TSU CoETCS Departments

TSU CoETCS ALUMNI ENDOWMENT INFORMATION AND DETAILS

What is an endowment?
Why establish an endowment?
How do endowments work?
What is the Tennessee State University College of Engineering, Technology and Computer Science (CoETCS) Alumni Endowment?
How to give to Tennessee State University CoETCS Alumni Endowment?
When to give to Tennessee State University CoETCS Alumni Endowment?
Where to give to Tennessee State University CoETCS Alumni Endowment?

What is an endowment?

Definition: A fund that is made up of gifts and bequests that are subject to a requirement that the principal be maintained intact and invested to create a source of income for an organization. Donors may require that the principal remain intact in perpetuity, or for a defined period of time or until sufficient assets have been accumulated to achieve a designated purpose.

An endowment is an amount of money (fund) that is given to a not-for-profit institution with a stipulation that the funds are invested to earn annual interest rather than spent immediately. An endowment fund is a permanent savings vehicle for not-for-profit institutions. It is a gift made to an institution to be held in perpetuity. This means that the gift is invested and only a portion of its average annual earnings is used for purposes specified by the donor. The remaining investment return is added to the principle to offset inflation. Schools often maintain endowments, as do hospitals, churches, and other not-for-profit organizations. The growth of the portfolio is not subject to tax and donors receive tax deductions for gifts made to endowments.

It is a permanent source of income for an institution’s programs and/or departments. Gifts to an endowment are invested, with a percentage (currently 3.5%) of the income growth supporting a specific institutional purpose as directed by the donor(s). The remaining income (minus an administrative fee) is reinvested into the endowment, ensuring that the value of the investment grows forever.

At many colleges or universities, individuals who give or pledge $25,000 or more may establish a personalized Endowment Fund in their name (i.e. The Andrews Family Endowment).  These customized funds can be tailored to support an individual’s field of interest within a college or university or they can be created to meet the university’s greatest needs.  Named Endowment Funds can be added to at any time and in any amount.    

Many colleges and universities provide those who have a named endowment with an annual financial report. Named Endowment donors whose funds create student scholarships will be given the opportunity to form a relationship with student recipients.

Why establish an endowment?

There is a growing need for universities to have long-term financial stability in order to deliver reliable service despite changes in the economy and government funding.

How do endowments work?

A portion of the annual earnings is used to award student scholarships or support college or university programs. The rest of the earnings are reallocated back into the fund’s principle to insure that the endowment continues to grow and yield more interest for future scholarships and support.

These personalized funds support academic and institutional programs of the college or university. An endowment fund is a gift that keeps on giving. The original amount of the gift is invested to earn yearly interest, which in turn is used to support students and institutional priorities.  

Normally an Investment Policy statement -- a document that states protocol, such as withdrawal procedure, investment allocation guidelines, and committee membership guidelines, governs an endowment. Investment Policy statements can range from simple one-page documents to formal multi-page documents.

Some highlights of an endowment's Investment Policy might be:

• The asset allocation for the endowment account.
  Most Investment Policy statements will require that the actual account be invested in a mix of equity and fixed income investments. For example, the policy could state that the mix can vary from 40 percent fixed income/60 percent equities, to 60 percent fixed income/40 percent equities, depending on movements of the underlying markets.
• A requirement regarding professional management.
  Many endowment Investment Policies require that professional money managers manage the assets. These money managers are normally required to report results to the not-for-profit's endowment or finance committee, as well as its Board of Trustees on a quarterly basis.
• The rules regarding annual draws.
  The not-for-profit is normally entitled to make annual withdrawals based on the year-end value of the endowment account, as of the previous year-end. The actual allowable draw is normally a percentage, such as 5 percent. The annual draws are then allocated to portions of the not-for-profit's operating budget as determined by the not-for-profit's board of trustees. Some endowments have a stated emphasis. For example, a school may emphasize "faculty". In this event, monies might be allocated to faculty retention, training, and compensation.
• A stipulation regarding the directing of the gift.
  Normally, gifts over a certain amount can be "directed". That means donors can "direct" the use of the annual 5 percent draw. The annual draw from all other gifts can be directed at the discretion of the not-for-profit's Board of Trustees.

What is the Tennessee State University College of Engineering, Technology and Computer Science (CoETCS) Alumni Endowment?

The Tennessee State University College of Engineering, Technology and Computer Science (CoETCS) Alumni Endowment is an endowment fund that is established by the alumni, friends and supporters of the Tennessee State University College of Engineering, Technology and Computer Science (CoETCS) for the benefit of the Tennessee State University CoETCS. It has been established within the Tennessee State University Foundation as a ‘restricted fund’ account with a stipulation that the funds are invested to earn annual interest, rather than spent immediately, for the benefit of the Tennessee State University CoETCS. A portion of the annual earnings is used to award student scholarships or support Tennessee State University CoETCS programs. The rest of the earnings are reallocated back into the Tennessee State University CoETCS Alumni Endowment principle to insure that the endowment continues to grow and yield more interest for future scholarships and support.  The CoETCS Alumni Endowment is a gift that keeps on giving to the Tennessee State University CoETCS. The original amount of the gift is invested to earn yearly interest, which in turn is used to support students and Tennessee State University CoETCS priorities.  

In 2006, the Tennessee State University College of Engineering, Technology and Computer Science (CoETCS) Alumni Endowment will be launched with a $100,000 contribution from its alumni. Funds contributed to this endowment will be added at any time and in any amount, throughout the calendar year, through numerous means (i.e. checks, electronic payment, wire transfers, wills/trust disbursals, etc.).   The Tennessee State University Foundation, as the primary funds manager of the Tennessee State University College of Engineering, Technology and Computer Science (CoETCS) Alumni Endowment, will provide regular financial report to the Tennessee State University College of Engineering, Technology and Computer Science (CoETCS) Alumni Chapter, to assure the donors of the state of the endowment.

The funds contributed to the endowment will be held in a 'perpetual trust', not to be withdrawal or expended by anyone, including the university.  This perpetual trust will be a 'restricted' account within the Tennessee State University Foundation.  That is where it is going, not to be used by the general university community.  Only "Interest Income" generated by the CoETCS Alumni Endowment will be used for the benefit of the Tennessee State University College of Engineering, Technology and Computer Science, by the direction of the CoETCS Alumni Endowment Board of Trustees.   The trustees of the CoETCS Alumni Endowment will be made up of a 'majority' of CoETCS alumni and faculty.  All funds contributed to the CoETCS Alumni Endowment is 100% Tax Deductible (i.e. the Tennessee State University Foundation is a 501(c) 3), and can also be matched by an employer's matching program.  This message has been repeated in numerous communications to the Tennessee State University CoETCS alumni and supporters.   Each contribution is a non-refundable donation into the endowment that will service the long-time needs of College of Engineering, Technology and Computer Science at Tennessee State University.  Based on the endowment model, each ‘donation’ will continue to provide for the needs of the CoETCS long after the donor have passed away. 

What are the goals the Tennessee State University College of Engineering, Technology and Computer Science (CoETCS) Alumni Endowment?

The endowment was initiated for the purpose of funding SCHOLARSHIPS, and that is the greatest tangible benefit that this endowment can support.  There is no intent for these funds or the interest that it generates to be used for a new engineering building or anything else other than 'scholarships'.  With continual alumni, community and corporate giving, if this endowment grows to become $100M, $200M, or more in the DISTANCE future, then the CoETCS Alumni Endowment Board of Trustees can decide (at that time) to use some of the interest income to support the facility needs of the CoETCS. 

CoETCS Alumni Endowment Giving Categories for Individual Participant Amounts

“The Mighty 100” was the first endowment-funding program initiated by the Tennessee State University CoETCS Alumni Chapter. The reason for "The Mighty 100" is to establish a "core" group of 100 CoETCS alumni which will: (1) support on-going giving to the college, with a gift of $1,000 being a starting point; (2) commit to give $1,000 on a annual basis; (3) become critical and active "advocates" for the CoETCS and influence others to give, and (4) become references for the CoETCS by their gift as a critical level of commitment to the CoETCS and the Tennessee State University CoETCS Alumni Endowment.

"The Mighty 100" was not intended to slight anyone.  We are all "The Mighty, Incredible, Fighting Tigers from the Legacy of 2006".  All donor names will go down in the history of the Tennessee State University as beloved alumni and supports that had the 'future-sight' to establish an endowment for the Tennessee State University College of Engineering, Technology and Computer Science. No gift amount will be refused.

NOTE:  ANYONE can give to the Tennessee State University CoETCS Alumni Endowment, regardless of race, age, sex, alumni, non-alumni, non-CoETCS, briefly attended or non-affiliated with Tennessee State University.   Family, friends, and other organizations are WELCOME to contribute.  All contributions will be accepted, and are 100% tax-deductible.

Establishing an endowment is not a one-time, one-year event.  To achieve the Endowment's full, income producing, potential to generate enough funds to award multiple, full-time, multi-year scholarships, it will take a numbers of years to get it to its needed financial level and potential.  With $100, 000 raised to launch Endowment with "The Mighty 100" at Homecoming 2006, by Homecoming 2007 it will have generated $3,000 in interest income (at 3% APR rate, conservation typical interest rate earned on endowments of this size), which will be awarded as a 'partial' scholarship to a deserving student.  That is the promise the CoETCS Alumni Endowment will keep annually, to award whatever interest income the endowment produces and give it to the CoETCS for student scholarships.  

The desire of the Dean of the CoETCS is to award 70 to 100 full-time scholarships per year from the Endowment, so at the 2006 Tennessee State University tuition rates, here is the model the endowment is targeting to support:

So, to generate $1,307,000 in interest income in 2006, at a minimum 3% APR, the Tennessee State University CoETCS Endowment would need a vested worth of $43.5M.   In 10 years, the amount that needs to be generated but the Endowment to support a 4% annual tuition growth rate is $1,934,679, or an Endowment amount of $48.4M.

Although we are 'years' away from having $43.5M in the CoETCS Alumni Endowment (or $48.4M when inflation is factored into the financial model), we have to start somewhere.  The plan is to continue "The Mighty 100" program and augment it with the following endowment building programs to be launched at Homecoming 2006, to continually run over the next 10 years or more:

With "The Mighty 100", and with the other CoETCS alumni endowment funding initiatives, the possibly exists for us to raise $1,050,600 to $2,250,600 per year.  Over ten years, we can raise $10,506,000 to $22,506,000.  This excludes any corporate, state, Title III, or Tennessee State University Foundation matching grants, for any gifts given to the Tennessee State University CoETCS Alumni Endowment. 

If the endowment funding targets can be achieved in the 2006-2007 fiscal year, with $1,150,600 to $2,350,600 raised in the 1 st year of the endowment fund, with a 3% APR rate, up to $34,518 to  $70,518 will be contributed to the CoETCS in scholarships in the second year.     In the 10th year, with $10,506,000 to $22,506,000.in the CoETCS endowment, at a 3% APR rate, $315,180 to $675,180 in interest income will be generated annually for scholarships, in the 11th year .  Although it is not the desired $1.9M needed to be generated in 2016 , the endowment-funding model will at least be heading in the right direction.  Who knows, some rich alumni or multi-millionaire (or billionaire) may leave a major gift to the CoETCS Alumni Endowment to help us quickly get to where we need to be.

How is the Tennessee State University CoETCS Alumni Endowment fund invested at Tennessee State University Foundation?

The Tennessee State University Foundation's investment policies are intended to preserve and increase the real principal value of its endowment while providing a dependable stream of income for the Tennessee State University CoETCS Alumni Endowment fund. The Tennessee State University Foundation may assist the Tennessee State University CoETCS Alumni endowment to grow through Title III, state, federal, corporate, or contributions received by other 3rd party foundation institutions. The Tennessee State University Foundation does not engage in high-risk or speculative activities. Portfolio management always follows written guidelines agreed to by the managers and the Investment and Finance Committee. The Tennessee State University Foundation's portfolio is diversified so as to keep volatility within acceptable limits for the portfolio as a whole.

The strategy of the Tennessee State University Foundation Board's Investment and Finance Committee is a prudent one, designed to ensure that future generations of Tennessee State University CoETCS students derive as much benefit from the Tennessee State University CoETCS Alumni Endowment fund, as do current students.

How to give to Tennessee State University CoETCS Alumni Endowment?

Go To ==>> http://www.tsuengralumni.org/endowment/

When to give to Tennessee State University CoETCS Alumni Endowment?

Anytime of the year.

Where to give to Tennessee State University CoETCS Alumni Endowment?

Anywhere, from any Web browser connected to the Internet around the world, or anyplace where postal service is available. Go To ==>> http://www.tsuengralumni.org/endowment/