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Endowment Guidelines  

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Introduction

An endowed gift is a contribution given with charitable intent to the Pellissippi State Technical Community College Foundation. The Foundation invests the principal of an endowment fund to earn income that supports students and programs at the College. Endowments are invested and managed by the Foundation with the goal of maintaining the purchasing power of the gift. The purpose of the endowment must be consistent with the goals, educational philosophy, and missions of the College and the Foundation.

Endowments may be established for a variety of reasons, such as to pay tribute to loved ones, to honor special occasions, or to support a particular business area or interest. They may be used for a variety of purposes as specified by the donor, such as for scholarships, endowed chairs, and grants to support innovations in teaching and learning. Contributions may also be made to the general endowment.

General Guidelines

Gift Amount

In general, a minimum of $15,000 payable over a period of years not to exceed ten must be contributed to the Foundation before a fund is endowed and disbursements are made from the fund’s income and appreciation. The Foundation currently has some flexibility to encourage contributions that will be matched by a U.S. Department of Education Endowment Challenge Grant. Donors interested in endowing a named endowment should contact the Foundation to discuss payment plans to create an endowed gift. Named endowments are established by a Memorandum of Agreement between the donor and the Foundation.

Investment

Investment Objectives: The investment objectives for managing endowment assets are 1) to maximize the benefit intended by the donor, 2) to produce current income to support donor objectives and the programs of Pellissippi State, and 3) to achieve growth of both principal value and income over time sufficient to preserve or increase the purchasing power of the assets, thus protecting them against inflation.

General Investment Procedures: The Foundation will follow Tennessee Board of Regents Policy 4:01: 01:10, “Policy on the Deposit and Investment of Funds,” which is available on the Web through the following link: http://www.tbr.state.tn.us/policies_guidelines/business_policies/4-01-01-10.htm

Allocation of Assets: The general policy shall be to diversify investments within both equity and fixed-income securities to provide a balance that will enhance total return while avoiding undue risk concentration in any single asset class or investment category.

It is the current policy of the Foundation Board of Trustees to invest all endowed funds in the Commonfund (Commonfund Securities, Inc., 15 Old Danbury Road, Wilton, CT 06897-0812). The Finance Committee periodically reviews the investments to balance the assets according to the market. At its meeting of May 11, 2004, the Finance Committee voted to allocate 70 percent of the Foundation’s endowed assets in the Equity Fund and 30 percent in the Bond Fund. All income, less Commonfund expenses, is reinvested. It is the current policy of the Foundation to invest all non-endowed funds in the Tennessee Local Government Investment Pool (LGIP) administered by the State Treasurer.

Restricted Investments: Certain funds are obtained by the Foundation through donations wherein the donor has placed restrictions on the form of investment to which these amounts may be applied, either directly by specifying qualifying investment vehicles or indirectly by stipulating a higher-than-normal spending rate. The Finance Committee of the Foundation Board of Trustees must agree to restrictions on ways in which funds may be invested before acceptance of such gifts. If accepted, such funds will be invested in accordance with the donor’s requirement to the extent such requirement is a condition of the gift, and will be excluded from the total pool of available funds subject to the current investment guidelines with respect to asset allocation.

Application of Earnings

Earned interest and capital appreciation will be returned to the fund on March 31, June 30, September 30, and December 31. Only endowed funds and participating funds (funds with no restrictions on invasion of principal) will receive quarterly earnings.

Spending

The Pellissippi State Foundation will make an annual distribution not to exceed 5 percent (average market value of the endowment fund for three years ending six months before the end of the current fiscal year). This amount will not normally exceed total real return (return net of inflation) from investments in the endowment fund.

The Finance Committee of the Foundation Board of Trustees reviews the spending policy against actual returns to make adjustments necessary for the preservation of the purchasing power of the endowment funds.

In 1997, the Foundation Board of Trustees established a spending policy that applies specifically to investments held under the terms of the Endowment Challenge Grant: up to 50 percent of the total aggregate endowment fund income earned prior to the date of expenditure may be withdrawn and spent according to the regulations of the United States Department of Education Endowment Challenge Grant.

General Endowment

The Foundation Board of Trustees may use income from the General Endowment for any use consistent with the Foundation’s purpose and goals.

Endowed Scholarships

Funding

Donors may choose to fund scholarships through endowments. If the dollar amount available from the endowment’s earnings becomes inadequate to fund the donor’s original objective due to market conditions, donors may choose to implement one or more of the following options:

• Add funds to the corpus to provide sufficient income
• Supplement earnings with yearly cash contributions
• Redefine the dollar amount of the scholarship

Determining the Amount of the Scholarship

An endowed scholarship gift is managed with the understanding that two-thirds of the original corpus will be maintained for investment. The remaining one-third of the gift and the earnings on the invested part will be distributed for scholarships. (Donors are free to specify a different preference.) A “fully endowed scholarship” is one in which the earnings on the invested capital generate the full amount needed to fund the scholarship each year.

Endowed Chairs

Purpose

Investing in the College’s human resources is vital to the continued development of Pellissippi State. Endowed chairs provide donors with an excellent opportunity to promote the professional growth of the College’s faculty and staff and the enhancement of learning for its students. An endowed chair can focus on any area that is included in the mission and programs of Pellissippi State, such as an academic discipline, a career/technical program, or a special area of study at the College.

Endowed chairs support a variety of academic activities that focus on the specific purpose of the chair. These include

• Travel, study, and research stipends for professional development
• Student instructional projects and field trips
• Acquisition of additional resource materials, literature, and media materials for the classroom, studio, and laboratory

Naming Endowed Chairs

An endowed chair is awarded competitively to reward instructional excellence and leadership. The chair carries the name selected by the donor if approved by the president. The donor is recognized through on-campus signage.

Endowed chairs can be named in honor of a distinguished former staff member, the donor, or someone the donor wishes to honor. The naming of an endowed chair can honor an individual or an organization. Endowed chairs can be either a memorial or a living tribute to the honoree.

Funding an Endowed Chair

Endowed chairs at Pellissippi State support instruction and study, and all enhance and support the regular academic program. Income from the endowed chair may supplement, but not supplant, the salary of full-time faculty or staff employed by the College. The endowment’s investment earnings may also fund additional activities associated with the position, including but not limited to support of students, research, travel, and continuing education.

Endowed chairs may be established and named for a minimum gift of $50,000. There is no maximum. The chair funding may be accumulated over a 10-year period and activated at the end of the accumulation period. Matching dollars through a U.S. Department of Education Title III Endowment Challenge Grant are available for a limited time.

There are many flexible and innovative ways to establish an endowed chair to match the philanthropic interests of donors. Endowed chairs can also be established through trusts and bequests. Foundation staff members are available to meet with donors or their investment adviser to discuss various options for endowing a chair at Pellissippi State.

Other Endowments

The Foundation has many other endowed funds that have been established to support specific departments and programs at the College. Donors who are not interested in establishing their own named endowment but who wish to make a charitable contribution to an endowment have many options. No minimum gift is required to contribute to established endowed funds.

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