What is an endowment?
An endowment is a permanent fund that the Foundation invests for the benefit of Texas A&M. It is an amazing philanthropic tool that allows you to benefit Aggieland for generations.
How can I create an endowment?
Creating an endowment is easy and comes with the freedom to direct your gift for a specific purpose based on your passions at Texas A&M. For example, you may choose to fund an endowed scholarship for students from Harris County, Texas, who are studying petroleum engineering. Aside from scholarships, many donors create endowments to advance faculty endeavors or enhance student programs or traditions in Aggieland. The majority of donors choose to direct their gifts in a specific way, and their wishes are documented via a signed gift agreement with the Foundation. You can also specify naming for the fund: in your name, in honor of a relative, or after a favorite professor, for example.
While endowments begin at $25,000, they can be funded over a period of up to five years. No matter what you choose to support, your gift will create a powerful legacy given the long-term financial impacts of endowments.
How does the Texas A&M Foundation manage endowed gifts?
When you create an endowment, the Texas A&M Foundation takes your gift—called the “principal”—and permanently invests it in our Long-Term Investment Pool (LTIP), a highly diversified portfolio with a current value of $2.2 billion. The LTIP is a dedicated source of long-term funding, made up of approximately 8,600 endowed gifts of all sizes from donors, that supports the mission and work of Texas A&M. The LTIP is managed by the Foundation’s Investment Office with oversight from our Board of Trustees. The Investment Team also leverages third-party relationships to provide additional resources and support for the overall investment process.
Each year, a portion of the LTIP is paid out to the university as an annual distribution to fund the purposes designated by donors. The Foundation determines a payout rate for all endowments based on long-term goals and current market conditions. This annual payout rate is what will support your passions in Aggieland, while—importantly—the principal of your gift will always remain.
What happens if there is a downturn in the markets?
While it is inevitable that financial markets will fluctuate with the ebb and flow of economic cycles, the endowment’s key competitive advantage of a perpetual investment time horizon allows it to withstand the variations of market conditions. The Investment Team believes that a long-term mindset truly facilitates the power of compounded returns and, as such, a long-term investment horizon is the team’s basis for all investment activity including both asset allocation and security selection. This enables the Investment Team to avoid the pitfalls of reactionary decisions related to short-term market volatility.
Understanding that risk is inherent in every investment, the Investment Team actively manages risk by identifying and understanding the types of risks associated within the portfolio, establishing policies and practices to monitor and mitigate the effects of risk, and accepting that risks are inherent in managing a perpetual pool of capital. Thus, the team’s approach to risk management supports the investment philosophy of being an all-weather portfolio by materially influencing security selection and portfolio construction.
With oversight by the Board of Trustees, the Investment Team utilizes an intentional asset allocation strategy based upon economic regimes to build a balanced, all-weather and diversified portfolio across geographies, sectors, market sizes and investment styles to best withstand market volatility. That balanced strategy extends to individual investment decisions as the team focuses on investing in singles and doubles as opposed to “swinging for the fences” to ensure the aggregate portfolio generates a long-term performance that supports consistent and stable annual payouts for Texas A&M regardless of the current market environment.
How do endowments benefit Texas A&M University?
While all gifts to the Foundation contribute to the high quality of education found at Texas A&M, endowments are particularly meaningful as they offer a dependable source of funding. Plus, as more individuals contribute endowed gifts to the Foundation’s portfolio, financial support for Texas A&M continues to increase, resulting in greater campus impact.
Are you interested in creating an endowment for Texas A&M? Let us know today by requesting a giving kit below.
