- 2014-15 Endowment Report (pdf)
- 2013-14 Endowment Report (pdf)
- 2012-13 Endowment Report (pdf)
- 2011-12 Endowment Report (pdf)
- 2010-11 Endowment Report (pdf)
- 2009-10 Endowment Report
- 2008-2009 Endowment Report (pdf)
- 2007-2008 Foundation Endowment Report (pdf)
- 2007-2008 University Endowment Report (pdf)
For questions about the information listed on this page, please contact:
Stewardship & Donor Engagement Manager
The Office of Donor Relations within University Advancement is responsible for the preparation and distribution of an annual report on the university's endowments. Links to the 2014-15 report, which details information on both the University and the Foundation endowments, and to prior year reports are are on the right-hand side of this page.
1. What are endowment funds?
The university’s endowment funds consist of both true endowments and quasi-endowments, also known as “funds functioning as endowments.” True endowments are made up of gifts received from donors with the stipulation that the principal remain untouched and that it be invested to produce a never-ending source of support for the purposes specified by the donors. Quasi-endowments are funds set aside by the university to function as endowments over the long term but which may be fully expended, with the approval of the Board of Trustees, to meet the needs of the university.
Endowment funds are invested for the long term, and a portion of earnings from those investments help support the purposes for which they were established: student scholarships, academic programs, professorships, and other university needs.
2. What is endowment principal?
Principal is defined by UNCW as total donor gifts to a true endowment. The terms principal and corpus are sometimes used interchangeably.
3. What is the difference between market value and book value?
The difference between book value and market value is unrealized appreciation (if market value is more than book value) or depreciation (if market value is less than book value).
4. What legal requirements regulate endowments in North Carolina?
In March, 2009, North Carolina adopted the Uniform Prudent Management of Institutional Funds Act (UPMIFA). This act replaces the previous guidance (UMIFA) adopted in 1985. (See Chapter 36E of the NC General Statutes) Unlike UMIFA, UPMIFA does not prohibit invasion of the endowment principal, but instead applies a prudence standard for investment and spending decisions.
UNCW has adopted a policy which takes the position that implementing the flexibility afforded by UPMIFA should be an option of last resort. If exercised, such spending shall not cause the principal to fall below 85% of the historic gift value of the subject endowment fund.
5. How large is UNCW’s endowment?
Endowment funds were valued at $90.9 million as of June 30, 2015, up from $23 million in 2000. The university’s endowment funds are pooled in the unitized University Endowment Fund (the endowment), which consists of approximately 400 separately named endowment funds.
6. How is endowment spending determined?
Spending policy rate is approved by the Board of Trustees of the University. The 4.5% spending policy rate is computed on the average endowment market value at the end of the previous 3 years. This rate helps to insulate the endowment from anticipated market volatility that includes lower investment returns and higher inflation. It also helps to ensure continued, steady support of student scholarships, and academic and university programs.
7. How soon will new endowments start to spend?
New endowments may begin spending after accumulated investment earnings are sufficient to fund the spending budget, subject to the annual computation date for endowment spending budgets of the previous June 30. Normally, it takes at least one full year before a new endowment can begin to spend.
8. How does stock market volatility affect the endowment?
Stock market values go up and down. The university manages stock market volatility by maintaining a diversified portfolio, which includes equities, fixed income, private equity, venture capital, real estate, marketable alternatives and other investments. However, diversification alone will not prevent the endowment from sustaining losses during market downturns.
UNCW endowment’s spending rate helps to insulate the spending budget from short-term fluctuations in the financial markets by using a conservative spending rate formula. The university’s endowment spending rate helps to smooth out the impact of volatile capital markets by providing for annual distributions of 4.5 percent of the average market values of endowment units over the past three years. The approach helps the university budget more consistently for its revenue streams.
9. Why doesn’t UNCW use the endowment to replace the dollars that have been lost from reduced state support?
How endowment funds may be spent is usually restricted by the donor. Such funds can be used only for the specific purpose for which the endowment is established. The endowment is a collection of about 400 separate endowments, most of which have been donated to provide support for specific purposes such as scholarships, educational programs or professorships. To ensure continuing support for future generations, the funds themselves are not spent but invested so that part of the annual earnings can provide a steady flow of dollars each year. The endowment provides a margin of excellence for the university, but it does not replace the unrestricted funds coming from state support and student tuition dollars.
10. Why not increase the rate of spending from endowment earnings when state funding is cut or growing slowly?
The current endowment spending rate is set to protect and grow the value of the endowment for the future, because it must continue to grow over time to preserve the quality and health of the university. If an institution were to spend down its endowment for unplanned expenses, it would take many years to build the endowment back up through investment income, reduced spending and new gifts. The university’s spending rate has changed only twice since 2000.
Commonly Used Terms:
Historical Gift Value:
- The original amount of the gift, plus any additional gifts.
- The cost basis of the gift, plus adjustments for gains or losses, subsequent gifts and any transfers to or from the fund.
- The total book value plus investment earned income and realized and unrealized gains and losses, less distributions
- An endowed fund whose market value is less than its historic gift value.
- Income that is earned from investments, such as dividends from stock and interest from money market and/or bonds.
Realized capital gains/losses :
- These are incurred when an asset is sold. A realized capital gain results from selling an asset at a price higher than the original purchase price. A realized capital loss results from selling an asset at a price lower than the original purchase price.
Unrealized capital gains/losses:
- The change in value of an investment after it is purchased but before it is sold.
- The percentage change in value over a period of time, taking into account net income and capital appreciation (depreciation). This would include interest and dividends, realized gains (losses), unrealized gain (losses) and investment management costs.