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When people give a gift to the University of Wyoming, they often establish an endowment, as opposed to the funds going directly toward immediate needs. This is because an endowment is a way to extend the life of the gift.
Endowments are conduits that allow yesterday's students help the students of today and tomorrow. They provide a firm foundation of assets that are held in perpetuity, the interest of which creates a steady stream of funding for those purposes chosen by the donor. This reliable income allows the university to plan and budget effectively, but most importantly it helps students achieve their educational goals, sending them down the path to success.
When you create an endowed fund, the gift buys shares-much like mutual funds-in the endowment pool. Adding these funds to the endowment pool broadens investment possibilities much more than if each endowment were invested individually. Accounting, however, is done separately for each fund, and based upon the number of shares owned in the pool, income is distributed after an initial one-year waiting period. Earnings above the amount of distributions are added to the corpus, enabling the principal to continue to grow and providing a hedge against inflation.
Then, every year, in accordance with its payout policy, the UW Foundation distributes millions of dollars to the university for expenditures such as student assistance, faculty support, library acquisitions, academic program support, and building/equipment purchases and maintenance. Endowments have the added benefit of allowing UW's colleges and units to budget more accurately with a predictable and reliable source of funding.
John Small, Senior Associate Vice President for Development