Managing endowment fund income in Universities

Abstract

In this paper, we discuss the methods of endowment management existing in the world and their applicability to the Russian university system. Endowment spending research focuses on the following issues: Reinvesting endowment income; identifying the size of expendable endowment income; using the endowment "body, not just its income; choosing endowment spending policy, rules and rates; as well as others. We provide an overview of endowment fund financial indicators and endowment spending allocation in Russia.Based on the example of HSE's Endowment Fund, we analyze the use of endowment spending rules and a model of financial indicators for 2008-2014. The University's Endowment Fund spending policies demand implementing a principle of preservation, which may be reasonable in a stable economy. However, the viability of the principle is questionable during a crisis, the more so since the endowment is mostly in rubles. Using net asset valuation methods, the HSE Endowment Fund could provide intergenerational equity with an annual distribution of income in favor of current and next generations.