Guidelines for Gift Endowments

Preface:
The establishment of a permanent endowment is the unique privilege of a donor to provide perpetual funding for a valued purpose. These guidelines are intended to assist persons who are considering making a gift to establish an endowment at Princeton Theological Seminary. They have been adopted by the Seminary Relations committee of the Board of Trustees to clarify and facilitate the process by which endowments can be initiated and established at the Seminary.

Endowment Defined:
An endowment is a gift whose funds are invested to provide continuing income, in perpetuity, for the general or specific purpose stated in the written endowment agreement between the donor and the Seminary. Donor established endowments shall be used only for the purpose(s) specified in the endowment agreement which must be accepted by the Seminary as well as the donor.

Endowment Income:
Income utilization of all endowment funds is determined by the Seminary Board of Trustees (normally in the range of 4-5% of the three year rolling average of the market value of the funds). Endowment earnings in excess of the approved utilization are credited to the principal of the endowment. This enables the endowment to keep pace with inflation and thereby continue to fulfill the original intent of the donor.

Endowment Focus:
Endowment gifts may be unrestricted or they may be restricted for a particular purpose subject to the approval of the Seminary Board of Trustees. Unrestricted gifts enable the donor to support the total program of the Seminary in perpetuity. Such gifts provide institutional stability and flexibility. Restricted gifts enable the donor to provide funds for the stated purpose of the endowment in perpetuity. A donor may request that an unrestricted or restricted endowment be named or that it remain anonymous.

Procedure for "Named" Endowments:
Normally a "named" endowment (e.g., for a scholarship or a faculty chair, or other purpose) shall be established through a written and binding agreement assuring 100% funding of that endowment by the donor(s) within a specified period of time (usually within 3-4 fiscal years or less) and stating parameters of the fund which are agreeable to both the donor and the institution. Donors may also specify that available earned income be returned to principal rather than expended for a fixed number of years during which time the fund will grow.