FSU Foundation Endowments—
Investment and Spending Policies

For questions about the Foundation’s Investment and Spending Policies, contact Jerry Ganz, Chief Financial Officer, at jganz@foundation.fsu.edu.

FSU Foundation’s Mission

The Florida State University Foundation enhances the academic vision and priorities of FSU through its organized fundraising activities and funds management. The FSU Foundation accomplishes its mission by:

• Fostering relationships with alumni and friends of FSU and advocating charitable giving to FSU;
• Soliciting contributions for academic purposes as part of FSU’s overall advancement effort;
• Investing and disbursing funds to meet current and future needs of FSU; and
• Strengthening relationships with donors to FSU.

Investment Oversight

The Investment Committee of the FSU Foundation Board of Trustees is responsible for investing the Foundation’s endowments. The committee, with the help of an independent investment consultant, develops formal investment policies and employs professional investment managers to implement those policies. A major U.S. bank holds the Foundation’s investments that require custody.

Investment Policy

All the endowments of the FSU Foundation are combined, or pooled, for purposes of investment. The primary objective of the investment pool is to grow the corpus in excess of inflation and to meet both current and future obligations as dictated by the Spending Policy, net of operational cost.

To reflect the growth objectives and risk tolerance of the Investment Committee and to support the Spending Policy, the endowment assets are invested according to the following asset allocation guidelines:

Spending Policy

The Endowment Spending Policy is designed to provide a stable income stream to the university community for its current needs while maintaining the purchasing power of the endowed assets.

Spending is 4% of a rolling three-year average of the quarterly market values of participating funds. Spending is distributed at the end of each quarter.

Underwater Endowments

The Florida State University Foundation strives to balance the donor’s desire to fund current program, faculty, and scholarship needs with the commitment to preserve, over time, the donor’s gifts to the endowment corpus. Furthermore, the Foundation takes seriously its responsibility to provide prudent fiduciary management, oversight of the endowments, and intergenerational equity. However, the Foundation is aware that despite diversification in its investment portfolio, and the best good faith efforts of its Board members, there will be times when the fair market value of an endowment may fall below the endowment corpus value creating underwater endowments.

In the event an endowment falls underwater by greater than 20% of its historic dollar value (the aggregate value of all contributions to an endowment fund at the time they were made), the Foundation will perform an in-depth analysis of the fund in order to determine the viability of suspending spending distributions until the value of the fund goes back above the 20% level referred to above. This analysis will include, but not be limited to, the following factors:

• Level of impairment of the fund
• Discussions with the appropriate dean or department head
• The need of the affected fund for continued support
• Cash balance available for use by the affected fund
• Consultation with donor (if possible)
• Identification of any temporary alternative funding sources

Following an analysis of a fund, the Foundation will make a decision on future spending distributions relative to that fund.

An annual summary analysis will be performed on all endowed funds less than 20% underwater to determine future spending distributions to those funds.

The intent of this policy is to attempt to continue to provide spending distributions to support the scholarships, programs, and faculty as designated by the donor and in accordance with Florida laws, while also allowing the endowment to recover more quickly from economic downturns.

Administrative Fee

The Foundation assesses a variable fee sufficient to offset its operating expenses. The fee will not exceed 2.5% annually.

Growth/Inflation

The earnings allocated to an endowment are based on each fund’s prorated share of the total investment pool. The amount allocated is the net of market performance, less the spending distribution and less an administrative fee for Foundation operating expenses.

Earnings in excess of spending and the administrative fee are added to the endowment balance. This “growth” is then available to provide the cushion to fund spending and fees during periods of poor market performance. Likewise, the endowment balance will decrease when earnings are not sufficient to cover spending and fees. Growth is also anticipated from the addition of new gifts.

In order to maintain purchasing power, the following equation must be true:

Fiduciary Responsibilities

An independent CPA firm audits endowment accounts held by the Foundation annually. Management reports are provided to the FSU Foundation Board and FSU officials. All requests for disbursements are reviewed for compliance with the Foundation’s Disbursement Policy and donor guidelines. Financial statements are forwarded monthly to responsible parties for each endowment.

Statement of Investment Policy & Objectives (PDF)

Frequently Asked Questions