Frequently Asked Questions
Q. Should all private gifts to ASU be directed to the foundation?
A. Yes, the ASU Foundation was established to receive and administer all private gifts to benefit ASU. The gifts are managed by the directors and officers of the foundation. However, it should be noted that gifts in kind (e.g., equipment, art or similar items) are gifted directly to ASU if used in ASU operations.
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Q. Why is building the ASU Foundation’s endowment so important at this time?
A. The nation’s best universities are also its best endowed universities—financially strong, able to make strategic investments in people and to undertake important new initiatives that address the needs of the community. By producing spendable income in perpetuity, endowed gifts are critical to the long-term quality of both ASU and the state. The foundation currently has $313 million in assets (as of June 30, 2003).
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Q. Because endowments are forever, how does the ASU Foundation ensure that donor intentions are honored now and for generations to come?
A. The foundation is committed to stewardship of the highest quality. Written documentation exists to verify donor intent and various levels of management approval are required for the expenditure of all funds. The ASU Foundation works closely with the campus, college or program benefiting from the gift to ensure the donor’s intent is met in both the receipt and management of donor funds. Annual reports are provided to all donors (or their designees) who establish endowments to benefit the University. In addition, donors can request information at any time about their gifts.
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Q. Endowed gifts may be important, but doesn’t ASU need current funding, too?
A. Yes, current funding provides the financial flexibility needed to respond quickly to new opportunities. It might be hiring a key faculty or staff member, purchasing a critical piece of equipment or renovating space for a laboratory. Current gifts, as well as endowed gifts, may include cash, real estate, stock and other securities, appreciated property and tangible personal property. In addition to building endowments, one of the foundation’s goals in the next three years is to significantly increase current giving.
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Q. If a donor cannot make an outright gift at this time, are there other ways to support the ASU Foundation?
A. One way is through a planned gift. Planned gifts are a critical component of fundraising because they can be tailored to the financial, tax and estate planning needs of the donor. The options include bequests through a will or living trust, charitable remainder unitrusts, charitable remainder annuity trusts, charitable gift annuities, deferred payment charitable gift annuities, charitable lead trusts, and remainder interest in a personal residence or farm. Planned gifts contributed almost 15 percent of the last campaign. The ASU Foundation hopes to double the contributions received through planned gifts in the next few years.
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Q. Who determines how endowed gifts to benefit ASU will be invested?
A. Endowed funds are generally pooled for investment purposes and managed under policies approved by the ASU Foundation Board of Directors and overseen by the ASU Foundation Finance Committee. The investment policy is reviewed annually. In addition, the policy implementation is reviewed at quarterly committee meetings to ensure timely asset allocations. The overall investment objective is total return with the asset mix structured to provide both current funds (generally for distribution to ASU) and growth of principal.
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Q. What happens to the total investment return earned on endowed gifts?
A. The pooled endowment total investment return is used for three purposes: a) to fund the annual amount available for awards, also called the “endowment payout”; b) to increase the endowment principal, which preserves the purchasing power of the original endowed gift; and c) to pay the annual administrative service charges (ASCs) assessed by the ASU Foundation. Consistent with the practices of the securities industry and other university-related foundations, the ASCs are set by the directors of the foundation and used to support ASU Foundation operations and development activities for ASU. Details on ASCs are available upon request.
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Q. How is the payout rate on the endowment determined and how does it compare to other universities?
A. The Finance Committee of the ASU Foundation reviews the endowment earnings distribution process annually. The rate is calculated as a pre-specified percentage of endowment market values. The payout rate is set annually. The foundation payout rate for the June 2003 payout is 5.2 percent. Since a portion of the return is normally reinvested each year, the principal generally increases in value, which in turn provides for an increase in the next year’s payout. According to fiscal 2000-2001 data, the National Association of College and University Business Officers reported that the average payout rate is 5 percent and that 84.8 percent of reporting institutions use a formula similar to the one used by the ASU Foundation.
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Q. Do you have other questions?
A. For additional information about the ASU Foundation and its programs, please contact us.
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