The endowment is Washington University's foundation of excellence. Endowment funds provide a steady, predictable source of income over time, on which the University can make commitments and build its programs. Unlike other gifts, which are spent relatively soon, gifts for the endowment are invested and the principal is held in perpetuity.

Our endowment is not, as many may think, a single "pot" of money that can be used as the University wishes. In fact, many separate endowed funds comprise the endowment, and each has its own stipulations about how and for what purpose the income may be used. Among the most important responsibilities of our Board of Trustees are overseeing these investments and establishing policies for spending endowment income. Current policy requires that a portion of annual endowment income be reinvested to ensure continued growth and stability and to preserve the purchasing power of the original donor's endowment gift. At present, endowment income represents a little more than eight percent of the University's annual revenues. Even Harvard, with the largest university endowment by far, draws only about seventeen percent of its annual operating budget from endowment earnings.

Endowed funds support many important purposes, as specified by their donors. Among these are professorships, scholarships and fellowships, research, the libraries, teaching, curricular development, buildings and grounds, technology, and new or evolving academic programs. A very limited number of funds within our endowment allow the administration and Board of Trustees broad latitude to determine how the income will be spent.

Chancellor Mark S. Wrighton has said, "The endowment enhances our ability to provide the education and research required to better serve society. Growth of these financial resources will be the difference between maintaining our current level of achievement and attaining our goals for the 21st century."

The endowment serves Washington University and the public in several ways:

1. by providing stability and a hedge against inflation or recession;
2. by leveraging other revenue sources to accomplish such goals as admitting students based on achievement and potential, and not on ability to pay;
3. by encouraging innovation and flexibility in teaching and research, which often results in important discoveries in science, medicine, economics, and other fields; and
4. by allowing the University to plan for the longer term--two centuries from now, the endowment will still benefit future generations who are seeking the highest quality education for their children.