The following infomation pertains to Endowment Spending as outlined in Investment Policy FIN-TRE-VI-150:
Definition of Endowment Funds (“IUEF”): These are gifts that have been donated to the university to support academic, research or capital programs. Some may be restricted to a specific purpose whereas others may be entirely unrestricted. These funds generally have a much longer investment horizon.
XV. IUEF Distribution Policy
The distribution policy for IUEF will mirror that of the IU Foundation (“IUF”). The IUF distribution policy states that effective July 1, 2011 the existing 5 percent distribution rate will be reduced 8.3 basis points (.083 percent) per year over the next six years resulting in a 4.5 percent distribution rate in fiscal year 2016 – 2017. The distribution rate for 2011-2012 will decline from 5 percent to 4.917 percent.
Distributions will continue to be based on a 12 quarter rolling average of the market value of the pooled long term fund.
Inflation bands will be put in place: Distributions will be constrained to fall within 2 times inflation on the growth side and 1 times inflation on the down side based on what was distributed in the previous year. The inflation factor will be calculated as a rolling 5 year average of the Consumer Price Index (CPI). Revised inflation bands will be computed at calendar year end and become effective the following July at the beginning of each new fiscal year.