Ford Foundation on Endowment Management

“Earning high returns isn’t just a matter of bragging rights — endowment income supports the missions of nonprofit institutions, whether education, as with college and universities, or broader social programs, as at many private foundations. By law, tax-exempt foundations must spend at least 5 percent of their endowment every year on charitable purposes. In Ford’s case, that amounts to over $600 million.

If endowment returns do not exceed the 5 percent annual spending rate, they will gradually wither, and can eventually disappear, which is why many investment committees view protecting endowments as a near-sacred duty. That’s the main reason the student-led movement for fossil-fuel divestment has gotten such a cold shoulder at many large endowments.”

If you want a school or foundation to last forever, its endowment must earn more than payout and inflation.

New York Times article on the Ford Foundation

Ford Foundation Center for Social Justice Atrium Garden

Post by Marcelino Pantoja