FAQS: Establishing a fund
What are my options to establish a fund?
Charitable gifts to K-State create a margin for excellence and sustain an environment where students, faculty and research flourish.
You may choose from several options to establish and name a fund. We strive to offer choices that allow you to establish the type of fund that most closely matches your philanthropic desires. In each case, your gift may be made outright in a lump sum, through a pledge of up to five years, or through a deferred gift that will be realized by the university in the future.
Permanently endowed funds
Permanently endowed funds create a lasting legacy by providing a continuous source of support for the purpose you specify. The principal will be maintained and invested in perpetuity and awards are based on the annual distribution-to-purpose rate.
Permanently endowed funds require a minimum contribution of $25,000 or a pledge of $5,000 per year for five years. A fund is considered to be endowed when the contribution reaches a minimum of $25,000.
Term-endowed funds are established to be held and invested for a period of time. Distributions from the principal are permitted. Term-endowed funds require a minimum contribution of $25,000 or a pledge of $5,000 per year for five years.
How are endowed funds invested?
Both permanently endowed and term-endowed funds require a minimum contribution of $25,000 or a pledge of $5,000 per year for five years. A fund is considered to be endowed when the contribution reaches a minimum of $25,000.
Once your gift reaches $25,000 it will be invested in the endowment pool on the first day of the next quarter. As of July 1, 2013, earnings from newly invested funds are held and reinvested for a period of one year. This helps to ensure the long-term sustainability of your fund.
The endowment pool operates much like a mutual fund; the endowed accounts purchase shares in the pool at the share value on their day of purchase. The share value fluctuates with the value of the investments held in the pool. An annual endowment management fee, not to exceed 1.4 percent, is subtracted from the total market value of the endowment pool.
Market value is the current worth of a fund, based on the number of shares of the endowment pool held and the current value of a share in the endowment pool.
How are distributions made from the different types of funds?
Distributing permanently endowed funds
The current rates, expressed as a percentage of market value, are as follows: 4.50 percent of the 12-quarter average of the fund's market value as of the end of the fiscal year, converted to a per share distribution amount, will be distributed on a quarterly basis to the expendable balance of the participating accounts and will be made available for expenditure in accordance with their respective memos of understanding. Distributions to purpose will be reduced to one-half of the regular distribution amount should the account’s market value fall to between 7.51 and 15.00 percent of the contributed value. No distributions to purpose will be made on accounts where market value has fallen to less than 15.00 percent of the contributed value. Amounts not distributed to purpose will be reinvested into the term endowed portion of the fund and subject to the same donor restrictions as defined in the MOU.
Awards from permanently endowed scholarship funds do not begin in the year they are established to ensure that adequate earnings have accrued to make the award. Many donors choose to add an expendable contribution to an endowed scholarship fund so that awards may be made immediately while the endowed portion grows.
Distributing term-endowed funds
Distribution options for term-endowed funds include the annual distribution rate set by the foundation, a fixed amount in multiples of $500, or a situational option that pays 50 or 100 percent of tuition and fees for the average freshmen hours.
Term-endowed funds should be established at a level where the fund can be expected to last at least 10 years. A portion of the market value of a term-endowed fund (0.5 percent), is retained by the foundation.
Distributing expendable funds
Expendable contributions are available immediately for use by the designated college or program. If not needed immediately, expendable contributions are invested until required and the earnings are retained by the foundation for operating expenses.
University Advancement Fee
Growing the capacity to support K-State with philanthropic gifts is made possible by a university advancement fee that applies to gifts established after July 1, 2013. Learn more here.