Endowment FAQ

Students walking on campus

What is an endowment and what does it support?

Financial endowments are funds donated to an institution which are invested to create an enduring stream of revenue, year after year. The principal of the gift is invested and a portion of the investment income is used annually to fund specific initiatives. Some of these activities include scholarships, awards and bursaries, faculty chairs, and research.

How does Waterloo’s endowment strengthen the university?

A sizeable endowment creates sustainability and affords Waterloo the opportunity to plan strategically for the long term. It provides the stability to advance Waterloo’s place nationally and globally. A strong endowment is a critical component to help us fulfill our vision of attracting top scholars and renowned academics, and providing the resources to develop strong programs that contribute to the welfare of society.

Who oversees and manages the endowment portfolio?

Waterloo’s board of governors has delegated the oversight of its investments to the Finance and Investment Committee.  The 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 chair is chosen from among the external members. 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?

Named endowment funds can be created at a variety of levels and through a variety of giving options.

Endowment Category

Endowment Suggested Minimums/Ranges

Chair

$3 million minimum
$5 million + preferred

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 one to five 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 the time when 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 capital maintenance. 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 for the fiscal year. Unspent expendable amounts or parts thereof may be carried forward for future expenditures or capitalized 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.

For more information, contact Annette Trudelle