The Purdue University Endowment

Since Purdue University’s founding in 1869, alumni and friends have played a pivotal role in establishing it as one of the world’s preeminent universities. Their contributions have touched innumerable lives by supporting Purdue’s far-reaching programs of learning, discovery, and engagement.

Many of these alumni and friends have not only provided funds year by year, but also have built a permanent financial foundation for Purdue by contributing to the University’s endowment.

You, too, can have a lasting impact on this great University and help to shape the future of Purdue, the nation, and the world.

Consider giving to the Purdue University Endowment.

Endowment Essentials

What is an endowment?

An endowment is a gift that is held in perpetuity and invested in a manner that protects the principal from inflation. The investment income provides a stable funding source for such purposes as scholarships, professorships, lecture series, and research centers.

Purdue has received and managed hundreds of endowment gifts over the years. Collectively, these gifts make up the Purdue University Endowment. For investment purposes, the individual endowment gifts are pooled into a single fund. Pooling endowment gifts allows Purdue to achieve greater diversity in its investments, lower its investment costs, and attain the maximum return on donors’ gifts.

What are the benefits of giving to the Purdue University Endowment?

Gifts of endowments offer many benefits, both to the University and to donors. Endowments increase Purdue’s institutional autonomy and provide it with the resources it needs to stay at the cutting edge. Endowment donors have the opportunity to have a lasting influence on the University’s character and to honor or memorialize loved ones, friends, colleagues, teachers, or other individuals.

Why are endowments so important to Purdue?

Building the University Endowment is a top priority for several reasons:

• One of five income streams

            Like all public universities, Purdue builds its budget from five income streams: tuition and fees, sponsored funding, internal reallocations, state funding, and private giving. Since the 1980s, state support has accounted for a steadily decreasing percentage of the overall budget. This trend makes private gifts even more critical for Purdue’s ongoing excellence.

• Indispensable to excellence

            Gifts from alumni and friends often enable Purdue to offer a scholarship to an excellent student, attract an outstanding professor, buy equipment, enhance a library — small things in the big picture, but indispensable to excellence.

• A secure source

            Because endowments are held in perpetuity and invested for the long term, these gifts provide one of the most secure sources of future revenue.

Investment Principles

Purdue has three investment objectives:

1. Preservation of capital;

2. Protection of capital from inflation; and

3. Enhancement of capital through market appreciation.

A statement of investment policy approved by the University’s Board of Trustees defines how Purdue may invest the endowment funds. Emphasizing long-term growth, Purdue invests the majority of its endowment funds in equities and the remainder in bonds and alternative investments.

How does Purdue maximize the value of donors’ gifts?

Strategic management of endowments increases the value of donors’ actual contributions, generating more income for the supported programs and providing the University with greater financial stability and leverage. Intelligent asset allocation, skillful investment management, and prudent spending policies have resulted in steady growth of the Purdue Endowment. The combined value of the University’s and affiliated foundations’ endowments exceeds $1.5 billion.

What is Purdue’s spending policy?

The University’s policy establishes endowment distribution that is significant yet stable. Income — interest and dividends plus capital appreciation — is distributed semi-annually, based on effective market values as of June 30 and December 31. The distributions have varied from four to five percent of the rolling average market value of the total endowment over the last 12 quarters. Using a 12-quarter average protects the amount that is distributed to individual accounts from short-term fluctuations in the market.

Management Basics

How does the University manage private gifts?

Two separate but allied foundations support Purdue financially: the Purdue Research Foundation (PRF) and the Purdue Foundation. These two foundations are distinct entities with their own memberships, purposes, and bylaws.

Purdue’s endowment investment policy is overseen by the University’s Board of Trustees and the PRF Board of Directors. They work collectively toward a common goal: to ensure private gifts to Purdue are managed well, invested thoughtfully, and used for the purposes specified by donors.

An Internal Investment Committee manages the Purdue Endowment funds and the endowments of the Purdue Research Foundation. This committee is made up of Purdue University’s executive vice president and treasurer (chairman), assistant treasurer, senior director of investments, and PRF’s senior vice president and treasurer.

History of Purdue’s Foundations

1930 — Following trustee David Ross’s idea to create a legal mechanism for Purdue to work together with private industry, the Purdue Research Foundation is founded as a separately incorporated entity to accept gifts, administer trusts, acquire property, negotiate research contracts, and perform other services helpful to the University.

1979 — In response to the Campaign for the Eighties, the Purdue Foundation is created as a simplified “clearinghouse” for private gifts.

Endowment Design

How is an endowment established?

Planning an endowment gift can be a creative, challenging, and rewarding process. Once you choose to make a gift to Purdue, your giving program can be structured to fit your needs and financial goals. Purdue development professionals can help you choose the most beneficial gift asset and the best method for transferring it to the University in order to achieve your giving objectives.

A minimum of $25,000 will establish an endowment at Purdue through any outright giving method using cash, securities, or personal and real property. Other minimums may apply, depending on the project. A minimum of $50,000 is required to establish a charitable remainder trust. Gifts of a life estate or life insurance are other possibilities.

See Gift Opportunities for more information on specific planned giving options.

Endowment agreements, signed by the donor and Purdue, delegate to the University the responsibility of administering the funds according to the donor’s wishes in perpetuity.

What tax benefits can I receive from an endowment?

Specific tax and financial benefits you can receive as a result of your gift depend on what type of asset you give and how you transfer it to the University. You may be able to receive federal and state income tax benefits, avoid or reduce capital gains tax liability, and qualify for estate or gift tax deductions. Several types of gifts can provide tax benefits while offering a lifetime income to you and your heirs.

We recommend you consult with your attorney or accountant for advice on the legal and tax implications of any gift you might make.

What options do I have for designating my gift?

Your most versatile option is to designate your gift to the President’s Fund, because the president directs this money to the areas of greatest need. This fund has provided scholarships and student services; supported building projects, laboratory renovations, and innovative new programs; and matched major grants.

You can also have a meaningful impact on programs throughout the University by tailoring your gifts to a particular area of interest, such as a college or school, academic unit, campus organization, or project.

What options do I have for creating a named endowment?

Named professorships, fellowships, and scholarships are a few of the opportunities that Purdue provides for donors to associate their name or someone else’s with Purdue. Many of the named opportunities have minimum permanent or annual funding requirements to ensure that income will be adequate to achieve the donor’s intent, both now and in the future.