Welcome to the Endowment - How Private Funding Enhances Your Work + Your Roles and Responsibilites

Welcome to the Texas State University Endowment

HOW PRIVATE FUNDING ENHANCES YOUR WORK + YOUR ROLES AND RESPONSIBILITIES

THE IMPORTANCE OF ENDOWMENTS

WELCOME TO YOUR ENDOWED FACULTY APPOINTMENT!

Endowments are the hallmark of a great university and the cornerstone for innovative breakthroughs and community impact. Private philanthropic support promotes quality, stability, productivity, and creativity, leaving a lasting legacy to the university and the communities it serves.

As an endowed fund recipient, you have the great honor and responsibility of advancing TXST’s impact through your teaching, research, or service. We look forward to and want to share your successes with alumni, donors, and the Bobcat Nation.

Texas State University has a proud tradition of showing appreciation to donors, and you, as a fund recipient, play a crucial role in that process. By sharing the highlights of how an endowment is helping you accomplish your work, you give donors confidence that their funds are nurturing tangible goals — and you inspire them to keep on giving.

www.ua.txst.edu/about/development-foundation

WHAT IS AN ENDOWMENT?

An endowment is a donor-established fund that generates a steady income stream in perpetuity to support its specific purpose.

Each endowment generates an annual payout based on the spending rate established by the TXST Foundation.

Annual payout is the amount made available each year for spending, in accordance with the fund’s purpose. For the TXST Foundation, the annual payout is calculated as 4% of the preceding 12-quarter average market value of Foundation assets.

Endowments established in a performing market will distribute funds within 12-18 months depending on when the endowment was established. Distributions of these types of funds are sent from the endowment to a university account for the holders to spend as needed during the academic year of the payout.

YOUR RESPONSIBILITIES AS AN ENDOWED FUND RECIPIENT

Your primary responsibilities as a recipient of an Endowed Fund are to strictly adhere to the donor’s intent for the gift, to follow all TXST and TXST Foundation policies and procedures, and to adhere to all state and federal laws surrounding charitable gifts. You are also expected to report regularly on the work that is made possible by this donor fund. This information is part of an important document that goes to donors known as the Annual Endowment Report (AER).

Every donor who has established or significantly supported a TXST endowed fund receives an AER. This report is produced by the TXST University Advancement Office of Gift Compliance in collaboration with the faculty member or staff that administers the fund. The resulting AER provides donors with transparency about how TXST is using the financial returns from their endowed investment and informs them of the real progress you are making toward your goals.

When you provide the report regarding your work, you are speaking directly to donors. Keep this point in mind when summarizing your research and deciding what language to use to address your audience. This gives you an opportunity to express gratitude and inform the donor(s) of your annual teaching, research activities, and accomplishments.

ANNUAL ENDOWMENT REPORTS

The Office of Gift Compliance delivers AER reports to donors in November of each year. Your report is requested from Gift Compliance at the beginning of August and is to be provided by mid-September. Your annual activity report and the following items will be provided to the donor for the previous fiscal year:

• Message from key university leadership

• Financial report(s)

• Endowment overview

• Endowment survey

OTHER WAYS TO CONNECT WITH YOUR DONORS

We encourage you to make meaningful connections with your donor throughout the year. In addition to providing formal updates, you can provide effective stewardship in other ways:

• Phone calls

• Meeting over meals

• Quick notes or emails when key research milestones are reached

• Invitations to visit a lab

• Introductions to students benefiting from endowment funding

Please contact the development office before initiating any of these activities. The development office knows which activities your donor prefers and how often the donor likes to be contacted. By coordinating with the office in advance, you ensure that additional stewardship is appropriate and appreciated.

FREQUENTLY ASKED QUESTIONS

WHAT IS THE PURPOSE OF DONOR STEWARDSHIP?

Stewardship keeps donors informed about the impact of their philanthropy, giving them confidence that they have invested wisely. Your stewardship will develop interest and respect between yourself and your donor(s), as well as educate them on how their funding is being put to work on campus. Research shows that 46% of donors stop giving for reasons connected to “a failure to communicate impact.”*

Gift Compliance is responsible for ensuring that donor funds are used to the maximum capacity as donors intended. Failure to meet this requirement can raise legal issues and affect our ability to fundraise. The TXST Foundation and the University Endowment must maintain transparency so we can build trust and ensure future gifts. Ask yourself, “If I were standing in front of a donor, would I feel 100% confident about my ability to easily explain how I used these funds? Could I show how my efforts align with the purpose of my endowment?”

WHAT IF THE DONOR(S) TO MY ENDOWMENT ARE DECEASED?

In this instance, the Advancement Services Office will seek to locate a next of kin to receive the AER report. If no next of kin can be identified, a financial AER report will be produced to be filed in the endowment file. Utilization reports will continue to be requested for compliance and accountability purposes. The faculty member will continue to receive a fund payout and will be expected to follow the fund purpose requirements.

WHAT IF MY DONOR IS A FOUNDATION OR CORPORATION?

Foundations and corporations have a designated TXST representative. Your development office will coordinate the mailing of the AER report to the organization.

WHAT CAN I USE ENDOWMENT FUNDING FOR?

The endowment payout supports your scholarly work, which may include teaching, research, and service activities, or any other specifications written into the fund purpose, found in the Memorandum of Understanding.

EXAMPLES OF ACCEPTABLE EXPENDITURES include, but are not limited to:

• Salary and benefits

• Salary for support staff working exclusively on the professor’s scholarly projects

• Travel for the professor related to scholarly work

• Purchase of computers and software for the professor, staff, or students working on scholarly work for the professor

• Meetings related to scholarly work

• Graduate student stipends/salary

• Publication and Printing costs related to scholarly work

EXAMPLES OF UNACCEPTABLE EXPENDITURES include, but are not limited to:

• Expenses paid for the professor’s personal benefit

• Travel for department purposes not solely related to the professor’s scholarly work

• Office celebrations

• Lab equipment for use within the department unrelated to the endowed fund purpose

• Staff salaries for general office workers

• Salaries of departmental administrators not solely utilized by the recipient

• Gifts and awards

• Building maintenance

• Lobbying expenses

• Purchasing personal memberships to organizations not related to scholarly work

• First-class travel

*2003 study by Cygnus Applied Research, cited in “Donor-centered Fundraising: How to Hold on to your Donors and Raise Much More Money” by Penelope Burke

MAY I ASK THE DONOR FOR A NEW GIFT?

Please coordinate any donor requests with your development office. Many donors appreciate the opportunity to make new gifts if they receive stewardship and feel engaged with the university.

WHO MANAGES THE INVESTMENT OF THE FUNDS?

Most new endowments are held and managed by the TXST Foundation, a not-for-profit 501(c)(3) separate entity from Texas State University. Please visit our website to see the Statement of Investment Policy approved by the TXST Foundation Board of Trustees. The TXST Foundation Board provides oversight and approval of the investment strategy executed by the TXST Foundation investment consulting firm Cambridge and Associates. University Endowments are managed by the Texas State University System (TSUS) Investment Advisory Committee (IAC) with the advice and support of the investment consulting firm Fund Evaluation Group (FEG). Reference the TSUS Investment Policy for further information.

WHO ADMINISTERS

TXST

ENDOWMENT FUNDS?

The TXST Foundation or the University Endowment holds and manages the endowment funds. Administering the funds is a collaborative process between Gift Compliance and the benefiting department or holder of the endowment. Please refer to Fiscal Responsibilities of Account Manager at Texas State on our website

Compliance with donor intent is one of Gift Compliance and the Account Manager’s fundamental responsibilities, and many areas of the university are dedicated to safeguarding our donors’ objectives. Through a Memorandum of Understanding, estate documentation, or other evidence clearly documenting donor intent, we are ensuring the donor’s gift is held in a fund for that purpose. More specific information can be found on our website in Endowed Chairs, Professorship, and University Chairs: Operating Guidelines. Our goals are to:

• Not underspend the endowment funds made available

• Not overspend the endowment funds made available

• Spend funds per the criteria of the Memorandum of Understanding that is signed between the donor and the university

Gift Compliance oversees and annually compiles an Endowment Compliance Report that is shared with the Deans, Endowment Compliance Committee, Provost, Executive Vice President for Academic Affairs, Vice President for University Advancement, and the Executive Director of the TXST Foundation. Funds that are not being administered within the above parameters are shared with the appropriate leadership of the respective areas.

University Advancement is the fundraising arm of TXST. It also serves as fiduciary, caring for gift assets to ensure they are administered and utilized in accordance with donors’ wishes. Fund stewardship is the responsibility of all university individuals.

WHOM MAY I CONTACT IF I HAVE A QUESTION ABOUT MY FUND’S PAYOUT?

The Director of Gift Compliance is available to discuss any questions you may have at 512-245-2921 or GiftCompliance@ txstate.edu. You may also call the Dean, Chair, or Director on your respective campus regarding fund payout. This information is provided to these individuals nine months prior to the next academic year for recruitment and budgeting purposes.

CONCLUSION

Thank you for your dedication to your work, the university, and to stewarding TXST donors. The generosity of our supporters enables us to cover essential costs, fund vital research, and honor the traditions of excellence and integrity that have always been at the heart of the TXST experience.

Endowed gifts demonstrate our donors’ deep belief in the power of the university’s influence on students’ lives, the Greater Texas region, and its economic growth and vitality. The extraordinary work that is taking place at our university would not be possible without their support and your diligent work. The impact that you make together at TXST creates a lasting legacy now and in the future.