Endowments

Leighton Mellemstrand,

Endowments create a lasting legacy. They provide a steady, predictable and perpetual source of income that ensures students get the financial help they need to finish their studies. They help researchers keep pushing the frontiers of knowledge, driving innovation and finding solutions to challenges facing our society. 

The minimum contribution needed to establish an endowment is $25,000, although this may change over time. Fund a new endowment over a period of up to five years by donating $5,000 a year, for example. Or make a gift of any amount to an existing endowment.

The Gift of Forever

Leighton Mellemstrand, ‘62 BSc(Ag), figured university was out of the question. It was 1958 and the 18-year-old was in hospital recovering from eye surgery. The surgery meant he could not retake his high school physics exam, which he failed. So Mellemstrand felt his only career option was to work on the family farm in eastern Alberta.

But his sister, Lynne Stacey, ‘58 Dip(RM), had a different idea. She had just graduated from UAlberta and convinced her brother to apply to the agriculture program. He was accepted and Stacey continued to help him along through the years with encouraging notes and small cheques. After graduating, Mellemstrand worked in animal nutrition and eventually ran his own feed manufacturing plant.

In gratitude for his sister’s support and to help UAlberta students in financial need, Mellemstrand created an endowed bursary with a gift of more than $30,000. He chose to help students studying in his sister’s field of study: physical therapy.

“I’m happy I have the chance to help students succeed,” Mellemstrand says. Isabel Aldrich-Witt received the Lynne Stacey (Mellemstrand) Bursary and says she could not have finished the school year without it. “This award is so meaningful,” she says. “It’s a person-to-person gift from someone who doesn’t even know me.”

Gifts to endowed funds provide the University of Alberta with ongoing, reliable funding that enables research and teaching excellence — allowing us to pursue fundamental questions and ideas, push the frontiers of knowledge, inspire creative experimentation, drive innovation and advance society. Endowed funds help attract and retain outstanding students, professors and researchers, as well as create and enhance important teaching and research programs.

 

Help students, research or other causes forever
Ensure stable, predictable funding
Create a new endowment or support an existing one

How it works

A donor establishes a student bursary with a $50,000 endowed gift:

  1. The bursary is named for the donor or someone else they want to honour.
  2. UAlberta invests the donor’s gift and the interest is used to fund the bursary.
  3. The endowed bursary is awarded in perpetuity.

UAlberta Endowment Information

  • The value of the endowment as of March 31, 2017 was $1.3 billion.
  • In 2016-17, $36.8 million was available from endowment funds to support research, teaching and learning.
  • Endowment spending in 2016-2017 was 3.2%, which totaled $36.8 million to support research, teaching and learning. In 2015-16, 3,965 students received support from donors (most recent data available).

How the UAlberta Endowment is Managed

To ensure an endowment will provide the same level of economic support to future generations as it does today, the university’s strategy is to not spend everything earned in years when investment returns are strong. This helps to grow the value of the endowment and ensure stable and ensures stable funding that increases over time.

Following a comprehensive review that included consultation with donors and other stakeholders, the university is implementing a revised endowment spending policy. Effective April 1, 2018, 4.0% of the endowment's 60-month average market value will be allocated for spending every year. This straightforward approach will make more funds available for current use, while ensuring the endowment continues to grow and benefit future generations of students, professors and researchers.

More Information

How do I decide between making an endowed gift and an expendable gift?

Determine if you would like your gift to have an immediate impact (expendable), or if you would like to leave a legacy that has an impact in perpetuity (endowed).

You should also determine if you would like a guaranteed amount to be allocated to your purpose every year (through an annual expendable gift) or if you are comfortable with an amount that will vary based on investment market conditions (an endowed gift).

Can the amount used from the endowment change from year to year?

Yes. Endowment fund earnings are subject to change due to a variety of factors, including fluctuations in investment markets and changes in investment policies. Spending allocation policies are also subject to change. As a result, the amount spent for the fund’s purpose, which is a percentage of the endowment’s value, can also vary from year to year.

Can I add to the endowment or supplement the amount allocated with a donation to ensure a guaranteed amount is allocated every year?

Yes. You can add any amount to the endowment principal at any time. New contributions designated to endowment spending are permitted in the first five years of establishment of the endowment as part of an approved fundraising plan. Please contact the Office of Advancement or Office of the Recording Secretary (see contact information below) to learn more.

How much goes to administrative fees and investment costs?

For 2017, 1.3 per cent of the opening market value of the endowment went to management and administrative fees. Currently, 0.7 per cent of the value of the endowment is directed to the infrastructure, people and systems that indirectly support its intended purpose, as well as to programs that raise funds for endowments. Another 0.6 per cent is directed to the cost of investment management professionals and other investment management costs.

Is it possible that nothing would be awarded from an endowment?

Yes, although the university undertakes every effort to ensure funding awarded to the purpose for which the endowment was established. However, for example, there may be no applications for funding from an endowment that supports a student award or no qualified candidates for a new faculty/Chair position under review or in recruitment.

How are unspent endowment spending allocations handled?

Reviews of spending balances are undertaken annually by the managing unit to determine and implement the most appropriate plan to use any unspent funding from prior years. This may result in spending increases immediately (the next year) or over a 2 to 3 year period of time.

If I fund an endowment over time, when will earnings first be spent?

Generally, earnings from an endowment are spent starting the first fiscal year (which begins April 1) after the total value of the endowment reaches $25,000. Donations can be allocated to the spending allocation of emerging endowments in the first five years to activate it immediately while it grows.

How has the university’s endowment performed over time?

Thanks to the generous support of our donors and the university’s prudent management, the UAlberta endowment has grown from $751 million to $1.3 billion over the past 10 years. Since 1989, the actual annualized investment return has been 9.8%, while total spending and inflation have been 6.9%. The additional earnings have been reinvested to grow the value of the endowment to enable stable funding that increases over time.

Why is the university’s spending allocation so low?

The university has taken a conservative approach to spending in order to strengthen the endowment so that we can continue to allocate to spending even when market returns are poor.

This approach has served us well and helped the endowment recover from the global financial crisis.

Following a comprehensive review that included consultation with donors and other stakeholders, the university is revising its endowment spending policy. Effective April 1, 2018, 4.0 per cent of the endowment's 60-month average market value will be allocated for spending every year. This straightforward approach will make more funds available for current use, while ensuring the endowment continues to grow and benefit future generations of students, professors and researchers.

What percent of earnings is used to grow the endowment?

The percentage of earnings reinvested to grow the endowment market value will vary from year to year based on market returns. In 2016/17 the percentage of earnings reinvested, after all expenditures and inflation, was 9.1 per cent. Over time these reinvestments have contributed to the value of the endowment, which now exceeds the inflation adjusted value of donations by 19.1 per cent. The endowment is well positioned to support future funding.

What guides how the university’s endowment investments are managed? Who decides how returns on endowments are spent and allocated?

The Board Investment Committee reviews the spending policy annually and recommends changes to the Board of Governors. The university manages the University Endowment Pool (UEP) in accordance with the University Funds Investment Policy, a copy of which can be found online at:

The Board Investment Committee’s annual report can be found at:

For additional information on the changes to the endowment spending policy, including reductions to the administrative fee rate, please see the University Endowment Pool (UEP) Spending Policy online at: