91³Ô¹ÏÍø

91³Ô¹ÏÍø has three primary goals with regard to its endowment spending policy:

• Maintain the endowment’s real purchasing power.
• Minimize year-to-year volatility to aid in budget planning.
• Support the University’s educational goals by releasing a substantial and sustainable flow of funds to the operating budget (similar to a model used by Yale University).

The current policy has been in effect since Fiscal Year 2005.  The spending formula now includes both an inflation component that places more emphasis on stable budget support (70%), and a relatively lower market value component that responds to changes in portfolio valuations (30%).

A new endowment begins earning interest and dividends (yield) as soon as it is established. In the first few years, only the yield is available for spending for the fund's designated purpose. Since 91³Ô¹ÏÍø's endowment strategy aims for strong total returns and emphasizes various equity-oriented investments, the annual yield is usually rather low. Meanwhile, appreciation (capital gains) continues to increase until it is sufficient to accommodate and sustain a higher spending level. Typically this occurs following the third or fourth year after inception of the fund.