What is a Scholarship Endowment and How do they Work?
Endowments are long-term investment accounts with a minimum balance requirement. The Virginia Tech Foundation endowment accounts invested with the intent that the principal of the original gift can be used to provide a perpetual stream of financial support to a scholarship. Each year a portion of the invested gift’s annual income is distributed in accordance with the guidelines set by the donor. In recent years, the annual income has averaged about 4.25% of the endowment pool’s market value, which then equates to around $2.2 million in annual income for the Virginia Tech Athletic Fund. Net returns in excess of the spending rate increase the market value of the endowment pool and are used to manage and grow the fund principal. The pool is invested over an infinite time horizon with the goal of maintaining the value in real terms and in turn providing a steady flow of income.
How to Make an Impact
Endowed scholarships may be established with a minimum gift or pledge of at least $50,000. In turn, the gift may be made through a single gift or through installments pledged over a period of time (usually 5 years). Donors also have the opportunity to continue to fund their endowed scholarship after the original commitment is fulfilled as the income available for scholarships will increase with the value of the endowment.
Endowment gifts can be made through a variety of methods including cash (check or credit card), securities (stocks, bonds, mutual funds, etc.), and corporate matching gifts. Also, contributions made to establish an endowed fund are considered charitable gifts to the Virginia Tech Athletic Fund and are tax deductible.
Appreciation and Recognition
Virginia Tech Athletics and the Hokie Club will annually name a student-athlete scholarship recipient for the endowed scholarship in accordance with the criteria (sport, position, area of academic study, hometown, etc.) established by the donor. An endowment fund that provides spendable income for a full scholarship will receive one student-athlete while all other endowments may share a student-athlete recipient if necessary.
For more information or if you are interested in established an endowed scholarship, contact the Hokie Club today!