Frequently Asked Questions


Scholarship Endowment FAQ

HOW is the annual SPENDING ALLOCATION for ENDOWMENTS calculated?

The Marshall University Foundation Board of Directors revised the SPENDING POLICY in November 2013. The Marshall University Foundation (Foundation) moved from a hybrid spending policy to a moving average spending policy.

The SPENDING POLICY is 4% of the average market value of the endowment for the previous 12-quarters (three-year rolling average). This rolling, multi-year average helps to smooth out market ups and downs to provide more predictable spending budgets.

The cap on the spending budget prevents overspending during extended up periods in the market, and the goal is to ensure that the endowmnet maintains its purchasing power over time to support future generations.

WHEN is the SPENDING ALLOCATION for ENDOWMENTS calculated?

The Foundation’s SPENDING POLICY calculates the SPENDING ALLOCATION annually based on September 30th market values.

The amount of SPENDING ALLOCATION from designated funds will be communicated to Marshall University around the 1st of November. The Spending Allocation is avaliable to Marshall University departments to plan for program expenses and scholarship awards for the following fiscal year, aiding in recruitment and retention of students and programs.

WHAT is APPRECIATION/(DEPRECIATION)?

APPRECIATION/(DEPRECIATION) is the difference between the Market Value and the Corpus of the endowment. APPRECIATION represents an excess of investment return, both realized and unrealized, over the withdrawls for spending and for management fees. DEPRECIATION represents a deficit where cumulative investement losses, both realized and unrealized, have reduced the market value below the corpus of the endowment.

APPRECIATION is the customary funding source for endowment spending budgets. There is NO SPENDING ALLOCATION if there is NO APPRECIATION.

WHY may my SPENDING ALLOCATION equal less than 4%?

Spending is limited by the APPRECIATION in the fund. A few reasons why the SPENDING ALLOCATION may be less than 4% of the market value are as follows:

1. If the APPRECIATION is less than the SPENDING BY CALCULATION, the SPENDING ALLOCATION will be limited to the amount of APPRECIATION in the fund.

2. If the funds have NOT been invested for the full 12-quarter period, the SPENDING ALLOCATION calculated will be less than the 4% target.

3. If a portion of the SPENDING ALLOCATION is returned to corpus, based on the guidelines, the net SPENDING ALLOCATION will be less than 4%.

WHEN will new ENDOWMENTS have a SPENDING ALLOCATION?

ENDOWMENTS begin earning APPRECIATION in the quarter in which the corpus reaches the minimum endowment level, i.e. for scholarships, $15,000.00. As long as the endowment has been invested during any part of the previous 12-quarters and there is positive appreciation, there will be a SPENDING ALLOCATION for the next fiscal year. The amount of spending will depend on how many quarters it has been invested and the positive appreciation at September 30.

HOW can I insure my new ENDOWMENT will be awarded immediately, while it is newly invested?

Donors can provide an EXPENDABLE gift to be awarded to a student, program fund, etc., while the ENDOWMENT is being newly invested. Donors may consider providing an EXPENDABLE gift during each of the first THREE (3) years of newly endowed fund, to supplement the rolling 12-quarter average.