Endowments at MSU
Giving to Michigan State University is an excellent way in which you can tangibly impact the quality of education that we offer. While all gifts to Michigan State University contribute to the high quality of education, research, and outreach, endowments are particularly meaningful as they offer a dependable, perpetual source of funding.
The investment made in MSU with the creation of an endowment provides the type of support that makes a real difference in the lives of our students, faculty, and staff by enhancing their education, research, daily work, future inventions, and academic excellence. Endowed gifts enable MSU to offer a truly world-class, contemporary education.
MSU has developed several tools to help explain the benefits of establishing or contributing to an endowed fund. These brochures are available online through the links below:
- 2012 Endowment Performance
- Endowment at MSU: An Investment in the Future
- The Impact of Endowment: Why Should You Care? (an article reprinted from the Winter 2007 MSU Alumni Magazine)
- Latest Return Rates for MSU's Common Investment Fund
- Office of Investments and Financial Management
A message from President Simon
When I assumed the presidency of Michigan State University in January 2005, I accepted a profound responsibility for the stewardship of a great, pioneering institution of higher education. I am proud to serve as MSU's 20th president.
As the first land-grant university, MSU spearheaded a movement that led to the development of a new educational tradition that has influenced higher education around the globe. Who would have guessed 150 years ago that a small class in a rough-hewn building cut out of the forests of central Michigan would one day be one of the top 100 research universities in the world and a model embraced by universities worldwide?
By any set of standards used to measure higher education, MSU is a world-class institution. Our faculty are at the top of their fields; our students rank among the best; our facilities and technology support their work, while giving hands-on experience with the latest tools for advancing their knowledge; and employers prize their skills and contributions to organizations and societies worldwide.
As an institution serving the public good, we have proven to be a reliable and effective steward of our resources. We provide value both to society in our development of leadingedge knowledge and tomorrow's citizen leaders and to our graduate and undergraduate students who can earn a worldclass education at a competitive price. We set the bar high for ourselves, and we delight in the hard work and diligence it takes to reach it.
It is no secret that despite our record of achievement challenges remain. To maintain and advance our current quest for excellence, we must establish greater control over our financial destiny. This means that it's imperative that our capital campaign succeed. The growth of our endowment represents the growth of our independence from the fluctuations of economic, social and political change. This growth is also essential to assure our competitive position among the world?s best universities. Increased public-private partnerships can help us develop additional sources of revenue as well as ensure that our work is closely linked to society?s needs.
We must re-dedicate ourselves to the task of making a difference in the lives of people by aligning our passion, our persistence and our energy to generate and advance knowledge, then using it in real, practical ways to transform lives. Those of us who are here today-the entire extended university community that I call "Team MSU"-will be the ones who respond to challenges and who will begin writing the next chapters of our history. You are an important part of "Team MSU," and I value deeply your ongoing support of Michigan State University.
Lou Anna K. Simon, Ph.D.
Frequently asked questions about endowments
What is an endowed fund?
An endowed fund is a fund in which:
- the principal, usually the original gift of a donor, is never spent;
- a part of the investment income from MSU's investment of the principal (original gift) supports a program or programs at MSU; and
- the remaining investment income is returned to principal and retained as a hedge against inflation and to provide a reserve that can be drawn on when investment returns are low or negative.
How are endowed funds invested at MSU?
Donors' gifts to establish a new endowed fund or add to an existing endowed fund "buy" shares (or "units" as they are called at MSU) in MSU's Common Investment Fund (CIF). Practically all MSU's endowed funds, and there are hundreds of them, are invested together as a pool in the CIF, just like a mutual fund. As the market value of the CIF increases or decreases, the value of the individual CIF shares increases (or decreases)-and so the value of each specific endowed fund goes up or down. To restate it in another way: Each gift to an endowed fund "purchases" a specific number of "shares" at the current share purchase price in the CIF, and the fund's shares increase or decrease in value as the CIF increases or decreases in market value.
How has the CIF performed?
MSU seeks to maintain excellent investment returns while minimizing the associated market risk. Over the past 10 years, MSU's CIF investment returns have consistently ranked near the top in the nation.Latest Return Rates for MSU's Common Investment Fund
MSU's highly regarded investment managers focus on investment fundamentals and risk controls to keep the university's record of investment performance outstanding. The mix of investments in MSU's portfolio is roughly 80% equity investments (stocks and private equity) and 20% fixed income (bonds, certificates of deposit and money market funds). For a more detailed analysis of the performance of the Common Investment Fund, please visit the link below:2012 Endowment Performance
How is investment income distributed to support programs at MSU?
Each year, the MSU Board of Trustees reviews the "spendable" percentage of the investment income that each share of the CIF will distribute to MSU programs. This is called the "Spending Policy." Historically, the distribution percentage has been approximately 5% of the market value of each share in an endowed fund (for 2012 the distribution percentage was 5% as established by the MSU Board of Trustees). At this spending rate, MSU will allocate investment income of approximately 5% on each CIF share to the MSU program, department, or academic unit that the endowed fund benefits. The larger the endowed fund, the more shares that endowed fund "owns" in the CIF and, thus, the more investment income is distributed to the unit.