The Endowment

The University of Massachusetts endowment is an accumulation of funds, primarily gifts with donor-designated purposes, set aside and invested to support the University's teaching and research missions in perpetuity. To date, thousands of donors from the University's five campuses who have wanted to provide enduring support for UMass have made gifts. Each year, a fixed percentage of the funds' market value flows to the University operating budget from interest and investment appreciation, providing an important source of support for each of the University's five campuses. Only about .5% of the University's budget is supported by the endowment currently. Aggressive growth of the endowment can help the University to secure enduring support for important initiatives including academic and campus life programs, financial aid, and facilities support. The University President, the chancellors, and the trustees have identified as a priority the need to increase the size of the University's endowment for three critical reasons:

  1. To maintain access to UMass for the most talented students regardless of their ability to pay. In the last academic year, UMass provided scholarship aid totaling approximately $148 million with 98 percent of students with need receiving some type of need-based financial aid. Institutional aid to UMass students is the fastest-growing category of financial aid, rising 7 percent over the previous year and 178 percent in the last decade, up from $53 million in Fiscal Year 2004. This is an extraordinary commitment to students because these funds must also support day-to-day operating expenses-from salaries and benefits to utilities and insurance. In order to continue to maintain-and hopefully to increase-our commitment to affordability, we must support a greater percentage of scholarship aid with endowment income.
  2. To help ensure that UMass is able to achieve excellence in our education and research programs. In order for the University to sustain and build its research competitiveness and to create a robust and well-supported environment that is an attractive destination for the best faculty members, income from endowment gifts designated for support of research and education initiatives must be available. Innovation is the engine, not only of our economy, but of our University. Research at the intersections and frontiers of academic disciplines is the foundation for excellent teaching and learning experiences for our students. Neither is possible without sustained support from endowment funding.
  3. To continue attracting the highest caliber faculty and students. It is crucial to attract and retain the best people in order to advance knowledge and educate students who will compete and lead in our global economy. We owe it to the people of our Commonwealth and our nation to support and advance the very best public University system possible.

Endowment Distribution Policy

The spending policy for the University of Massachusetts endowment balances the conflicting goals of providing substantial support for current operations and preserving the purchasing power of endowment assets. The policy is designed to release substantial current income to the operating budget in a stable stream while protecting the value of endowment assets against inflation, thereby allowing programs to be supported at today’s level far into the future.

The policy computes the distribution at the rate of 4 percent of the endowment fund’s average fair value for the preceding twelve quarters on a one year lag.  Only quarters with funds on deposit are included in the average.  In addition, a prudence rule is utilized limiting spending from a particular endowment fund to no lower than 93 percent of its book value.