Endowments and Economic Uncertainty


In times of economic uncertainty, even the countries largest and most effectively managed endowment funds, including many major universities, face financial challenges. Several have faced asset value declines from 18% to 26%. This decline in asset value contributes to a reduction in operating income.

For example, an endowment fund with managed assets of $20 million that loses 20% also loses the income from $4 million – and at an income withdrawal rate of 5% has reduced income of $200,000.

Few organizations have policies in place that enable them to withstand the fluctuations in the financial markets. Those same organizations depend on a rebound in the markets to regain their value and subsequent endowment income.

McKinley Carter Philanthropic Advisors are able to develop specific policies for each endowment fund under management to help the organization better prepare for market fluctuations. We will also develop with each organization spending rates, savings rates, and gifting rates.