The CEF is the investment pool consisting of the University’s endowments. An endowment is a permanent fund established through private gifts to support the program(s) specified by the donor.
The CEF operates similar to the mutual fund. When an endowment gets initially added to the CEF, it buys units in the fund at the CEF unit market price at that time. Each individual endowment maintains a separate identity but is commingled with all endowments for investment purposes.
The primary objective of the CEF is to provide permanent funding for endowment programs while preserving the purchasing power of each endowed gift over time. This objective drives spending policy, return requirements, long-term asset allocation and risk tolerance.
The secondary objective is to provide a steady stream of income to support individual programs. This influences the spending formula used to calculate distributions.
The spending policy authorizes the annual transfer of funds from the CEF to support the purpose designated by the donor. The spending policy is set by the Board of Regents.
The purpose of a spending policy is to provide a disciplined and reasoned approach to moving money from the CEF on a predictable and consistent basis. This policy helps preserve intergenerational equity, the idea that future generations of students and faculty receive the same level of benefits from the CEF.
The spending policy is calculated as a percentage of average market value of the CEF over a rolling five year window. Currently 4% is distributed to the endowed programs and 1% for administrative fees. The CEF returns are netted against the external management fees.
Distributions from the CEF are used to sustain the University’s academic excellence by supporting outstanding faculty, innovative programs and student scholarships.
Details of the CEF’s investment performance are available in the quarterly Investment Performance Report.