Endowment Giving Policies

Policy Statement

DEFINITION

An endowment is created with a gift in which the donor's intent is to is to create a permanently invested fund that is not wholly expendable. Typically, the total gift value remains intact, and a portion of the earnings are distributed to support general purposes, or programs designated by donors. This is commonly known as a "True" fund.

"Term" and "Quasi" funds are two other forms of endowment that have evolved that retain the spirit of long-term investment and principal preservation yet permit more flexibility as financial planning tools. Quasi endowments permit principal and income to be expended subject to Dartmouth's policies for expending quasi endowment principal. Term endowments require that principal remain intact for a specified term, with only the income available for spending. After the passing of a specific event or time, principal may also be expended at Dartmouth College's discretion.

GOVERNING AUTHORITIES

Three major authorities determine Dartmouth College's rights and responsibilities in administering its endowment: legal, donor, and trustee.

1. The primary legal authority is the Uniform Prudent Management of Institutional Funds Act, adopted and enacted with some modification by the New Hampshire legislature in July 2008. This statute establishes the parameters, subject to any donor limitations, in which Dartmouth College can maintain, invest, and spend its endowment and other institutional funds.  Other legal regulations, doctrines, and considerations may affect Dartmouth's procedures and policies for endowment administration. The N.H. State Charitable Trusts Unit of the Office of the Attorney General is responsible for protecting the public's interest in the property and assets committed to charitable purposes in the State and enforcing applicable laws.
2. Donors can restrict the terms of an endowment by means of a "gift instrument," a document signed by the donor that states the donor's intent. The donor can intend a true, term, or quasi endowment, and may either restrict the distribution of that endowment to a specific purpose or allow the Trustees to direct the distribution for purposes determined at Dartmouth College's discretion.
3. The third authority is the Board of Trustees of Dartmouth College. The Trustees have ultimate authority over the acceptance and maintenance of gifts, endowments, and investments. The Investment Committee of the Trustees, the President, and the Executive Vice President for Finance & Administration (EVP) are authorized by the Trustees to oversee the administration and investment of the endowment.

GENERAL ENDOWMENT POLICIES

It is the policy of the Trustees of Dartmouth College to enhance its endowment by promoting practices that permit the most flexibility in long-term planning, utilization, and investment. Therefore, Dartmouth seeks endowment gifts that that broadly define the purposes and least restrict administration and the investment of the funds. Donors may restrict the use of income for a specific purpose, provided that the purpose is acceptable to Dartmouth.  

To ensure funds meet this criterion, Dartmouth has developed the following policies that apply to endowments at the institution.

Designation

It is Dartmouth's expectation that a donor-designation to endowment is final. Once a gift is designated to endowment by a signed gift agreement, the donor's gift designation may not be changed, except under exceptional circumstances which may require the approval of the Gift Acceptance Committee (GAC).

Gift additions

A gift addition to an existing endowment fund takes on the terms of the fund. Donors wishing to make a gift addition must be made aware of this policy. Additions are not currently subject to a minimum amount.

Endowment purpose

The Trustees of Dartmouth College encourage endowment gifts for general, or broadly defined, purposes, because they provide the institution with the most flexibility in its financial planning. However, some purposes are not appropriate for endowment; for example, gifts that do not involve long-term investment. If a donor has an expectation that their gift be invested for a near term (i.e., less than ten years) with a set expectation for liquidation, the gift would not be considered appropriate for endowment. Exception to this policy requires prior approval by the Executive Vice President & Chief Financial Officer. Additional approvals may also be required subject to Dartmouth's Quasi Endowment Policy (ID 024-0016).

Documentation polices

To establish an endowment fund, Dartmouth College requires a gift instrument with certain elements approved and signed by the donor. The document must clearly identify which individuals have the authority to define the endowed fund terms and all restricted endowments must have an alternative use clause. This documentation serves as evidence of donor intent and helps to ensure the terms of the gift are clearly documented and followed.

Endowment Funding Levels

The Trustees of Dartmouth College have approved several thresholds for endowed funds. Dartmouth requires a minimum amount to establish an endowment, and various other levels are required for specific purposes (e.g., scholarship, professorship, fellowship, etc.). 

The objectives in establishing these thresholds are 1) to encourage gifts by providing donors with a variety of important giving opportunities, and 2) to ensure that endowments sufficiently provide annual spending amounts which cover the estimated costs of the program/purpose they support, both at the time they are established, and in the future. 

Dartmouth College requires that endowment levels be achieved with donor contributions only. Accumulated earnings retained as part of a fund's market value, are not counted towards reaching these levels because they are already counted on to help preserve the long-term purchasing power of the endowment and are available for spending in current and future periods as needed. Accumulated earnings can also fluctuate over time with changes in the market; while gift principal generally remains intact in perpetuity, and therefore can be relied on to provide a stable source of income. 

Fund additions designated by Dartmouth College, such as Trustee matches or income returned to historic book value, also do not count towards meeting endowment thresholds. Dartmouth's policy requiring that endowment levels be achieved with donor contributions help to ensure that Dartmouth treats all donors in a fair and equitable manner in recognizing their generosity, and also helps to ensure that funds remain at a level sufficient to support their designated purpose.