Q. How is an endowment fund created?

A. An endowment fund is created when funds are given to an institution by donors who have stipulated, as a condition of the gift, that its principal may not be spent – only the income. The donor may also restrict the use of the income to a particular purpose. If so, the institution must spend the income for that purpose.

Q. How are endowment funds invested?

A. Most of the endowment funds are pooled and invested by Managing Agents into marketable securities for long-term growth and earnings, while assuring that principal remains protected.

Q. What’s the difference between University and Foundation Endowments?

A. The University of North Carolina at Charlotte and the Foundation of the University of North Carolina are two separate legal entities, each with its own tax I.D. number. When an endowment is set up, the determination as to whether it is a University or Foundation endowment is according to which legal entity the donor’s gift is made. If a Foundation endowment is established for the purpose of funding University scholarships, a University “spending account” will be set up that will receive income from the endowment and from which the expenditures for the scholarship awards will be made.

Q. What is a “quasi-endowment”?

A. A quasi-endowment is a fund that is treated like an endowment for investment and spending purposes, but does not actually have the donor restriction that the corpus of the fund be held in perpetuity. An example of quasi-endowments is our 078XXX account range. These accounts hold the earnings of our endowment accounts 079XXXX, until they are distributed for spending. They are not part of the original gift from the donor that must never be spent, yet are invested as such, to produce more income. UNC-Charlotte’s quasi-endowments are established at the direction of the Board of Trustees of the Endowment Fund.

Q. What is a “term endowment”?

A. A term endowment is an endowment that the donor has stipulated that principal may be expended after a stated period or on the occurrence of a certain event. An example of a term endowment is when a donor gives $1 million toward a new building, which may not be constructed until some time in the future.

Q. What should an administrator do when the department receives an endowment gift?

A. UNC-Charlotte has a written policy on the receipt of gifts – Policy #39 “Gift Acceptance”, that pertains to all gifts, including endowments.