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The Board of Regents establishes the conditions under which an endowment may be accepted and established. No endowment shall be accepted in which the donor directs the investment transactions or holdings or may approve investment policy strategy. The endowment fund shall be under the sole control of the Board of Regents once the Board of Regents accepts the gift.
The Board of Regents authorizes all endowments to be invested in instruments as specified under a separate written Endowment Investment Policy and is deposited with an investment manager established for the purpose of managing endowments for public and private educational institutions.
The purpose of the Spending Policy is to set objectives relative to distribution of endowment earnings while protecting the real value of the endowment corpus and ensure that spending transfers are performed on a predictable, consistent basis for the endowment purpose. Endowments are pooled and invested in instruments that provide income and gains in accordance with the University's current Endowment Investment Policy. A unitized approach may be used to allocate investments and investment earning to each endowment. Spending distributions shall be made not less than annually to transfer a certain percentage of endowment earnings to the operating budget.
Kentucky State University has established an endowment spending policy that attempts to balance the long-term objective of transgenerational purchasing power of endowments with providing a reasonable, predictable and sustainable level of income to support current needs. Spending is derived from interest, dividends and capital appreciation on endowments.
Market values and returns are reported net of fees. Each endowment is allocated proportional charges of investment management expense as well as interest, dividends, and capital appreciation. Each endowment fund grows through additional gifts and its share of investment income.
The spending policy is not to exceed 5% of the three (3) year moving average of fiscal year end endowment market values using the most recent previous fiscal year plus any funds available but not spent in previous fiscal years. There will be no spending allowed in the first year a fund is established unless a specifically stated exemption exists with the original donatives' documents. In no case shall spending deteriorate the initial corpus unless specifically stated in the original donatives' documents.
Kentucky State University Endowment Spending Policy As presented to the Board of Regents July 2011