their endowment?
No. Waterloo does not charge any administration fees to the individual endowment accounts to administer and carry out the terms of the endowment.
What is the University's endowment spending policy?
The overall objective is to achieve an annual realized income that provides both spending and inflation protection. It is necessary to protect the endowment against inflation and preserve capital, not only for current needs, but for future needs as well. Each year, the income for spending is allocated to individual endowments to support the cause for which the fund was created at a rate that is established annually, based on investment returns. Another portion of the income is used to provide inflation protection based on the Consumer Price Index. The residual, if any, goes to create a reserve to cover years with low investment returns. The allocation to each endowment account is based on the weighted average principal of the endowment as at March 31 each year. Unspent expendable amounts or parts thereof may be carried forward for future expenditures or transferred to principal at the end of the fiscal year.
How does the University deal with volatility in investment markets?
The Finance and Investment Committee is confident in the quality and diversification of the University’s investments and in Waterloo’s prudent investment policies. Short-term market fluctuations will, from time to time, negatively affect performance of the investment portfolio. The University’s long-term investment strategy is designed to preserve capital in order to support future generations.
Can I give to an existing endowment?
Yes. Waterloo’s existing endowment funds support a wide variety of projects or programs in a specific faculty, school, college or elsewhere on campus.