Endowments

Frequently Asked Questions about Endowments

How is the University of Alberta endowment managed?

To ensure an endowment will provide the same level of economic support to future generations as it does today, the university's strategy is to not spend everything earned in years when investment returns are strong. This helps to grow the value of the endowment and ensures stable funding that increases over time.

Each year, an annual spending allocation is made available to support students, researchers, academic programs, libraries, museums, facilities and a wide variety of other activities as designated by donors. This straightforward approach makes more funds available for current use, while ensuring the endowment continues to grow and benefit future generations of students, professors and researchers.

How do I decide between making an endowed gift and an annually funded award?

Determine if you would like your gift to have an immediate impact (annually funded award), or if you would like to leave a legacy that has an impact in perpetuity (endowed).

You should also determine if you would like a guaranteed amount to be allocated to your purpose every year (through an annual expendable gift) or if you are comfortable with an amount that will vary based on investment market conditions (an endowed gift).

Can the amount used from the endowment change from year to year?

Yes. Endowment fund earnings are subject to change due to a variety of factors, including fluctuations in investment markets and changes in investment policies. Spending allocation policies are also subject to change. As a result, the amount spent for the fund's purpose, which is a percentage of the endowment's value, can also vary from year to year.

How much goes to administrative fees and investment costs?

In 2022-23, 1.2% of the value of the university's total endowment was directed to fees and expenses. Currently an administrative fee of $8 million, or 0.5% of the value of the endowment, is used to support centrally funded indirect costs associated with the endowment program. In addition, investment management fees last year were $11 million or 0.7%.

Is it possible that nothing would be awarded from an endowment?

Yes, although the university undertakes every effort to ensure funding is awarded annually, there are occasions when spending may not occur or may be delayed. Some examples include: there are no qualified students for an award; a student declines an award after the award deadline; a student transfers programs and becomes ineligible for renewal; a change in leadership for an academic professor or Chair leads to a vacancy; endowment criteria is highly specific and fund terms cannot be met to award the spending. If you require more information on why your endowment was not spent, please contact Donor Relations at thankyou@ualberta.ca. 

How are unspent endowment spending allocations handled?

Reviews of spending balances are undertaken annually by the managing unit to determine and implement the most appropriate plan to use any unspent funding from prior years. This may result in spending increases immediately (the next year) or over a two to three year period of time.

If I fund an endowment over time, when will earnings first be spent?

Generally, once the total value of the endowment reaches $50,000, earnings are available to be spent in the next fiscal year, beginning April 1. So for example, if you donate $50,000 in December. Spending will be available for the student, researcher or program any time after April 1 (3 months). If you donate April 3rd, your donation will be invested and accrue interest until the following April 1 (11 months).

How has the university's endowment performed over time?

Over the last decade the university’s endowment has exceeded its long-term target of 7.25% with a 9.1% annualized return. The university endowment fund remains in a position to provide stable support for students, researchers and the university community.

What is the university doing to mitigate any negative economic impacts on endowment funds?

The investment committee works with investment managers to mitigate impacts as well as take advantage of opportunities. The Board of Governors reviews spending policy regularly. The spending policy is designed to smooth out the market fluctuations that occur using a 60-month rolling average.

What guides how the university's endowment investments are managed?

The primary investment objective for the University Endowment Pool (UEP) is to achieve a long-term real rate of return that equals or exceeds total endowment spending and inflation. Emphasis is placed on preserving intergenerational equity to ensure all beneficiaries, current and future, receive comparable levels of support. Assets are classified based on the strategic role they perform within the portfolio, specifically: Growth, Inflation Sensitive, Delation Hedging, and Diversifiers.

Who decides how returns on endowments are spent and allocated?

The Board Investment Committee reviews the spending policy annually and recommends changes to the Board of Governors. The university manages the University Endowment Pool in accordance with the University Funds Investment Policy and the University Endowment Pool Spending Policy.

Is there a place where I can read more on how the University Endowment Pool is performing?

Yes. The Board of Governors’ Investment Committee produces an annual report. Current and previous investment reports can be found here.

Helpful Links:

2023 Annual Investment Report