The Foundation's Board of Trustees establishes a spending policy each fiscal year that dictates the annual stipend paid out of the Endowment to the university. The spending policy is fixed for one year and pays out \"rain or shine,\" meaning that it is not impacted even if markets are down. This rate is currently set at 5.25%, broken down as follows:
- 4% of the average unit value is made available to support each account's fund purpose.
- 1.25% of the same average supports the Foundation's operating budget.
Both components are calculated on a five-year (20-quarter) moving average. This model smooths the effects of market volatility and ensures that brief market dips will not affect your account's beneficiaries.
","question":"How is the Endowment's spending policy determined?"},{"answer":"The Endowment is a unitized fund. Similar to a mutual fund, the units represent the number of units purchased by the original gift principal, and new gifts join the Endowment at the current month's market value per unit. The number of units associated with your individual endowed account only changes if new gifts are added.
As the market value of the Endowment grows over time, a newer gift purchases less units than an older gift of the same amount. Because payouts are based on average unit value, older accounts will generally have a higher payout than newer accounts with fewer units.
The payout-per-unit rate drives the annual payout, calculated as the number of units in your individual endowed account multiplied by the payout-per-unit rate. The fiscal year 2025 rate was $1.30/unit. The fiscal year 2026 rate is set at $1.36/unit, allowing for easy estimation of your endowed account's upcoming annual payout.
","question":"How are units and payouts determined?"},{"answer":"The Foundation's chief investment officer and investment team are governed by the investment committee and an investment policy statement. The committee reviews all new investments and the Endowment's overall health monthly. The committee also establishes a strategic asset allocation for the investment team to follow, setting portfolio guidelines for a balanced strategy that considers both the preservation and growth of capital across economic environments.
Concentrating on the competitive advantage of the Endowment's long-term time horizon, the investment team focuses on creating a well-balanced and globally diversified portfolio across asset types and strategies to provide consistent long-term support for stakeholders like you. Finally, the Endowment is tracked against industry benchmarks to assess its performance. The spending policy mentioned above does not impact investment return performance.
","question":"How are investment decisions made?"},{"answer":"Because the Endowment's principal cannot be spent, funds can be invested in more illiquid investments than accounts like retirement accounts, which expect to eventually spend the principal. These illiquid investments yield higher returns and thus provide more significant and lasting support for Texas A&M.
","question":"What are the benefits of investing in a university endowment?"}]'>