Financial endowment
[2] Endowments are often structured so that the inflation-adjusted principal or "corpus" value is kept intact, while a portion of the fund can be (and in some cases must be) spent each year, utilizing a prudent spending policy.
Endowments in the United States are commonly categorized in one of four ways:[2] Restricted endowments ensure that the original principal, inflation-adjusted, is held in perpetuity and prudent spending methods should be applied in order to avoid the erosion of corpus over reasonable time frames.
Endowed professorships or scholarships restricted to a particular subject are common; in some places, a donor could fund a trust exclusively for the support of a pet.
A court can alter the use of restricted endowment under a doctrine called cy-près meaning to find an alternative "as near as possible" to the donor's intent.
[13] The earliest endowed chairs were established by the Roman emperor and Stoic philosopher Marcus Aurelius in Athens in AD 176.
Aurelius created one endowed chair for each of the major schools of philosophy: Platonism, Aristotelianism, Stoicism, and Epicureanism.
The oldest dated waqfiya goes back to 876 CE, concerns a multi-volume Qur'an edition and is held by the Turkish and Islamic Arts Museum in Istanbul.
A possibly older waqfiya is a papyrus held by the Louvre Museum in Paris, with no written date but considered to be from the mid-9th century.
The earliest known waqf in Egypt, founded by financial official Abū Bakr Muḥammad bin Ali al-Madhara'i in 919 (during the Abbasid period), is a pond called Birkat Ḥabash together with its surrounding orchards, whose revenue was to be used to operate a hydraulic complex and feed the poor.
[27][28] Nearly 50 years later, Henry VIII established the Regius Professorships at both universities, this time in five subjects: divinity, civil law, Hebrew, Greek, and physic—the last of those corresponding to what is now known as medicine and basic sciences.
The use of endowment funding is strong in the United States and Canada but less commonly found outside of North America, with the exceptions of Cambridge and Oxford universities.
In addition, holding such a professorship is considered to be an honour in the academic world, and the university can use them to reward its best faculty or to recruit top professors from other institutions.
[32] An endowed faculty fellow is a position permanently paid for to recruit and retain new and/or junior (and above) professors who have already demonstrated superior teaching and research.
It can be either merit-based or need-based (the latter is only awarded to those students for whom the college expense would cause their family financial hardship) depending on university policy or donor preferences.
In the United States, typically 4–6% of the endowment's assets are spent every year to fund operations or capital spending.
Any excess earnings are typically reinvested to augment the endowment and to compensate for inflation and recessions in future years.
[35] This spending figure represents the proportion that historically could be spent without diminishing the principal amount of the endowment fund.
The case of Leona Helmsley is often used to illustrate the downsides of the legal concept of donor intent as applied to endowments.
[44] In Canada, after the financial crisis in 2008, University of Toronto reported a loss of 31% ($545 million) of its previous year-end value in 2009.
[45] Critics like Justice Funders' Dana Kawaoka-Chen call for "redistributing all aspects of well-being, democratizing power, and shifting economic control to communities.".
[46] Endowment repatriation refers to campaigns that acknowledge the history of human and natural resource exploitation that is inherent to many large private funds.
It lasts as long as the program officer who had an interest and then goes away" and recommended that an independent endowment be established and that "[n]ative leadership is crucial".
