Endowed Funds and Scholarships

A Gift That Keeps on Giving

A strong endowment is a key indicator of the quality and financial strength of a college. An endowment is a “trust fund”  –  a nest egg for the future.

St. Olaf College’s endowment has been built over the years through generous gifts of all sizes designated for a variety of purposes. Each endowment gift is invested to generate growth and income, and St. Olaf spends only a portion of the annual investment return in supporting the college’s mission and operations. To guard against diminishing funds caused by inflation, the remaining investment return is added back to the fund.

The goal is to ensure that the fund maintains its value over time, and the programs supported by the endowment receive the same — or even greater — funding in the future as they receive today.

The endowment program at St. Olaf continues to grow because more people recognize the benefits of creating their own endowment funds. Some prefer to launch an endowment now so they can see immediate results. Some arrange to establish an endowment gift later with estate assets. Still others prefer to establish an endowment now and add to it through a bequest.

Why make an endowment gift to St. Olaf College?

  • Durability – The idea of creating a perpetual stream of financial support makes sense to people who see a similarity between retirement funds and endowment provisions. You may like the concept of a fund that is guarded and invested separately from other assets so the principal of the fund will stay intact. Only the income or a portion thereof will be used to support St. Olaf College.
  • A Positive Legacy – When your name is attached to an endowment fund, you create an enduring legacy for generations to come. Endowment funds can also be used to honor those who have made a significant impact either in your life or the life of St. Olaf College.
  • Perpetuate Annual Gifts – You may see an endowment fund as a way to underwrite your regular giving to St. Olaf College.
  • A Stronger St. Olaf – Each year, St. Olaf must raise a certain amount of money to sustain facilities, programs and personnel. Raising money for today’s needs is always a priority. Annual payouts from endowment funds relieve some of this pressure and allow the college to plan more confidently for its future.
  • Personal Satisfaction – It is very fulfilling to do something that makes a significant difference and leaves a lasting impact.

How is an endowment gift made?

Planning an endowment gift is a personal process. Some donors make outright gifts of cash or appreciated securities toward the college’s general endowment, in addition to their annual support through the St. Olaf Fund. Others may choose to create a separate, named endowed fund. These donors work with St. Olaf Advancement staff to establish their endowment and craft written guidelines to govern its use in perpetuity.

Some donors decide to establish an endowment through their will or trust provisions, or through some other planned gift arrangement. Because these gifts will take effect some time in the future, St. Olaf encourages each donor to contact the Advancement Office for specific wording regarding future endowment funding.

What is necessary to establish and name an endowed fund?

A named endowment fund can bear the name of the donor or the name of someone he or she chooses to honor or memorialize. The fund can be designated for a particular program, department, or activity on campus. Because an endowment exists in perpetuity, a named endowed fund is an enduring legacy, forever linking the name of the donor to the achievements he or she has made possible.

An endowed fund may be named for the donor(s), a person, or may be given a special name agreed upon by the donor and the College. Named chairs, professorships, and fellowships must be approved by the Board of Regents, upon recommendation by the President.

May a donor restrict his or her gift?

The endowment is divided into two parts: unrestricted (for general use) and restricted (for specific purposes). An endowment gift may be unrestricted or restricted, according to the wishes of the donor.

Unrestricted gifts are used for the highest priorities on campus and provide flexibility as needs change over time. Restricted endowment gifts combine the donor’s interests with certain college objectives. The St. Olaf Development Office works with each donor to ensure that he or she creates a distinctive endowment gift that reflects common goals.

Within the two parts of the endowment is a collection of individual endowed funds – many of them scholarships – either unrestricted or with varying degrees of restriction. Some donors direct their gifts to an existing fund within the endowment that matches their interests. Others choose to create a separate, named fund within the college’s endowment.

How much does it cost to endow a scholarship?

To establish an endowed scholarship either outright or through your will, you would transfer assets to the college with the understanding that these funds would be permanently invested and the income used to provide an annual scholarship for the selected recipients.

Each proposal to establish a scholarship must be approved by the Vice President for Advancement and the Director of Financial Aid. Proposals may specify the conditions of the award, specific kinds of student(s) and/or areas of study, but must be general enough in their terms to ensure that aid will be awarded annually. The minimum amount to endow a scholarship is $50,000. Special arrangements can be made to build the endowed scholarship over a period of up to five years, and to begin awarding it once that minimum level is met. Prior to that, all appreciation and income will be added back to the principal sum.

Once established, can I continue to give to my fund?

Contributions designated to a specific endowed fund may be made in several ways: annual gifts of cash and appreciated securities, bequests through will or trust, remainder interests from life income plans, or proceeds from retirement plan assets and life insurance policies. I’d like to make an endowed gift, but prefer not to name a fund.

Are there existing endowed funds to which I can contribute?

Many of the college’s existing endowed funds and scholarships accept additional contributions. The Development Office will be happy to assist you in selecting a fund that most closely matches your preferred designation.

What is the amount of St. Olaf College’s endowment?

As of May 31, 2015, the market value of the St. Olaf endowment (excluding Deferred Gifts) reached $455.5 million.

How is St. Olaf College’s endowment managed?

Endowment funds are managed primarily by outside fund managers retained by the college. The college uses an asset allocation model, which generally distributes the endowment between equity investments, fixed income investments, and alternative assets: hedge funds, real assets and private equity.

What percentage of endowment earnings are spent?

The college uses a 14-quarter “smoothing policy” to allocate funds from the endowment to the endowed scholarship and endowed fund spending accounts. The effective spending rate is usually around 4.5%.

What happens to incomplete scholarship funds?

After communication with the donors, those funds that do not reach the minimum $50,000 level within a period of five years will be transferred to the general scholarship fund at St. Olaf College.

What’s next?

  • Seek the advice of your financial or legal advisor.
  • Contact Planned Giving at 800-776-6523 or plannedgiving@stolaf.edu to discuss endowed gifts.
  • If you include St. Olaf in your plans, please use the college’s legal name, address, and Federal Tax ID:

Legal Name: St. Olaf College
Address: 1520 St. Olaf Avenue, Northfield, MN 55057
Federal Tax ID Number: 41-0693979