How do endowments work?
An endowment is an excellent way to ensure that support for your favorite program or department will last forever. This type of gift is a simple investment-based fund that generates income to support a specific program. Once the fund is established, some of the earnings are reinvested to sustain the program’s growth over the years. Endowments are invested in a pool through the UT treasurer’s office. The treasurer’s office uses professional investing criteria to make decisions for the overall endowment pool. The office also watches benchmarks in order to gain the highest possible return while protecting the integrity of the principal as much as possible. At UT, as at most universities across the country, endowments pay out at a rate of 5% per year to the program. Any additional earning is reinvested to provide growth and security in the fund.