University endowments funded by donors must be established and managed in accordance with Policy FN15 Endowed or Named, Annually Funded, Accounts and with the highest level of stewardship to assure that the University can provide detail on how funds were managed and expended in compliance with the Guideline Agreements set by the donor. Guideline Agreements are established by donors and become a legal contract with the University, which dictates how the University may use the funds generated by an endowment. The individuals responsible for the management of endowments for the unit must assure that the spending from the account meets the Guideline Agreements set by the donor, including selection of recipients for scholarships and other awards.
- Award - Recognition for achievement of a single specific nature. It may be for grades, activities, or a combination of both. Awards may be created to benefit students, faculty, or staff.
- Endowments- Endowments are invested gifts that provide stable, sustained revenue to support their intended purpose in perpetuity, as stipulated explicitly by the donor(s). Although distinct in purpose or restriction, individual endowments are commingled and invested together in Penn State's Long-Term Investment Pool (LTIP).
- Graduate Assistantships - A form of graduate support, teaching, research or administrative, that includes a stipend, tuition remission, and a subsidy for health insurance. See The Graduate School Policy GSAD-901 Graduate Fellows and Graduate Trainees for complete details
- Graduate Fellowship - Highly prestigious financial support packages that typically include a stipend, tuition remission, and a subsidy for medical insurance. They derive from University or outside awards. Unlike assistantships, they do not have a required instruction or research responsibilities. Recipients must be enrolled in degree programs and be registered full time
- Guideline Agreements - An official University document that describes the benefactor's intent and specifies how the subject endowment or annual income will be used. All Guideline Agreements are drafted and approved by the Office of Gift Acceptance.
- Named, Annually Funded, Account (NAFA) - Gifts are made annually to the NAFA, which only has a spending account, and spent annually in accordance with the Guideline Agreements. To establish NAFA Guideline Agreements, the donor must pledge, for a period of at least five (5) years, a dollar amount equal to at least 5% of the minimum required to endow the same type of account. This option is available for some but not all of the purposes identified in Policy FN15 Endowed or Named, Annually Funded, Accounts
- Quasi-Endowment (funds functioning as an Endowment) - Internally funded endowments, which are funded through unrestricted funds (general funds may not be used for this purpose). The decision to hold the funds in perpetuity is made by the University, not an outside donor. Quasi endowments may only be formed from a unit's unrestricted funding sources. Approval from the Associate Vice President Budget and Finance is required (and must be documented alongside the Guideline Agreement and other relevant materials) for a quasi-endowment to be established.
- Scholarship - An award of money to a student, granted in recognition of academic distinction and/or to provide financial assistance.
- Statement of Donor Intent - A University document that reflects the benefactor's current wishes for the administration of the future endowment and locks in the current minimum for that specific type of endowment. All Statements of Donor Intent are drafted and approved by the Office of Gift Acceptance.
- Term Endowment - Term endowments are created with funds from external sources, which generally fund a specific event. An end-date is established in the Guideline Agreement, and the principal is spent down over the life of the term endowment. Use of term endowments is not encouraged. Approval from the Associate Vice President Budget and Finance is required to create any term endowment.
All proposals, to persons or organizations, contemplating the establishment of endowed or named, annually funded, accounts must:
- be approved by the appropriate administrative officer (dean or chancellor)
- be approved by the Vice President of Development & Alumni Relations through the Prospect Management and Solicitation System before submission to the potential donor.
While the emphasis should be on encouraging unrestricted gifts to the institution, donors may restrict the purpose for which an outright gift (via Endowment or NAFA Guideline Agreements) will be used or how a planned gift will eventually be used (via Statement of Donor Intent) by the University. Any such restrictions must be agreed upon when the gift is established and fully documented in writing in the Guideline Agreements. Provisions are included in all Guideline Agreements, Statement of Donor Intent, and gift agreements to modify the restrictions included therein should it be determined by the University at some future date that the purpose for the gift can no longer be fulfilled.
The University has established six (6) different options for funding endowments and named annually funded accounts.
A benefactor's gift satisfies the specific endowment minimum requirement at the time that the endowment is established.
- An endowment Guideline Agreement and account are created.
- All endowment purposes may be funded in this manner
A benefactor may sign an irrevocable pledge commitment to satisfy the specific endowment minimum requirement during a period of no more than five (5) years from the time that the endowment is established.
- An endowment Guideline Agreement and account are created
- All endowment purposes may be funded in this manner
A benefactor may also pledge to early activate their pledged endowment by providing annual gifts, for a period of at least five (5) years, to the spending account of at least 5% of the minimum endowment level.
- All endowment purposes may be early activated in this manner.
A benefactor may choose to create an endowment in the future with some type of deferred gift (i.e., gift annuity, charitable remainder trust, bequest) and may choose to formalize this future gift by creating a Statement of Donor Intent. If a gift annuity is used to fund a future endowment, the amount must be two (2) times the minimum funding level required at the time the gift annuity is established.
- NO endowment Guideline Agreement or account is created until funding is received
- NOT all endowment purposes may be funded in this manner; specifics are provided in the minimum requirements section
A benefactor may choose to early activate a pledged future endowment during their lifetime by providing annual gifts, for a period of at least five (5) years, to the spending account of at least 5% of the minimum endowment level. In this case, the Statement of Donor Intent would be converted to a Guideline Agreement.
- An endowment Guideline Agreement and account are created
- NOT all endowment purposes may be funded in this manner; specifics are provided in the minimum requirements section
Named, Annually Funded, Accounts (NAFAs) may be established for a fixed period of time by an annual expendable gift of not less than 5% of the minimum required endowment level. The benefactor must make such a commitment for a minimum of five (5) years and sign a pledge commitment form.
- NAFA Guideline Agreements and non-endowed account are created
- NOT all endowment purposes may be funded in this manner; specifics are provided in the minimum requirements section
The University has established certain requirements for each type of endowment. Endowments will activate upon attaining the required minimum funding level. Prior to reaching the required minimum funding level, income generated will revert to principal (unless the endowment is early activated). The endowment types, the minimum gift required, the payment terms of the gift, the purposes for which the endowment will be established, and the monies used are as follows (listed in descending dollar values):
- Minimum Endowment - $5,000,000 - payable over no more than five (5) years
- Eligible Funding Options
- Outright Gift
- Pledge Commitment, payable over not more than five (5) years
- Early Activation of Pledge Commitment, payable over not more than five (5) years to the spending account of at least 5% of the minimum endowment level.
- Purpose - To provide unrestricted support to the academic college or campus led by the Dean/Chancellor. The funds are not meant for long-term commitments to support any specific project, program, or person. They are not intended to be used to supplement the salary of the Dean/Chancellor.
- Minimum Endowment - $4,000,000 - payable over no more than five (5) years
- Eligible Funding Options
- Outright Gift
- Pledge Commitment, payable over not more than five (5) years
- Early Activation of Pledge Commitment, payable over not more than five (5) years to the spending account of at least 5% of the minimum endowment level.
- Purpose - Provide unrestricted support to the academic college or campus for the Assistant/Associate Dean/Chancellor. The funds are not meant for long-term commitments to support any specific project, program, or person. They are not intended to be used to supplement the salary of the Assistant/Associate Dean/Chancellor
- Minimum Endowment - $3,000,000 - payable over no more than five (5) years
- Eligible Funding Options
- Outright Gift
- Pledge Commitment, payable over not more than five (5) years
- Early Activation of Pledge Commitment, payable over not more than five (5) years to the spending account of at least 5% of the minimum endowment level.
- Purpose - To provide unrestricted support to the academic department led by the Department Chair. The funds are not meant for long-term commitments to support any specific project, program, or person. They are not intended to be used to supplement the salary of the Department Head.
- Minimum Endowment - $2,000,000
- Eligible Funding Options
- Outright Gift
- Pledge Commitment, payable over not more than five (5) years
- Early Activation of Pledge Commitment, payable over not more than five (5) years to the spending account of at least 5% of the minimum endowment level.
- Future Funding
- Early Activation of Future Funding
- Purpose - To provide supplemental department support for outstanding University faculty in order to provide the holder of the chair with the resources necessary to continue and further the scholar's contributions to teaching, research, and public service. The support monies will be used for such purposes as salary supplementation, graduate assistantships, administrative staff assistance, research, travel expenses, student support in the form of scholarships/awards, etc. The holder shall be appointed in accordance with University policy.
- Minimum Endowment - $1,000,000
- Eligible Funding Options
- Outright Gift
- Pledge Commitment, payable over not more than five (5) years
- Early Activation of Pledge Commitment, payable over not more than five (5) years to the spending account of at least 5% of the minimum endowment level
- Future Funding
- Early Activation of Future Funding
- Purpose - To provide distinguished scholars the opportunity to continue and further the scholar's contributions to teaching, research, and public service through the provision of salary and supplemental funds. The supplemental funds are to be used for, but are not restricted to, such areas as graduate assistantships, administrative staff assistance, course development, research, travel expenses, student support in the form of scholarships/awards, etc. The holder shall be appointed in accordance with University policy.
- Minimum Endowment - $750,000
- Eligible Funding Options
- Outright Gift
- Pledge Commitment, payable over not more than five (5) years
- Early Activation of Pledge Commitment, payable over not more than five (5) years to the spending account of at least 5% of the minimum endowment level
- Future Funding
- Early Activation of Future Funding
- Purpose - To provide distinguished scholars the opportunity to continue and further the scholar's contributions to teaching, research, and public service through the provision of salary and supplemental funds. The supplemental funds are to be used for, but are not restricted to, such areas as graduate assistantships, administrative staff assistance, course development, research, travel expenses, and student support in the form of scholarships/awards, etc. The holder shall be appointed in accordance with University policy.
- Minimum Endowment - $500,000
- Eligible Funding Options
- Outright Gift
- Pledge Commitment, payable over not more than five (5) years
- Early Activation of Pledge Commitment, payable over not more than five (5) years to the spending account of at least 5% of the minimum endowment level
- Future Funding
- Early Activation of Future Funding
- Purpose - To provide supplemental department support for outstanding University faculty in order to provide a holder of the career development professorship with critical financial support and encouragement for faculty starting an academic career. The supplemental funds are to be used for, but are not restricted to, such areas as graduate assistantships, administrative staff assistance, course development, research, travel expenses, and student support in the form of scholarships/awards, etc. The holder shall be appointed in accordance with University policy.
**Future Funding/Early Activation of an Endowed Chair, Professorship, or Named Career Development Professorship:
In certain cases, the agreement reached with a major donor regarding the support of an endowed chair, professorship, or named career development professorship may specify that the University will not receive the endowment principal funding for several years. Proposals for the early activation of a future endowed chair, professorship, or named career development professorship will be reviewed and approved by the Executive Vice President and Provost of the University. The following general guidelines apply:
- The agreement reached with the donor to fund the future endowment must be of an irrevocable nature (i.e., charitable remainder trust, charitable gift annuity, estate note, etc.)
- If a gift annuity is used to fund a future endowment, the amount must be two (2) times the minimum funding level required at the time the gift annuity is established.
In cases where approval has been received, the donor must commit to a minimum five-year pledge of at least 5% of the minimum required endowment per year until the endowment principal becomes available. A term of at least five (5) years is required.
The faculty position exists as long as it is early activated. At the point where the donor cannot or will not fund a five (5) year commitment, the College has the option to fund the position, or the position will be suspended.
Early activation of an endowed chair, professorship, or named career development professorship through annual gifts will require that all parties be informed that the funding of the position will continue as long as resources are available.
- Minimum Endowment - $400,000
- Eligible Funding Options
- Outright Gift
- Pledge Commitment, payable over not more than five (5) years
- Early Activation of Pledge Commitment, payable over not more than five (5) years to the spending account of at least 5% of the minimum endowment level
- Future Funding
- Early Activation of Future Funding
- Named, Annually Funded, Account
- Purpose - Award money to a graduate student, including payment of or reimbursement for expenditures related to dissertation or thesis completion, in recognition of academic distinction and/or to provide financial assistance. The University will not administer a student aid program that is contrary to the law, or unreasonably restricted. See The Graduate School Policy GSAD-907 Graduate Fellows/Graduate Trainees for complete details.
- Minimum Endowment - $100,000
- Eligible Funding Options
- Outright Gift
- Pledge Commitment, payable over not more than five (5) years
- Early Activation of Pledge Commitment, payable over not more than five (5) years to the spending account of at least 5% of the minimum endowment level
- Future Funding
- Early Activation of Future Funding
- Named, Annually Funded, Account
- Purpose - Lectures enable Penn State students and faculty to interact and develop relationships with important leaders and professionals in a variety of fields. Lecture series often provide the stimulus for innovations in research and education. A benefactor may specify an area of study for the lecture series to address. Expenditures from the lectureship shall consist of an honorarium and/or expenses for the lecturer. Reimbursement of expenses shall conform to current University travel policy.
- Minimum Endowment - $25,000
- Eligible Funding Options
- Outright Gift
- Pledge Commitment, payable over not more than five (5) years
- Early Activation of Pledge Commitment, payable over not more than five (5) years to the spending account of at least 5% of the minimum endowment level
- Future Funding
- Early Activation of Future Funding
- Named, Annually Funded, Account
- Purpose - Enhance the academic environment of our students and faculty, often merging the special interest of a donor with enrichment opportunities. Pure Program Support endowments can be designated to a college, campus, department, or program of a donor's choice. While the required minimum is $25,000, the actual gift depends on the nature of the program that is to be supported; practical minimums should be determined.
Minimum requirements for scholarships vary depending upon the type of scholarship.
Scholarships solely designed to support students pursuing J.D., M.D., or M.B.A. degrees have a minimum endowment level of $50,000, as opposed to a minimum endowment level of $250,000 for Graduate Scholarships.
Scholarships that are designed to support both Graduate and Undergraduate students must have a minimum endowment level of $250,000.
Hybrid program support endowment that permits undergraduate student support must have a minimum endowment level of $50,000. Hybrid program support endowment that permits graduate (and undergraduate) student support must have a minimum endowment level of $250,000.
Scholarship types are listed below in descending dollar value order:
- Minimum Endowment - $300,000
- Eligible Funding Options
- Outright Gift
- Pledge Commitment, payable over not more than five (5) years
- Early Activation of Pledge Commitment, payable over not more than five (5) years to the spending account of at least 5% of the minimum endowment level
- Future Funding
- Early Activation of Future Funding
- Named, Annually Funded, Account
- Purpose - Endow specific position in a particular NCAA Division I sport (i.e., quarterback, forward). All Athletic Position Scholarships are tracked/monitored by Intercollegiate Athletics. Undergraduate or graduate student-athletes may be eligible for Athletic Position Scholarships.
- Minimum Endowment - $250,000
- Eligible Funding Options
- Outright Gift
- Pledge Commitment, payable over not more than five (5) years
- Early Activation of Pledge Commitment, payable over not more than five (5) years to the spending account of at least 5% of the minimum endowment level
- Future Funding
- Early Activation of Future Funding
- Named, Annually Funded, Account
- Purpose - These are University scholarships designed for students enrolled in the Graduate School, engaged in graduate-level coursework. and are established according to a donor's interests and/or preference(s) for a particular campus, college, geographic area, academic merit, or any number of other eligibility specifications consistent with University policy.
- Minimum Endowment - $50,000
- Eligible Funding Options
- Outright Gift
- Pledge Commitment, payable over not more than five (5) years
- Early Activation of Pledge Commitment, payable over not more than five (5) years to the spending account of at least 5% of the minimum endowment level
- Future Funding
- Early Activation of Future Funding
- Named, Annually Funded, Account
- Purpose - Tailored to recognize outstanding National Collegiate Athletic Association (NCAA) Division I student-athletes. All Athletic Scholarships are tracked/monitored by Intercollegiate Athletics. The scholarship typically includes a preference or restriction for student-athletes who are proficient in a specific sport. Undergraduate or graduate student-athletes may be eligible for Athletic Scholarships.
- Minimum Endowment - $50,000
- Eligible Funding Options
- Outright Gift
- Pledge Commitment, payable over not more than five (5) years
- Early Activation of Pledge Commitment, payable over not more than five (5) years to the spending account of at least 5% of the minimum endowment level
- Future Funding
- Early Activation of Future Funding
- Named, Annually Funded, Account
- Purpose - These are University scholarships designed for undergraduate students and are established according to a donor's interest and/or preference(s) for a particular campus, college, geographic area, academic merit, financial need, or any number of other eligibility specifications consistent with University policy. Students enrolled in the Graduate School, but still undertaking undergraduate coursework are eligible for this scholarship.
- Minimum Endowment - $30,000
- Eligible Funding Options
- Outright Gift
- Pledge Commitment, payable over not more than five (5) years
- Early Activation of Pledge Commitment, payable over not more than five (5) years to the spending account of at least 5% of the minimum endowment level
- Future Funding
- Purpose - Granted to the top academic students among those who have the greatest financial need. These scholarships "follow" the recipient throughout their college experience providing the student continues to meet the eligibility criteria.
- Minimum Endowment - $20,000
- Eligible Funding Options
- Outright Gift
- Pledge Commitment, payable over not more than five (5) years
- Early Activation of Pledge Commitment, payable over not more than five (5) years to the spending account of at least 5% of the minimum endowment level
- Future Funding
- Early Activation of Future Funding
- Named, Annually Funded, Account
- Purpose - To provide recognition for achievement of a single specific nature. Awards may be created to benefit students, faculty, or staff.
All scholarships from endowed funds must be awarded through eSteward or LionPATH. Policy FN15 Endowed or Named, Annually Funded, Accounts applies to scholarships from all endowed funds regardless of exceptions noted below. Refer to Policy FN09 Scholarship for more details on scholarships.
To assure appropriate stewardship and fiduciary management of endowed accounts, all spending must be made DIRECTLY from the endowment spending account and must adhere to the purpose and expenditure requirements stated in the endowed Guideline Agreements. Transferring funds out from the spending account of an endowment or from a Named Annually Funded Account to other University accounts to spend are NOT permitted (see exceptions below).
NOTE: General Ledger 52660301 Aid - Scholarship is restricted to the disbursement of scholarships/awards/fellowships through the LionPATH System and should NEVER be used in a transaction within SIMBA.
Exceptions to the establishment and minimum requirements must be justified to, and written approval received from, the Vice President for Development and Alumni Relations.
There are certain categories of endowments where transfers are permissible, due to the nature of the endowment. The following endowment spending accounts are exempt from the prohibition on transfers:
- Endowed funds where the Guideline Agreements specify or allow transfers to other University accounts.
- Endowed funds with Guideline Agreements allowing expenditures in support of the Hershey Medical Center or Four Diamonds Funds, where these funds must be transferred to the appropriate accounts for expenditure.
- Spending account on unrestricted Quasi Endowment (those with a single principal fund within the fund range of 1730000000 - 1737996999), given that these funds are University funds and have no donor stewardship requirements.
- Loan Funds where the Guideline Agreements specify transfer to other accounts.
Exceptions to allow transfers from an endowment spending account to other University fund, beyond those specified above, must contain the following information:
- a detailed explanation providing a compelling reason why the funds must be transferred to another account for management and spending;
- a copy of the Guideline Agreement for the endowed fund;
- a detailed explanation of how the account will be managed to facilitate accurate donor reports through the Office of Donor Relations on the expenditure of funds; and
- a detailed plan on how employees managing the transferred funds will be accountable for adhering to the donor Guideline Agreement.
The request for transfer exceptions must be documented with a memo and submitted by the Finance Officer and approved by the Associated Vice President of Development and the Associated Vice President of Budget and Finance.
If an exception is granted, all transfers must use a journal entry (JE).
If the JE is to transfer from an endowment spending account to other University funds:
- Debit general ledger 59000401 (Tsfr-to Other Funds-Endowment Transfer Only)
- Credit general ledger 45000100 (Tsfr-from Endow Fund-Endowment Transfer Only)
Endowed spending account transfers cannot be made to general funds unless specifically approved.
Violation of a financial policy and/or procedure should be reported to y our supervisor, unit manager, Human Resources representative, and/or office responsible for the policy and/or procedure. Where those resources are inadequate, you may choose to make an anonymous report through the Penn State University hotline by calling 1-800-560-1637.
The Financial Officer is responsible for ensuring that procedures pertaining to the accountability and safeguarding of all cash receipts, cash funds, and other assets are established and followed in accordance with approved University policies and procedures. Regular audits relating to advances, cash, travel, equipment accountability, and other expenditures provide a means to protect University assets. The Financial Officer is responsible for collaborating with Internal Auditing when audits are being performed in the administrative area. Audits pertaining to sponsored activities or other audits performed by external auditors may also be performed. The Financial Officer is also be responsible for collaborating with the external auditor and/or a central University office related to these procedures.
University Records retention must be managed in accordance with Policy AD35 University Archives and Records Management, and retention schedules approved by the Records Management Advisory Committee, the Office of General Counsel, and Senior Vice President and Chief of Staff. These records retention schedules are derived from - or based upon - federal, state, and local statutes or regulations, University Policy, industry standards, and business needs. All University Records must be maintained in such a manner to provide ease of access, establish a suitable audit trail for all transactions, and to be reviewed prior to disposition.
University Records and Transitory/Disposable Record are defined below. See Policy AD35, Definition of Terms for additional information.
- University Records - Information that documents a transaction or regularly conducted activity of the University and that is created, received or retained pursuant to law, University policy, or in connection with a transaction, business, or activity of the University. The term includes documents, papers, letters, books, drawings, maps, plans, photographs, tapes, film or sound recordings, microforms, digital or analog files, information stored or maintained electronically, and data- or image-processed documents.
- Transitory/Disposable Records - University Records that have temporary value and, as a result, may be destroyed after they are no longer needed. In no event shall be retained longer than the official copy of the University Records as delineated on the Records Retention Schedule. Examples include photocopies of official University Records, a printed copy of a University Record that is held by the Responsible Party or within a System of Record, a spreadsheet containing data that is exported from an officially resides in another systems, personal emails not related to University business or activity, and/or mass emails or communications.
Upon completion of the retention period, University Records must be disposed of via secure destruction or transfer to University Archives, unless an exception to the disposition process set forth below applies. If the disposition method for University Records states "Review by Archives" on the records retention schedule, the employees responsible for those records should consult the University Archivist for a final determination of disposition. For University Records that must be securely destroyed, units may arrange for shredding services by either contacting the Blue/White Shredding Program or the Inactive Records Center.
Exceptions to the disposition process are as follows:
- University Records subject to a Legal Hold (see Policy AD35, Legal Hold). A legal hold will remain in effect until it is released in writing by the Office of General Counsel.
- University Records under audit or review by external auditors - The Financial Officer will be notified regarding any cost objects that are under audit hold; the Financial Officer will be responsible for contacting the Unit associated with the cost objects. An audit hold will remain in effect until the hold is released by the Office of Budget and Finance.
- University Records under audit or review by Internal Auditing – Internal Auditing will notify the department or individual regarding any audit holds pertaining to an Internal Auditing investigation. The audit hold will remain in effect until the hold is released by Internal Auditing.
To safeguard the privacy of individuals, records that contain Personally Identifiable Information (PII), as defined in University Policy AD53 Privacy Policy, or student records, as defined in University Policy AD11 Confidentiality of Student Records, must be destroyed beyond recovery. For additional information regarding privacy and the protection of an individual's personal information, see Policy AD53 Privacy Policy.
Additional questions may be directed to the Office of Records Management.
There are no exhibits associated with this procedure.
For questions or additional details, please contact the Office of Gift Acceptance.
To request changes to this procedure, please contact the Office of Systems & Procedures by submitting a GURU Technical Support Request form.
July 1, 2024
- July 1, 2024 - Procedure updated to reflect changes for quasi-endowment reporting.
- February 1, 2023 - Editorial changes: Changed all references to the Associate Vice President for Finance to the Associate Vice President for Budget and Finance, per the directive of the Senior Vice President for Finance and Business.
- January 19, 2023 - Editorial changes:
- Changed all references to the Office of the Corporate Controller to the Office of Budget and Finance, per the directive of the Associate Vice President for Finance
- Changed all references to the Corporate Controller to the Associate Vice President for Finance, per the directive of the Associate Vice President for Finance
- Changed all references to the Vice President for Administration to the Senior Vice President and Chief of Staff, per the directive of the Associate Vice President for Finance
- Original - October 25, 2022 (replaces Policy Guideline FNG07 Endowment Spending Stewardship)
