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  • 1.  Investing endowment pledge payments, yes or no?

    Posted 09-01-2023 11:28 AM

    Hello,

     

    I would like to know how other institutions manage endowment pledge payments in order to reach fully funded status.  Do you invest the payments and allow any gains and/or returns to benefit the donor's endowment?  If so, is managing this a manual process for you?  Our software, Fundriver, will not accommodate.  If the donor does not see any investment benefit, how do you have that conversation with the donor? 

     

    Example - $10,000 annual pledge payments to establish a $50,000 pledge. We distribute based on a 20-quarter moving average.  When the endowment reaches distribution status, the early quarters are making a significant difference on the annual payout and will continue to do so for several years.

     

    Thanks in advance for any feedback.  Shelby

     

    Shelby Gould

    Assistant Vice President, Advancement Operations 
    Chief Operating Officer, TWU Foundation

    940.898.3861 | office

    903.920.2415 | mobile

     

    Horizontal TWU logo in maroon and black

     

    Division of University Advancement

    1605 N Bell Ave | Denton, TX 76204

     



  • 2.  RE: Investing endowment pledge payments, yes or no?

    Posted 09-01-2023 11:47 AM
    I have only seen this practice done three or four times - and only as an exception to normal standards that require the donor to pay the pledge fully. If I recall correctly, each of the times I have seen this the endowment minimum was at or above $1,000,000 and the funding mechanism was more often securities that came in slightly below the established minimum.

    In these rare instances, the donor cannot pledge the interest or earnings. Only the amount they will personally contribute. So the pledge must be reduced to the amount actually paid. However, your endowment committee or similar body may authorize the fund to achieve minimum funding levels through asset growth rather than contributions.

    However, I would strongly suggest against this as a regular process. It diminishes the value of donors who give the full amount to establish an endowment. If your donors can't fund the full amount, they should be offered a different proposal for another purpose requiring a smaller contribution amount.

    John
    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987




    Original Message


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