• Most endowments created prior to 1996 stipulate that realized income will be distributed and all realized capital gains will be reinvested as principal, and principal is inviolate (“traditional” or “restrictive” language).
• Most endowment agreements written since 1996 and some of the older endowments have “flexible” language allowing for distributable earnings to be calculated in accordance with policy established by the Foundation’s governing board.
  

Policies for Endowments with "Traditional" or "Restrictive"

Investment Language

• The C.I.T. has historically distributed the actual realized income (dividends and interest earned).  Because it is based on actual yields, the distribution rate varies from year to year.
• The C.I.T. has historically reinvested all realized capital gains as endowment principal.  This enables each endowment to grow and its annual distributions to increase because the investment base is increased in real terms.
• Endowments with "restrictive" language will continue to distribute the realized income and reinvest the realized capital gains.
  

• The spending rate for eligible endowments whose agreements include the "flexible" language is established annually by the UI Foundation Board of Directors based upon the recommendation of the Investment Committee.
• The established spending rate will be the same for all eligible endowments.
• All earnings in excess of the amount distributed based on the spending rate will be reinvested as endowment principal.
• The FY2007 spending rate was set at 4.5% of the prior three year rolling average fair market value of the invested fund balance.