Frequently Asked Questions

An endowment is a donor’s gift made with a legal stipulation that the original principal may never be spent. These gifts are held and invested in perpetuity—either by The Regents of the University of California or the UC San Diego Foundation—to generate ongoing expendable income that supports the donor’s intended purpose.

Endowed gifts may be restricted (for a specific use) or unrestricted (for general university priorities). Because endowments are permanent, they provide UC San Diego with long-term financial stability and allow for planning well into the future.

Both The Regents and the UC San Diego Foundation manage their endowments under written investment policies and in accordance with the Uniform Prudent Management of Institutional Funds Act (UPMIFA).

Endowment funds are pooled for investment to maximize total return and reduce costs. Each individual endowment owns units in its respective investment pool, much like shareholders in a mutual fund. New gifts are added to principal and invested in the pool. Administrative costs are deducted annually from total investment return before calculating payout.

The spending policy, or payout, is established by the UC Regents or the UC San Diego Foundation Board of Trustees, depending on where the endowment resides. The payout represents the amount available each year for the fund or chair holder to spend in accordance with donor intent and university policy.

Earnings beyond the annual payout are retained in principal to offset inflation and promote growth. If funds are not needed for their stated purpose, payout may be reinvested.

All endowment funds benefit UC San Diego. If a fund’s purpose becomes difficult to fulfill, the Chancellor may authorize a redesignation, with UC Presidential approval, to ensure continued alignment with the donor’s intent.

The UC Regents and the UC San Diego Foundation each have fiduciary responsibility for their respective investment portfolios. Both follow similar principles:

• Maximize long-term total return

• Preserve and enhance the inflation-adjusted value of principal

• Provide stable and predictable annual spending distributions

Both organizations invest using diversified portfolios of equities, fixed income, and alternative asset classes. While equity markets fluctuate in the short term, they historically provide higher long-term returns.

Regents Endowment: Managed by the UC Chief Investment Officer of the Regents in the General Endowment Pool (GEP), with an investment management fee of approximately 0.09% per year.

Foundation Endowment: Managed under policies approved by the UC San Diego Foundation Board of Trustees and Investment Committee. The Foundation uses the GEP as its core investment, complemented by other vehicles for diversification.

Endowments operate within a unitized investment pool, similar to a mutual fund. Each individual endowment owns a number of units whose value changes monthly. New endowments “buy in” at the month-end unit value when their gift is received.

Example:
At December 31, 20xx, the pool’s market value is $10,000,000 with 100,000 units, or $100 per unit.

• The Jones Endowment contributed $10,000 five years ago when the unit value was $50, buying 200 units.

• The Smith Endowment contributes $10,000 today, buying 100 units at $100 per unit.

As unit values increase, both funds grow in market value, though new endowments purchase fewer units as appreciation occurs.

Because the principal of an endowed gift may never be spent, the spending policy determines what portion of investment return can be used each year.

Most universities—including UC San Diego—adopt conservative spending rates to preserve long-term value. Payout is calculated using a multi-year average of the endowment’s market value to stabilize annual distributions.

According to the National Association of College and University Business Officers (NACUBO), the national average spending rate is about 4.4% of average fund value.

The policy rate (5.00%) is applied to the 60-month average unitized value to determine gross payout. Because market values fluctuate, the effective spending rate—the payout as a percentage of current market value—will differ slightly, typically lower than 5% during market growth.

The 0.55% administrative fee supports annual endowment management and reporting costs.

Endowment payout is calculated annually using:

1. The average unit value (60-month average)
2. The number of units each endowment owns
3. The spending policy rate

Example:

• Average unit value = $85.60
• Policy rate = 5.00%
• Administrative fee = 0.55%

Jones Endowment (200 units)
200 × $85.60 × 5.00% = $856.00 gross spending
Less $94.16 admin fee → $761.84 net available

With a current market value of $20,000, the effective rate equals 4.3%, showing how averaging smooths payout over time.

Smith Endowment (100 units)
100 × $85.60 × 5.00% = $428.00 gross spending
Less $47.08 admin fee → $380.92 net available

This approach ensures stable, inflation-protected support for UC San Diego programs while preserving the long-term value of every endowment.

Answer:
UC San Diego’s endowments are held and managed by two separate entities:

• The Regents of the University of California, the legal governing body of the UC system, and

• The UC San Diego Foundation, a nonprofit public-benefit corporation established to support the university.

Both entities serve the same mission of advancing UC San Diego’s teaching, research, and public service. The distinction lies primarily in governance and flexibility:

• Regents endowments are held in the university’s name and governed by UC-wide policy. They are typically used for campus programs, research, and faculty support.

• Foundation endowments are managed by the UC San Diego Foundation Board of Trustees and provide an additional avenue for donors who wish to give through a 501(c)(3) organization. Foundation endowments are invested alongside Regents endowments to ensure consistent long-term performance.

Regardless of where an endowment is held, 100% of funds benefit UC San Diego, and gifts to both the Regents and the UC San Diego Foundation are tax-deductible charitable contributions. All endowments are managed under prudent investment and spending policies that protect donor intent in perpetuity.

Gift funds are alphanumeric.  If the fund starts with A through L, it is a UC San Diego Foundation fund.  If the fund starts with M through X it is a UC Regents fund.  Each letter represents the restriction level of the fund.  

A current fund is a fund in which all gifts to the fund can be spent for the purpose designated by the donor.

An endowment fund is a fund in which the original amount of the gift (endowment principal) is invested in perpetuity for appreciation. Only the expendable income (payout) allocated to the endowment expendable fund may be spent on the purpose designated by the donor.

The Foundation and Campus both use Oracle Financial Cloud (OFC) with separate ledgers.  The fund number is the same on both ledgers, so there is no need to set up a transfer fund.  Foundation gifts will still need to be transferred to campus for expenditure. 

• Foundation expendable gift and endowment payout balances will be transferred to the Campus ledger monthly, one month in arrears. For example, a gift or payout received in March will be reflected on the Campus ledger in April.
  • Any gift for research requiring clearance through the COI office for Economic Interest will be held until the transfer after clearance has been received.
  • Delays in the transfer of endowment payout will occur during the first quarter of the fiscal year due to fiscal year end dependencies.
• Regents expendable gifts will be recorded during the month end close process, around the 5^th business day of the following month.
  • Any gift for research requiring clearance through the COI office for Economic Interest will be held until the transfer after clearance has been received.
• Regents endowment payout will be recorded on the campus ledger each fall for the prior fiscal year.
• Gift revenue and endowment payout will be recorded to a specified chart string, which only needs to be provided once. If a form is not received, gift revenue and endowment payout will be recorded to the Owning FinU per STAR and Project 0000000. 
• Once gift revenue is recorded if you need to allocate the money to another project or financial unit, please complete a resource transfer. For information about resource transfers please see this knowledgebase article.
• If you need a new project or task for your request, please create one using PADUA and review this knowledge base article for instructions. Project and task management is not handled by our office.
• Please go to our forms page and select the Gift Fund Chart String form. This form allows you to establish the chart string referenced above.  
• Endowed chairs: DO NOT COMPLETE THIS FORM. The payout for endowed chairs will be transferred to a central VC chart string. Someone in the VC’s business office will complete a resource transfer to move the payout into the chairholder’s project once the requirements of Academic Policy PPM 230-8 Section II D have been met.
• When you’ve completed the form, attach it to a case in the UC San Diego Services & Support Portal,
  • About: Gift Funds
  • Related to:  Gift Fund Setup & Transfer
  • More Specifically: Gift Fund Chart String. 
  • The ticket will be closed once the chart string has been added to the fund in Oracle.
• If you have questions, use
  • About: Gift Funds
  • Related to: Gift Fund Inquiries
  • More Specifically: Gift Fund Questions

Fund accounting rules do not permit the commingling of different "types" of monies. Gifts made directly to a Regents' fund are considered to be a different "type" of money from funds that are transferred from a Foundation fund because of the difference in the source. Similarly, on the Campus, General Funds cannot be commingled with Opportunity Funds. The only way you can use the money held in a Foundation fund is to transfer the balance to the Campus ledger to the related gift fund.  Only the Foundation can deposit money into this fund. However, certain expenses incurred in other Regents' funds can be transferred to the Foundation transfer fund (via cost transfer). Once the balance has been transferred from the Foundation to Campus, you can use the same processes and forms to expend it as with any other Regents fund, except that it must be spent in accordance with the donor's wishes.  

An analogy is to think of the Foundation fund as an account at bank A and the Regents' transfer fund as an account at bank B. The two accounts are linked together and when you need to spend money from your account at bank B (expenditures from the Regents' fund), you will need to transfer funds from your account at bank A to your account at bank B.  The following is an illustration of the flow of gift money.

You can obtain gift fund balance information from two places:

• STAR Dashboard

  • The STAR Dashboard contains endowment expendable fund number, donor lists, gift documentation, endowment payout projection letters, market value, and balances for gift funds at the fund level.  The campus expendable in STAR reflects the balance of the entire fund, regardless of project or financial unit. If there is a discrepancy, please run an oracle balance report on the fund only to see where other balances may exist. 

• FDN-DSH Gift Fund Panorama at bah.ucsd.edu

  • Foundation Fund Details: Provides information from the Foundation ledger including account balances and transaction detail.
  • Gift Fund Balances: Displays cash balances on both the Foundation and Campus ledgers down to the FinU and Project where a balance resides. To view this report properly, you must have the GL Inquiry Role for the Foundation ledger. KB0032240
  • GL (UCSD) Project Balances: Provide a total for Resources Available, with consideration of the displayed General Ledger resource and expense totals and inception-to-date Capital Assets expenditures.
  • General Ledger (UCSD) Transaction Details: Provide FinU/Fund/Project/Account transaction data that hits the General Ledger and all Subledgers (PPM, Payables, Receivables, Cash Management) for the selected accounting period.
  • Project COA Lookup: Provides the ability to quickly locate the new Chart of Account (COA) data for your Projects.
  • Non-Sponsored Project Task DFFs: Delivers the fund, function, location, and activity defined for given tasks on a general project for the purpose of driving accounting for costs and revenue within the PPM module.
  • Please complete the Oracle BI - Gift Fund Panorama training lesson for more detailed information about each report.

A current fund is a fund in which all gifts to the fund can be spent for the purpose designated by the donor.

An endowment fund is a fund in which the original amount of the gift (endowment principal) is invested in perpetuity for appreciation in accordance with the Foundation's Endowment Investment Policy. Only the expendable income allocated to the endowment fund as set by the spending policy may be spent on the purpose designated by the donor. Due to the nature of how endowments are invested (primarily in the stock market), they may earn a total annual return (appreciation plus yield) that is far in excess of the spending policy. Total return earned in excess of allocated spending is retained in the investment pool to provide for growth in the principal. This, in turn, increases the market value of the pool, and thus the five year average, which then increases expendable income allocations over the long term. This methodology preserves and enhances the real value of the endowment principal and protects the expendable income allocations against erosion from inflation.

All processing fees charged by 3rd party vendors are passed through to the fund receiving the gift.  The most common fee is for credit card gifts where the bank charges approximately 2%.  Other less common tender types are charged fees at different rates as determined by the 3rd party processor.