Frequently Asked Questions
What is the endowment? The role of Vanderbilt’s endowment is to provide a permanent source of support for the university’s students, faculty and programs. While current-use gifts support the university’s immediate needs, only the endowment ensures long-term sustainability.
Vanderbilt’s $4.1 billion endowment includes more than 2,700 individual funds, each one named and used according to the donor’s restricted purpose. As with a mutual fund, these assets are pooled and invested collectively. When donors make endowed gifts, “shares” are purchased in the university’s endowed pool. The value of the shares reflects investment returns after the annual endowment payout.
What is the payout? Following the university’s guidelines, a portion of the endowment’s value is distributed monthly to support the donor-designated purpose. This distribution is known as the payout. Currently, the payout rate is five percent of each individual endowment’s average market value for the prior three calendar years.
Who manages Vanderbilt’s endowment? The university’s Office of Investments manages the endowment under the direction of the Vanderbilt University Board of Trust Investment Committee. Vanderbilt maintains a highly diversified investment portfolio designed to mitigate downturns in any one sector of the economy. The Board of Trust also periodically reviews the endowment’s payout rate to ensure that the university’s current needs are met while also safeguarding the endowment’s future.
How did Vanderbilt’s endowment perform this year? During fiscal year 2017, Vanderbilt’s endowment portfolio grew to $4.1 billion. This growth is due to a set of factors including the addition of new endowed gifts as well as strong investment returns, which allowed Vanderbilt to make $203 million in distributions.
What percentage of Vanderbilt’s annual budget does the endowment fund? In fiscal year 2017, endowment distributions comprised 15 percent of the university’s operating budget. The remaining 85 percent came from other sources such as government and nongovernment grants and contracts, student tuition and fees, and philanthropy.
What does Vanderbilt’s endowment support? The endowment provides a permanent source of support to advance the university’s mission of teaching, research and service. See the Endowment by Use chart on the right for more information.
Why does Vanderbilt devote so much of its endowment to scholarships and financial aid? Scholarships and financial aid constitute the largest category of endowment use. In fiscal year 2017, 66 percent of undergraduate students and 87 percent of graduate and professional students received financial assistance. In 2000, Vanderbilt began expanding financial assistance for undergraduates, ultimately launching Opportunity Vanderbilt in 2008, its bold initiative to replace all undergraduate need-based student loans with grants and scholarships. Scholarship support is a top priority for all undergraduate, graduate and professional schools.
Can I create an endowment through my estate? Absolutely! The vast majority of testamentary gifts are directed for endowed purposes. Such gifts can become a donor’s legacy at the university, benefiting students, faculty, programs or other special interests.