Spending

The Trustees of Miami University recognize their fiduciary responsibility to manage prudently the funds that have been and will be given to the University's endowment. Spending from these funds is intended to benefit Miami University in perpetuity; therefore, the spending policy is intended to achieve a balance between the need to preserve the purchasing power of the endowment principal at the time of the donation and the need to maximize current distribution to support the programs designated by the contributors.

Goals

The Trustees hereby reaffirm the following goals for the endowment spending distribution:

  1. To preserve and grow the charitable impact and intergenerational equity of donor funds in perpetuity.
  2. To maintain a spending formula that protects the real value of the endowment principal, recognizing that maximizing endowment growth also maximizes distribution growth.
  3. To strive for stability and predictability of distributed amounts from year to year, recognizing that a certain level of volatility is inherent in the endowment's investment policy.
  4. To assure past and future contributors that donated funds are, and will continue to be, prudently managed to achieve and maintain the intended charitable impact in perpetuity.

Spending Calculation

Annually, each endowed fund will make a distribution determined by averaging the market value of the previous twelve quarters (as of March 31 of the current fiscal year). This three-year average value shall then be multiplied by the spending rate of 4.0%.

If an individual endowed fund has sufficient accumulated earnings to make a full calculated distribution, then that amount shall be distributed. If an individual endowed fund has a positive accumulated earnings balance, but that balance is less than the full calculated amount, then a partial distribution shall be made until the accumulated earnings balance is zero. If an individual endowed fund has a negative accumulated earnings balance, then just realized dividends and interest allocated to that fund shall be distributed.

Annually, the Vice President for Finance and Business Services and staff will evaluate this policy and the resulting distributions.

The Board of Trustees shall consider the policy with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, considering the following factors:

  1. The duration and preservation of the endowment fund
  2. The purposes of the institution and the endowment fund
  3. General economic conditions
  4. The possible effect of inflation or deflation
  5. The expected total return from income and the appreciation of investments
  6. Other resources of the institution
  7. The investment policy of the institution

This policy was updated in Spring 2017.