Endowment FAQs

What are the tax benefits of funding an endowment?
There is a federal tax deduction for charitable contributions. Some states, including North Dakota, give tax credit for gifts to endowments. If you pay taxes in North Dakota, you may be eligible for a 40% state tax credit. Gifts of appreciated assets such as stock can be used to fund an endowment, saving capital gains taxes. Consult your tax adviser to optimize tax benefits.

Do I need to fund my endowment all at once?
No. You may establish your endowment by making scheduled payments over time. The minimum required to establish a named endowment fund is $25,000. Faculty professorships, chairs, and other program-specific endowments have higher minimum gift requirements.

Can I choose what I want my endowment to support?
Yes. You may designate a purpose, including priority needs of the University. Endowments generally fund scholarships, faculty positions and academic programs.

When will my gift start making an impact?
Spending policy (or payout policy) determines how we make dollars available to support the purpose of your endowment. Each December 31, we make available for the upcoming fiscal year, a portion of each endowed fund’s value – currently 4%. This is calculated using the fund’s average market value from the previous 12 quarters (or the actual number of quarters invested, if fewer than 12). Endowment gifts received by December 31 will generate a payout the following December 31.

How can I make an impact now?
While your endowment is investing, you can make an additional impact gift to serve as the payout. Impact gifts received prior to March 1 will provide student support for the fall semester of the same year.

Who is responsible for managing my investment?
The UND Foundation is proud to work with SEI, our outsourced chief investment officer. SEI has been delivering investment outsourcing solutions for more than 25 years and manages $21.2 billion on behalf of 169 nonprofit clients.* SEI’s professionals created a custom investment portfolio designed to meet our organizational and financial goals, and the SEI solution allows us to focus on fulfilling our university's mission. 

How will I know my endowment is making an impact at UND?
The UND Foundation manages more than 1,400 donor-established funds. These funds result in an average annual impact to the University of about $7 million and growing. We provide an annual report that illustrates your endowment’s activity. For scholarship endowments, you will also receive information about your scholarship recipient. You may request a quarterly report at any time by calling our office.
 
Is there a cost for managing my endowment gift?
University foundations across the U.S. apportion a small percentage of the gift as a fee for managing the gift and the endowment. At UND, an investment administration fee of 1.75% of the previous quarter’s market value provides discretionary support for the university and the foundation.

Does the Foundation charge any other fees on gifts?
The Foundation does not charge a fee on gifts** given to the endowment. This means that 100% of an endowment gift will be placed in the endowment fund to grow and be used for the donor’s designated purpose.

What is your policy on underwater endowments?
We consider endowment funds with a fair market value smaller than the original gift value “underwater.” Generally, what we have found is our old practice of immediate, non-averaged payouts of greater than 4% was not sustainable for some funds. Our goals have always been to earn an average 8% total return, which allows for the 4% payout with growing principal over the long term. Unfortunately, those goals were negatively affected by market losses, especially from the financial downturns in 2000 and 2008.

Our University of North Dakota Foundation Board of Directors has a stop-loss threshold for spending from underwater funds, so as to ensure in perpetuity the endowment survives with a goal to keep pace (increase) for inflation. The UNDAAF Investment Committee has been monitoring the values after the 2008 credit crisis, in hopes of seeing full recovery. 

We have made changes so that this should not happen to new endowments in the future. Under our new stop loss policy, spending would be reduced if the fair market value of a fund, evaluated as of June 30 of each year, falls below 80 percent of the original gift value. This is a mechanism to provide the balance between supporting the institution and the commitment to prudent management.

The endowment fund for fiscal year starting July 1, 2015 will produce a reduced payout so less will be taken each year from principal, until the principal grows to within 80% of your gift. This will reduce the annual impact you make on UND, yet ensure your endowment will be sustainable and here in perpetuity.

*As of June 30, 2016.
**Gifts and pledge payments made by credit card are subject to a 2.75% credit card fee.