Endowment, Annuity and Charitable Remainder Trust Management

What makes up Bradley's endowment

  • Over 600 endowed accounts supporting:
    • Scholarships -Department/college support accounts
    • Endowed professorships/Lecture series -Program support
    • Faculty development
    • Capital/facility enhancement
  • Gift annuities and charitable remainder trusts (CRT)
    • Deferred giving providing current income to donor
    • Assets managed by the University
    • Gift annuities backed by University assets
    • CRTs are separate entities with Bradley acting as trustee

What is needed to establish an endowment

  • Signed agreement with the intended use of the funds
  • Signatures of the donor and appropriate Bradley representative(s)
  • Minimum commitment of $25,000
  • Donors can be individuals, corporations, estates, trusts

How is the endowment managed

  • Endowed accounts and gift annuities are managed in investment pools. CRTs are invested to meet the income needs of trust and seek long term growth. Funds are invested in a diversified portfolio
  • Investment objectives are:
    • Provide for long term growth of the endowment
    • Produce current income to support intended use of funds
    • Enhance the purchasing power of contributions

Spending Policy

The spending policy determines the level of spending to be awarded to   endowed accounts on an annual basis.  Awards are based on the three year   average market value (MV) of the endowed account as of December 31.   Awards may be up to 5%  of the average MV as determined by the Board.

Example

Donor A contributes $25,000 on November 1, 2009 to endow a scholarship.   Gift is invested in endowment and assume no change in MV at 12/31.

Spending policy calculation in years one through three would be as follows:

 Year 1

Market Value @ Spending Award

12/31/2007 12/31/2008 12/31/2009 @ 4%

 $                  -$            -$     25,000   $ 333.33

Spending awards are available on the June 1 of the next fiscal year.

 Year 2

Assume endowment returns 3% in calendar year 2010.

Market Value @ Spending Award

12/31/2008 12/31/2009 12/31/2010 @ 3.5%

 $;              -$;   25,000  $;     25,750   $ 592.08

 Year 3

Assume add'l gift of $2,000 given on 12/31 and endowment return of -5% in 2011.

Market Value @ Spending Award

12/31/2009 12/31/2010 12/31/2011 @ 3%

 $;   25,000  $   25,750  $     26,463  $ 772.13

Gift Annuities and Charitable Remainder Trusts

Similar Characteristics

  • Provide life income for donor and/or designated recipient
  • Payments made quarterly
  • Annual tax reporting provided to donor
  • Donor may designate intended use of remainder interests

Factors effecting distribution rates

  • Gift annuities
    • Age of income recipeint (s)
    • Life expectancy
    • Start date of annuity payments
  • Charitable Remainder Trusts
    • Remainder Annuity Trust vs. Unitrust
    • Market Value of trust assets
    • Applicable distribution percentage
    • Additional contributions (unitrusts only)