FAQS: Establishing a fund
How can I set up a fund, and how will the KSU Foundation administer it?
Charitable gifts to K-State create a margin for excellence and sustain an environment where dreams flourish. We strive to offer choices that allow you to establish the type of fund that most closely matches your philanthropic desires. There are three kinds of funds you can establish through the KSU Foundation: expendable funds, endowed funds and quasi-endowed funds.
To start the conversation about how you can make a difference at K-State through a philanthropic gift, please contact a development professional associated with the K-State college you would like to benefit.
What is an expendable fund?
Expendable contributions are available immediately for use by the designated college or program. Expendable contributions are invested and the earnings are retained by the foundation for operating expenses. Expendable funds:
- Require a minimum contribution of $6,250 or a pledge of $1,250 per year for five years.
- 95 percent of the contribution is distributed to the purpose you specify.
- 5 percent of the contribution is made available to the designated college or program for the area of greatest need.
What is an endowed fund?
Both endowed and quasi-endowed funds require a minimum contribution of $25,000 or a pledge of $5,000 per year for five years.
- The principal is never invaded in an endowed fund. A portion of the earnings and market appreciation are distributed for the purpose outlined in the fund. Distributions from endowed funds do not begin until earnings are available.
- The distribution to purpose is adjusted annually for inflation, and is stated as a percent of the market value of the endowment pool.
The inflation-based distribution to purpose for endowed funds is designed to maintain the purchasing power for an endowed fund in perpetuity. The distribution rate is always between 3 and 4.75 percent of market value. This assures that during most periods of inflation the distribution to purpose will be larger than in the previous year.
An endowed fund may be considered underwater when the market value is less than the contributed value. If a fund is underwater, distributions may not be made from the fund in order to protect the value of the fund. Donors do have the option of contributing additional monies to restore the fund so it is no longer underwater.
What is a quasi-endowed fund?
Quasi-endowed funds require a minimum contribution of $25,000 or a pledge of $5,000 per year for five years. They differ from endowed funds in that distributions may continue when a quasi-endowed fund is "underwater," meaning that the market value is less than the original contributed value. Quasi-endowed funds:
- Should be established at a level where the fund can be expected to last at least 10 years.
- You may choose from three distribution options for a quasi-endowed fund:
- 1.) Fixed dollar option pays out in multiples of $500
- 2.) Fixed percentage option pays out 4, 5, 6 or 8 percent of market value annually
- 3.) Situational option pays out 50 or 100 percent of tuition and fees for the average
Are there any other options?
A popular combination may be created by adding an expendable portion to an endowed fund, so that an award may be made immediately while the endowed portion grows.
In all cases, your gift may be enhanced by combining a current gift with a documented deferred gift.