How is the endowment spending distribution determined?
The Board of Trustees establishes and oversees a spending policy that prescribes how endowment distributions are made. The University’s current spending policy for the endowment can be characterized as applying a spending rate (4.75%) to the average of asset values over the last three years. The asset values are equal to the endowment’s portion of Managed Funds. Though the concept is similar, the actual spending formula is more complex and contains an additional governor as a smoothing technique. The formula does produce some year-to-year variability since the spending rate is applied to asset values that change with the market. However, using a multiple-year formula and other smoothing techniques provides an element of predictability. Emory’s spending policy is generally similar to those at most peer institutions. In fiscal year 2005, the endowment distributed over $209 million to support the University’s ongoing operating and capital expenditures.
