How an ISU endowment fund works

1. Working with ISU Foundation, donor agrees to set up endowed scholarship fund called the Sunshine Scholarship. Gift is in the amount of $100,000. Donor, together with foundation and departmental representatives, stipulate in a memorandum of agreement (MOA) that scholarships will be awarded to ISU sophomores majoring in meteorology.

2.ISU Foundation puts endowment in investment pool, where it begins accumulating earnings. Earnings are available for spending six months after the scholarship gift is made (market fluctuations will determine how much is available).

3.During the first year, the fund grows to $108,000. Foundation notifies meteorology program that the Sunshine Scholarship endowment is activated and how much is available. From this point on, endowment funds will be distributed this way each quarter:* 5 percent of endowment's market value averaged over 12 quarters ($5,200 in this example) goes into a foundation account for the Sunshine Scholarship. 1.5 percent of endowment's current market value ($1,620) goes to foundation to support fund-raising operations. Remainder of the investment income ($1,180) goes to build the endowment. The goal: To stay even or keep ahead of inflation.

4. Program/department representatives select metereology students for the scholarship, based on terms in the MOA and amount of funds available.

5. In the case of student scholarships, Office of Student Financial Aid transfers awards to students' university accounts.

	6. Funds are transferred electronically from the ISU Foundation account to a parallel university account as reimbursement for the scholarship awards.
Illustrations by Buck Jones

* These amounts are annual. Distributions are made quarterly. With non-scholarship endowments, the first 4 percent of growth is returned to the foundation as a one-time fee.