Endowments are regulated.
Brown is legally required to spend endowment earnings according to donors’ intent. Brown is also legally required to manage the endowment so that it will provide support for both current and future generations of faculty and students.
The Brown Endowment is forever; Brown uses amounts earned by endowment for well-defined purposes.
Over time, Brown donors have made gifts to the University endowment for specific purposes — scholarships, faculty chairs, academic programs, athletics and libraries, among others. Brown manages donors’ gifts to provide support for the activities specified by the donors forever. In the 2011 fiscal year, the Brown endowment provided $111 million to the University’s operating budget for those donor designated activities.
Brown’s endowment is managed as a pooled fund for thousands of donor funds, ranging from small memorial book funds for the library to multi-million-dollar funds that support whole institutes. Each of those funds holds shares in the endowment. Income from the endowment is distributed annually on a per-share basis to units of the University that are engaged in work consistent with the intentions of the University’s donors.
A strong annual endowment return does not mean a surplus in revenue.
In order to smooth the economic peaks and valleys from year to year, the University uses a rolling three-year average of the endowment’s market value to determine how much will be available for the budget in a given fiscal year. The Corporation has authorized the University to use between 4.5 and 5.5 percent of that average market value for the annual budget.
Income from the endowment enriches the Brown experience.
In fiscal year 2011, endowment income represented 14% of University's total revenues. The remaining operating revenue came from tuition, fees, research grants and other sources. If Brown were to lose the income from the endowment, we would either have to cut programs or increase fees. Income from the endowment is equal to about $12,500 per student. In effect, the endowment enhances the student experience by that amount.