How much does any endowment pay out to achieve its purposes?
Institutional policy is to annually determine a “takeout rate” that falls in a range of 4%-5%, although it is a long-term goal of the Trustees to lower the maximum takeout rate to 4%. The purpose of this is to provide that the endowment can grow from its appreciation, yet still provide the essential operating funds that the college needs each year. A good way to make a quick calculation as to the size endowment needed to achieve a particular goal is to multiply the annual need by 20. For example, if you want to provide a scholarship of $2,500 each year, it would roughly require an endowment of $50,000.
