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Published September 06, 2008 11:22 pm - The University of Oklahoma's billion-dollar endowment allows it to maintain programs and scholarships through changing economies.
The total endowment of $1.15 billion seems a mind-boggling number. Surely if OU has that much money on hand, it can afford to keep tuition down and hire new faculty members?
But endowments don't work like that.


OU endowment keeps donors' money in circulation


By Julianna Parker

The University of Oklahoma's billion-dollar endowment allows it to maintain programs and scholarships through changing economies.

The total endowment of $1.15 billion seems a mind-boggling number. Surely if OU has that much money on hand, it can afford to keep tuition down and hire new faculty members?

But endowments don't work like that. Instead, they're governed by a set of policies and restraints that keep them working for the university without being able to bail it out.

Endowment funds aren't just available for withdrawal at will. Each endowment is given by a private donor for a specific project with the goal of maintaining it in perpetuity.

Endowment example

The University of Oklahoma Foundation controls much of OU's endowment.

One of the oldest endowments the foundation administers shows how endowments are used throughout the years.

The fund was established with about $3,500 in 1945 to provide scholarships for students focused on mathematics, OU Foundation President and CEO Guy L. Patton wrote in an e-mail. The scholarship amount was originally $100 to $300 a year per student, which was a significant amount at the time.

Since it was established, the scholarship has been awarded to more than 200 OU students. The scholarship is still active. Today, it is awarded to two to three students per year studying mathematics, but now the award amount is $1,500 to $2,500 a year.

"So, 63 years after the original gift, this donor is still having a lasting impact on students' lives each and every semester here at OU," Patton said. "I would say that is truly leaving a legacy."

In order to keep the endowment's payouts up to speed with inflation, the principal amount has had to increase over the years.

"This, of course, is what has allowed the scholarship amounts to have similar impact in meeting the student's financial need in 2008 as it did in 1945," Patton said.

How it works

To this end, the organization administering endowments has a complicated task ahead of it.

When a donor creates an endowment, it is with the intention of supporting a project forever, Patton said in an interview at his office last month. The idea, he said, is "to be able to put back a sum of money -- think of it as a retirement account -- that will secure the future of a given organization."



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