Colleges seek financial donations to fund a variety of activities related to the academic mission of the institution. An endowment consists of a large sum of money that matches specific interests of a donor with a need of the institution. The initial donation remains intact and the designated initiative is funded from the interest earned on the donated funds. In some cases, an endowment is set up with unrestricted guidelines, allowing the college to choose how funds are used.

Noble Purpose

If you’re interested in starting an endowment, begin by reflecting upon the reason for your donation. For example, an endowment can be used to honor a family member through a named scholarship. A larger donation can be used to fund a department chair or professorship. A professorship is a faculty position named after a specific professor. Funds from an endowment can also support a symposium, guest lectureship or equipment for a program. The size of your gift is critical in determining what you can fund. For example, a named scholarship may only require $25,000 compared with a $1,000,000 to fund a professorship.

Rules and Parameters

Each college provides specific guidelines for an endowment so it’s important to meet with a development officer to become familiar with the terms. For example, Freedonia University allows 4 percent of the endowment's value to be used annually. Anything beyond 4 percent is used to grow the fund. This will fluctuate, depending upon the stability of the financial market and the policies of the institution. The college may take a small percentage of the annual disbursement to pay for management of the fund. Ask about the guidelines related to the annual payout and maintenance expenses before writing your check.

Trusting Relationship

It’s important to feel comfortable with the people who’ll be overseeing your donation. This will likely require a series of meetings with the development or fundraising office and the department benefiting from your gift. Use the meeting with the development officer to review institutional policies on endowments, ask questions about the investment of the funds and seek information on tax deduction options. Use your meeting with the academic department to find out if your passion is a good fit with the needs of the institution. Since an endowment will be around forever, you can’t count on the current leadership to ensure that your interests are maintained. Instead, you need to know that the purpose of your gift is a long-term match with the mission of the department.

Growth Strategies

Your initial gift will open an endowment, and the institution will use investment strategies to grow the fund. Before giving, look into foundations, private donors or an employer who might be willing to contribute to the fund. The college may be able to suggest potential donors who might be interested in matching your gift. You can also allow other donors to contribute to the endowment on an annual basis. If your gift is in honor of an individual or cause, ask the college to hold an annual fundraiser or add it to their annual calling drive to supplement the fund. If your donation is well managed, it’s a gift that gives forever.