Tuition Rising, Chapter 3 - Chapter 3: Endowments assets...

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Chapter 3: Endowments - assets specified to be held in perpetuity; mutual funds - donor contributes and university invests in a portfolio of stocks, bonds, real estate, other income-earning assets - contribution buys # of shares - institution spends part of total return on current operations and returns part to endowmt - base spending on performance over a number of yrs to protect against negative return yrs - aim to spend 4-4.5% of value of endowments each yr on current operations - measures: endowment, endowment per student, income per student generated by endowment at 4% payout rate Endowment spending policies - why invest in endowment when stock market averaged double-digit returns? - donors suggested that instead of presenting endowment gifts, invest funds themselves and give annual gifts based on earnings - payout is the amt that the university decides to spend from endowment, NOT total rate of return on endowment’s assets - spend less than total return to preserve real value or purchasing power of
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Tuition Rising, Chapter 3 - Chapter 3: Endowments assets...

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