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Endowment Management
According to University procedures, endowment funds are pooled and distributed to meet as many student financial needs as possible. The Board of Trustees determines the University’s investment strategy and endowment management policies, which may be amended from time to time at the University’s discretion, to further the educational and fiscal goals of the Endowment Fund and the University.
The Endowment Fund is provided through assorted and various established scholarship funds. Also known as the General Scholarship Fund, the fund is sustained through the principal amounts of the different scholarship funds. A “principal” is the principal of an investment, as opposed to the interest or income of an investment. St. John’s University requires a minimum principal investment of $50,000 to endow a fund. The principal of endowment funds are held in perpetuity, and are invested and reinvested as part of the general investment funds of the University. The expendable portion is the interest or income of an investment, which is available for scholarship awards annually. The expendable annual income rate of five percent is calculated based on a three-year moving average of the market value of the principal, and may change each year as determined by the Board of Trustees. The investment objective for these endowments is to continue to increase the annual scholarship awards over time.
Glossary
Earnings Available for Spending: Annual Income Allocation
This is the income allocated at the close of the fiscal year and will be used for scholarships in the following academic year. This is calculated on the three-year moving average of the market value of the principal balance. The rate used to determine the allocation is currently five percent and may change each year as determined by the University’s Board of Trustees.
Expendable Fund Value: Represents the cumulative funds available to be awarded for the designated purpose. This is the income allocated to use for scholarships.
Overall Investment Portfolio Performance
This graph depicts the net rate of investment return earned by the endowment fund for one year, three year, five year and ten year periods as of
May 31st. St. John’s portfolio performance has exceeded the broader equity markets over the long term. The investment performance of your particular endowment may vary from these rates of return based on the timing of your gift(s) during the year.
Principal Fund Balance Value
Represents the funds donated for the purpose of funding the scholarship. These funds cannot be spent.
Principal Market Value
Represents the market value of the principal balance as a portion of the University’s investments.
Scholarship Awards
Represents the total scholarship awards made between June 1st and May 31st of the fiscal year.
New York State Prudent Management of Institutional Funds Act (NYPMIFA)
On September 17, 2010, the New York State Prudent Management of Institutional Funds Act (NYPMIFA) was signed into law by Governor David Paterson. NYPMIFA contains important updates and changes to the law governing the use of endowed funds by charitable institutions, including colleges and universities like St. John’s. The following Frequently Asked Questions are provided to assist you in better understanding NYPMIFA and its impact on endowed gifts.
Why did I receive a letter regarding NYPMIFA?
If you received a letter, you have donated to an endowed fund at St. John’s prior to September 17, 2010. NYPMIFA changed the rules on how endowed funds can be used and requires that the University notify all living donors that have given to an endowed fund with directions as to the maintenance and/or use of their gifts, and advise them of the change.
Why didn’t I receive a letter regarding NYPMIFA?
If you did not receive a letter, you did not make a donation to an endowed fund prior to September 17, 2010.
What is an Endowment?
An Endowment is a fund in which the original dollar value or principal are invested and reinvested as part of the general investment funds of the University with the intent that the income generated will be used to support the intended purpose, most often scholarship awards. The Board of Trustees determines the University’s investment strategy and endowment management policies, which may be amended from time to time at the University’s discretion, to further the educational and fiscal goals of the Endowment Fund and the University.
How does the change in the law affect my fund?
Prior to NYPMIFA, when a donor established or contributed to an endowed fund, only the income and capital appreciation generated by the assets in the fund were permitted to be spent for the purpose that the donor intended the endowed fund to support (i.e., program, scholarship, etc.). The University was not permitted to spend below the original value of the gift (otherwise known as the "historic dollar value," “principal” or "contributed value"). Under the new law, unless the donor indicates otherwise, the University is allowed to spend endowment funds below their original dollar amount (i.e., the University may spend from an endowment fund when the market value of the endowment fund is below the historic dollar value) if the University’s Board of Trustees concludes that such spending is prudent. Before expending any amounts from an endowment fund (including amounts from historic dollar value), the University must consider specific factors set forth in the new law. These factors are designed to balance the need for current funding against the need to ensure that a fund is available for the benefit of future generations, thereby ensuring that current students are not disproportionately advantaged or disadvantaged relative to future students due to temporary circumstances. What will not change is that any allocation of funds will have to be prudent and consistent with St. John’s spending policy.
What other changes are included in NYPMIFA?
NYPMIFA governs many aspects of the management and investment of endowments. Other sections of NYPMIFA relate to the prudent management and investment of funds, the delegation of management and investment functions to outside advisors St. John’s has always and continues to maintain the highest standards for the prudent management of all University funds. The University’s current policies meet these new standards.
What is St. John’s endowed funds spending policy?
The University's current spending policy is to appropriate for distribution each year 5% of each endowment fund's average market value over the prior three years. This spending policy is designed to provide a predictable stream of funding to support endowment funds, as intended by the donor, while allowing the fund to maintain the purchasing power of the endowment assets. This spending policy allows the University to minimize fluctuations in earnings thereby, reducing the impact of difficult market conditions in which an endowment may lose value over the short-term.
How will St. John’s spending policy change as a result of this new law?
At the present time, the University does not plan to change its spending policy unless its analysis of the factors described above dictates a different spending level with respect to particular endowed funds. However, under the new law, absent any donor restrictions, the University is permitted to spend endowment funds below their original dollar amount (i.e., when the market value of the endowment fund is below the historic dollar value) if the University's Board of Trustees concludes that such spending is prudent.
Here is an example of how the Spending Policy might work under the new law.
Let's assume a donor established an endowment fund in 2008 with a gift of $100,000 and that as of May 31, 2011, the market value of the fund is $95,000. Under the prior law, earnings for this fund would be retained and reinvested into the fund until such time as the market value exceeded the gift value of $100,000. Under the new law, the University would be permitted to spend the endowment fund below its gift value of $100,000 if the University's Board of Trustees concluded that such spending was prudent and the donor did not indicate that the University could not spend below the gift value.
Why do I want the new law to apply to my fund?
By applying the new law to your fund, the University will be able to continue to meet your intent and make awards in the most difficult financial times when our students and the University are in greater need. If the new law is not applied, the University will be prohibited from spending from the historic dollar value of your fund which can cause significant difficulties for St. John’s based on temporary economic conditions. While difficult economic times can cause temporary declines in the value of endowed funds, the needs of the University and our students remain constant and in some cases (e.g., financial aid to needy students) increase during these periods. Under the new law, the University can continue to draw on its endowed funds under such circumstances, provided that the spending levels are prudent and calculated (among other things) to ensure the continuing availability of the funds for the benefit of future generations.
What do I need to do if I agree with having the new law apply to my fund?
No additional action is required on your part. Under the new law if you do not respond within 90 days from the date notice is given, the new law will apply to your fund. Of course, you can mail back the form signed with box #1 checked in the envelope provided, but such action is not necessary if you want the new law to apply to your fund.
What do I do if I don't want my fund to be spent below the amount of the historical dollar value?
If you do not want the University to spend below the original dollar value of your gift just check box #2 on the form that was sent to you and return the signed form in the envelope provided. We will update our records regarding your fund. The letter needs to be returned within 90 days from when it was mailed to you otherwise the new law will be applied to your fund.
Who can I call if I have other questions about the new law or about my fund?
Contact Dionne Dorsey '15G, Acting Director, Office of Donor Relations at 718-990-2128 or via email at [email protected], if you have any questions about your specific fund or how the new law might apply. Or, send us an email at with your question(s) and a member of the Office of Development will get back to you as quickly as possible.