While NC State uses donated money in a variety of ways, including directly spending it on operating costs and maintaining facilities, a substantial portion of the donations that are known as endowments are not directly spent.
Endowments are similar to money put in a bank account, in that they gain interest each year; they are invested in something known as the NC State Investment Fund. The fund is divided and managed by several entities, the biggest being the University of North Carolina Management Company. The money is invested in a variety of sectors, including real estate and energy.
Jim Broschart, associate vice chancellor for University Development, explained that endowment money is not meant to be spent. The returns gained from endowments is a source of funding for the university each year, so spending it would decrease how much the university gains each year.
“In an endowment, you have a chunk of money that the donor has given, and that chunk of money stays intact and earns investment income, and a portion of the investment income is split off every year to support, say, a scholarship,” Broschart said. “Another small portion of those investment earnings grow the endowment, so next year there’s more investment income.”
As a result of NC State’s Capital Campaign, a massive fundraising effort that began in 2016, the university now has a lot more endowment money, according to Brian Sischo, vice chancellor for University Advancement.
“All combined is a market value of $1.3 billion,” Sischo said. “Within that, there are over 3,000 individual funds. Some are as small as $50,000-100,000; some are as large as nine figures plus.”
One of the Capital Campaign’s goals was to increase the university’s total endowment by $800 million. The more endowment money the university has, the greater the return it gets each year through interest. The interest can be spent in a variety of ways, including professorships, scholarships and general upkeep of the university.
“Last year endowment return was 12-13 percent,” Sischo said. “The university has a four percent spending rule – we would’ve taken four percent of the return, meaning the balance of nine percent would be reinvested into those accounts so that they have a chance at growing over time.”
Recently, the Wilson family donated $28 million toward NC State’s endowment fund. The money generated through that will go toward the newly renamed Wilson College of Textiles.
“$28 million will be invested in the endowment,” Sischo said. “The income from that will directly support the faculty and students within that particular college.”
Once the university has the full $28 million, at a 12-13 percent return, the fund will generate approximately $3 million. About two-thirds of that will be reinvested back in the fund, so more can be generated the following year, and the last third can be spent toward the Wilson College of Textiles.
To sustain a fundraising at the scale NC State does, donations of all sizes are needed, according to Broschart.
“It takes donors of every size to mount a successful campaign,” Broschart said. “We don’t just care about the size of the gift, we care about the number of people giving, the number of people who care enough about the university to give to it, because it implies that we have broad reach, and it also means that someday modest donors become bigger donors.”
