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Scholarship Endowments

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What is an endowment?

An endowment is a gift held in perpetuity and invested to provide a stable funding source for scholarships and other campus initiatives. Gifts are placed in a fund and a portion of the income earned from that fund finances a scholarship for deserving students, now and in the future. All endowed funds are established by a written agreement between the donors and Texas A&M University-Corpus Christi.

Why are scholarship endowments so important to Texas A&M University-Corpus Christi?

Scholarship endowments are vital to the growth of Texas A&M University-Corpus Christi. They enable the University to keep a college education within the financial reach of as many families as possible, recruit and retain well-qualified students and recognize outstanding performance and exceptional potential in students.

Like all public universities, Texas A&M University-Corpus Christi builds its budget from three main income streams: tuition and fees, state funding and private giving. State support is steadily decreasing, which makes private gifts even more critical for growth.

Approximately 70% of the student population requires some form of financial assistance through merit- and need-based scholarships, grants, loans and part-time campus employment. Scholarship support is a critical need to enable students to graduate. Because scholarship endowments are held in perpetuity and invested for the long term, these gifts provide one of the most secure sources of future revenue.

How to establish an endowed scholarship?

How to invest your endowment?
When establishing an endowment, donors may choose to invest through Texas A&M University-Corpus Christi or the Texas A&M-Corpus Christi Foundation. This is your choice. There are advantages and disadvantages to consider when investing in either type of endowment. It could follow your own investment philosophy or be a more guaranteed approach—both are for the benefit of Texas A&M University-Corpus Christi. All monies are accounted for use only at this campus.

Foundation Endowments:

The Texas A&M-Corpus Christi Foundation is a single purpose use foundation, created for the sole benefit of Texas A&M University-Corpus Christi. It is a board of local leaders who invest endowments for the benefit of the University. The Foundation utilizes a balanced portfolio method of investments consisting of stocks and bonds. The current assets of the foundation are approximately thirty-two million. The Foundation investments distribute 4.25% based on a rolling twelve quarter average of fair market value.

Advantages:

• The endowment has the opportunity to grow through market gain.
• It is locally managed, although the employed investment advisors may not be.

• The endowment is subject to market fluctuations thus there is market risk.
• The payout is 4.25%

University Endowments:

Endowments set up in the university are pooled with other Texas A&M University System endowments but are accounted for separately. System Treasury invests these funds utilizing a balanced portfolio method. The current assets being managed are approximately one billion. They pay out 5% based on the corpus amount invested.

Advantages:

• There is no market risk whatsoever. Therefore, a $100,000 gift today will be a $100,000 gift ten years from now.
• The payout is consistently 5% whether the market is up or down. Because the endowment is pooled with other funds, the economies of scale dilute fees.

Disadvantages:

• The endowment will neither grow nor diminish with market fluctuations. For example, a $100,000 endowment today will be valued at a $100,000 ten years from now.
• There is an inflationary risk of purchase power.

What selection criteria to use?
Donors may choose to make certain designations for their scholarship endowments such as a particular college, academic discipline or department or include other selection criteria. The donor may also narrow the scholarship for merit- or need-based consideration or give primary consideration to one with secondary consideration to the other. Gender, age and ethnicity cannot be used as criteria or preference for awarding scholarships. A scholarship agreement will be executed stating the name of the scholarship, the purpose, selection criteria and amount of scholarship award.