The Endowment Handbook

5Policies and Practices for Managing Endowment

This chapter enables you to:

• Understand the importance of sound policies to provide guidance and protect the reputation of organizations building endowment.
• Adapt policies to maximize both the growth of endowed funds and the impact of distributions.
• Know the different kinds of policies and their application.
• Determine how to develop, adopt, implement, and update policies regularly.
• Select and monitor advisors to manage funds and investments.

An endowment is a treasure that demands careful and transparent stewardship, which is defined in Merriam‐Webster's Collegiate Dictionary (11th ed.) as “the careful and responsible management of something entrusted to one's care.”¹ This important responsibility is ultimately assigned to the board of directors. When an organization receives its tax‐exempt status under state and federal laws, the board of directors – and its individual members – assumes a “duty of care,” “duty of loyalty,” and “duty to manage accounts” on behalf of the public the organization serves and to avoid any self‐dealing or conflicts of interest.

An endowment is a treasure that demands careful and transparent stewardship.

This chapter explores all three factors in managing endowment growth: gift acceptance, investment, and spending policies. It provides resources for staff and volunteers who work with donors, and the board of directors and administrators who will carry out financial stewardship of the assets entrusted ...