Policy. It is the policy of Western Washington University Foundation to create and maintain endowments to support Western Washington University in perpetuity. Endowments shall be invested in accordance with the Foundation Endowment Investment Policy and endowment earnings shall be spent in accordance with the Endowment Spending Policy. This policy shall be administered in accordance with the guidelines below.
Authority. The Endowment Policy is approved by the Foundation Board of Directors. The Finance and Audit Committee, within the broad framework of policy set by the Foundation Board, shall have direct responsibility for the oversight and management of the endowment funds and for the establishment of investment policies and procedures.
Guidelines.
Types of Endowments. The Foundation will establish endowments in three broad categories. Within those categories endowments will be further divided in to those that provide scholarship support and those that provide other support to the University.
True endowments: These are endowments in which the donor, by agreement or other evidence, has stipulated that the fund be maintained in perpetuity. The value of the original gift and any other amounts stipulated by the donor to be maintained in perpetuity shall be classified as permanently restricted funds.
Term endowments: These are endowments in which a donor or other outside agency has stipulated that the fund is to be maintained until a particular event or for a stated period of time, after which all or part of the fund may be expended. Additionally, if a donor or other outside agency proscribes a spending rate that makes it unlikely the endowment will last in perpetuity, it will be classified as a term endowment. Term endowments shall be classified as temporarily restricted funds.
Quasi-endowments: These are funds established by the Foundation Board of Directors as endowments. While quasi-endowments are established for the same purposes as true endowments, any portion may be expended at the discretion of the Board. The Foundation President is authorized to act for the Board in establishing quasi-endowments. Quasi-endowments shall be classified as unrestricted funds.
Funds. Each endowment will include two separate funds, a principal fund and a spending The principal fund is used to hold gifts, corpus, to perpetuity. Investment earnings (and losses) will also be posted to the principal fund. The spending fund will contain distributions made from the principal fund in accordance with the Foundation Endowment Spending Policy. Amounts spent to fulfill the purpose of the endowment may only be spent from the endowment spending fund.
Minimum Endowment Amount. The minimum amount to establish a new endowment shall be $25,000.
Growth endowments. An endowment may be established with an initial gift of less than the minimum endowment amount if there is a reasonable expectation that the minimum amount will be reached within a five year period. This expectation could come from a donor pledge or from a fund raising campaign as in the case of memorial endowments contributed to by many donors. During the period between establishment and achieving the minimum endowment amount, all investment earnings (losses) will be added to the endowment corpus.
Endowment Management. Endowment investment and spending decisions will be made in a prudent manner and will consider, when relevant, the following factors:
the duration and preservation of the endowment fund
the purposes of the Foundation and the endowment fund
general economic conditions
the possible effect of inflation or deflation
the expected total return from income and the appreciation of investments
other resources of the Foundation and Western Washington University
the Foundation’s Endowment Investment Policy and Endowment Spending Policy
Endowment Investment Pool. The Foundation’s endowment funds will be invested in a common endowment investment pool and managed in accordance with the Endowment Investment Policy. Individual endowment funds will purchase pro rata shares in the investment pool and investment earnings and losses will be allocated based on the shares held. When an endowment is established with a gift of a non-liquid, non-earning asset (e.g. real estate), that endowment will not be part of the endowment investment pool. In that case, the endowment asset will be held in the endowment principal fund and when it is liquidated the net proceeds will become the endowment corpus and will be invested with the common investment pool.
Spending Distribution. Annually, a spending distribution will be made from the principal fund to the spending fund. The amount will be calculated in accordance with the Endowment Spending Policy and will be recorded at the beginning of the fiscal year.
Expenses. The Board of Directors may establish an administrative fee to be assessed to all endowments. This fee will be calculated and charged at the rate of one quarter of the approved annual rate on the quarter ended market value.
