UMass Foundation

Policies

Endowment Distribution Policy

The spending policy for the University of Massachusetts endowment balances the conflicting goals of providing substantial support for current operations and preserving the purchasing power of endowment assets. The policy is designed to release substantial current income to the operating budget in a stable stream, since large fluctuations in revenues are difficult to accommodate through changes in University activities or programs, while protecting the value of Endowment assets against inflation, thereby allowing programs to be supported at today's level far into the future.

The University of Massachusetts spending rule achieves these two objectives by using a long-term spending range of a percentage of the preceding 12 quarter average combined with a smoothing rule that adjusts spending gradually to changes in Endowment market value.

The amount of endowment return made available for expenditure during a fiscal year which commences on July 1 is to be computed at the rate of 4 % to 6% of the Endowment Fund's average market value for the preceding twelve quarters on a one year lag and a three-year share average. The Foundation utilizes the pooled investment concept for its endowment funds whereby all invested funds are included in one investment pool. Distribution to each fund participating in the pool is based on its average pro rata unit ownership in the pool during the preceding fiscal years.