How is an endowment payout amount established?
The endowment payout is determined by the expected real return of the assets over the long term. Real return is the rate of return the assets earn, adjusted for inflation. This is an important point as the endowment must keep up with inflation to ensure the capital is preserved and that current and future students receive equitable support. The long-term expected rate of return on the endowment’s assets, adjusted for inflation, has resulted in a 4.5% spending rate. This rate is reviewed annually to ensure it is still realistic given the long-term outlook of the endowment fund investments.
