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Purpose and Function

Is the endowment one big fund or many different funds?

As of fiscal year 2025, there were approximately 1,100 individual endowments which, when aggregated, constitute ³Ô¹ÏÍø’s endowment. Nearly all of the dollars in the college’s endowment can be traced back to gifts given to the college by its alumni, friends, and benefactors. In general, these endowments are connected to gift agreements between the donor and the college defining how the income generated by the donor’s gift may be used. These gift agreements cannot be changed without donor consent or a court order and exist in perpetuity.

How is the endowment’s level of support for the college’s operating budget determined?

Every year, the Board of Trustees, upon the recommendation of the Resources and Investment Committees, approves an update to the college’s endowment payout policy. The payout policy is summarized as follows: the endowment’s values at the close of each of the last three fiscal years, but lagged backwards in time by a single year, is averaged. Five percent (5%) of this figure is then built into the next year’s operating budget to support it.

What is the breakdown of the endowment’s support for different kinds of activities at the college?

Endowed funds are classified as both unrestricted and restricted.

Unrestricted endowment funds are those endowments for which the donor did not place constraints on the use of those funds. These funds may be designated by the trustees for a specific purpose, or may provide support to the operating budget.

Restricted endowed funds have stipulations placed on them which limit their use for specific purposes (e.g., financial aid, faculty instruction, academic support). This chart provides a more detailed look at how these funds are budgeted.

Can the trustees or the college’s chief financial officer move money out of the endowment for unbudgeted expenses?

Endowment distributions must be used and accounted for in accordance with the endowment payout policy and cannot be “moved around” on an as-needed basis. Endowment spending to support college operations is budgeted and allocated per the terms of the donor’s gift agreements. The Investment Committee, the Resources Committee, and the entire Board of Trustees play a key role in setting this endowment payout policy, which is reviewed and reaffirmed annually. 

If ³Ô¹ÏÍø experiences a budget shortfall, why can it not make an extra draw from its endowment to balance its operating budget?

The endowment is managed with a goal of providing a reliable and perpetual funding stream to the college. Overspending to cover a current gap between planned expenses and planned revenues shortchanges future generations of the college’s students who will depend on the endowment as well. Any extra and unplanned withdrawals from the endowment reduces the endowment’s principal and permanently lowers the income available to support future generations. This negative impact would be perpetual.

Do student tuition dollars fund the endowment?

The overwhelming majority of the endowment’s value of approximately $900 million (as of January 2026) is attributable to gifts made by alumni and friends of the college, as well as the reinvested returns (i.e., from interest, dividends, and both unrealized and realized capital gains) produced by investing those gifts wisely over the college’s 150-year history of operations.

How does income from the farms owned by Whitman factor into the endowment?

Farm income is paid out to support the operating budget of the college using a formula that takes into account sales of crops—mostly dryland wheat—over a trailing time period.

If I wanted to make a gift to ³Ô¹ÏÍø to establish an endowment, what should I do?

To learn about establishing an endowed fund, please contact the college’s Development team at 509-527-5165 or development@whitman.edu.

Decision-Making and Governance

How are decisions made on where the endowment is invested? What kinds of criteria are considered?

Investments for the endowment are guided by the endowment’s Investment Policy Statement (IPS). The IPS covers a range of topics such as: target allocation percentages by asset class; types of eligible investments; environmental, social, and governance factors; role of the Investment Committee, the external investment consultant, college staff, etc.

Prospective investment managers are typically brought forward to the Investment Committee by either its consultants or Investment Committee members. The college’s investment consultants, taking into consideration the IPS, step through a rigorous process to determine if an investment manager would be an appropriate addition for the overall portfolio. If an investment manager is approved, an investment is made, and the consultant and Investment Committee monitors the performance and actions of the investment manager. If the investment manager experiences underperformance against its benchmarks over the long term or the fund experiences significant changes, the Investment Committee will determine whether the manager should remain in the portfolio.

The responsibility to hire investment managers or make changes to the Investment Policy is delegated to the trustee members of the Investment Committee by the whole Board of Trustees, which annually reviews and approves the investment decisions taken up by the Investment Committee.

How are members of the Investment Committee selected?

A subcommittee of the Investment Committee, called the Nominating Subcommittee, periodically considers ³Ô¹ÏÍø alumni and parents of current and former students with depth and breadth of experience in the investment management profession. As vacancies on the committee become available, the Nominating Subcommittee recommends new members to the Chair of the Board of Trustees. The Chair of the Board of Trustees reviews, vets, and discusses these prospective new members with the Executive Committee and the Governance Committee of the Board of Trustees and invites prospective new members to join the committee.

Who are the endowment’s fiduciaries and what is meant by a “fiduciary”?

Members of the Board of Trustees, as well as all members of the Investment Committee, are fiduciaries. A fiduciary is a person who holds a legal duty to act in the best interests of another party, placing that party’s interests above their own and managing assets with care, loyalty, and prudence. These individuals serve as stewards of the college’s assets, including, but not limited to, the assets in its endowment, and must exercise due diligence and oversight to ensure not only that the college is well-managed but that its financial status remains sound in the present time while maintaining intergenerational equity.

What is meant by “intergenerational equity,” and why is this concept important?

In the broadest sense, intergenerational equity refers to the objective of providing equal benefits and opportunities for both current and future generations. This objective is relevant not only to the management of the college’s endowment, but also applies much more broadly (e.g., to the tension between short-term economic growth and longer-term growth).

Are there laws related to the role of fiduciaries with college or university endowments? What are they?

The primary federal laws defining the role of fiduciaries in governing the endowments (and other assets) of non-profit organizations are the Uniform Prudent Management of Institutional Funds Act (UPMIFA) and the Uniform Prudent Investor Act (UPIA). These laws require members of the Investment Committee to act with prudence, good faith, and care in the management of the college’s funds, and to disclose any potential or real conflicts of interest. All investment actions and decisions must be made exclusively in the best interests of the college.

What role do the President and the Chief Financial Officer play in the college’s endowment?

The President, the Vice President for Finance and Administration, and the Director of Investments all serve as staff to the Investment Committee of the Board of Trustees. For example, while the Chair and Vice Chair of the Investment Committee set agendas for Investment Committee meetings, the Vice President for Finance and Administration and the Director of Investments prepare the agenda, meeting minutes, and other documents for the committee.

The President, Vice President for Finance and Administration, and Director of Investments have no authority to make investment decisions or modify the Investment Policy for the college’s endowment.

Why aren’t students and faculty members on the Investment Committee?

The policy committees (i.e., Resources Committee, Advancing Whitman Committee, Whitman Experience Committee) of the Board of Trustees have student, faculty, and staff representatives from the college. The functional committees (e.g., Audit Committee, Investment Committee) do not, as their work requires particular technical knowledge, depth, experience, or credentials.

Structure and Operations

What is an “investment consultant”? How does this arrangement differ from an internal chief investment officer or an outsourced chief investment officer?

³Ô¹ÏÍø uses an investment consultant model to govern its endowment. An investment consultant is a non-discretionary advisor who can make recommendations and proposals to the Investment Committee.

This model is in contrast to an internal chief investment officer (CIO) or outsourced chief investment officer (OCIO), where the Investment Committee cedes some control over certain investment management decisions while maintaining oversight of the internal CIO or OCIO.

Who is ³Ô¹ÏÍø’s investment consultant?

³Ô¹ÏÍø uses Monticello Associates as a non-discretionary investment consultant.

Does ³Ô¹ÏÍø’s endowment hold investments in individual companies?

The ³Ô¹ÏÍø endowment generally does not hold direct investments in individual companies, but instead invests in investment funds managed by external firms. These investment managers pool assets from the college and numerous other investors into “commingled” funds. The investment managers buy stakes in individual publicly-traded companies or private companies, or other entities, based on their fund’s investment strategy. This pooled structure is how the majority of college endowments invest and is regarded as a standard and best practice.

What is an “investment manager,” and what is meant by a “commingled investment fund”?

Typically, an investment manager is a firm that creates one or more commingled funds made up of numerous investors’ monies. These monies are invested according to an investment strategy set forth by the investment manager with the aim of increasing the value of the clients’ investments. Investment managers often have hundreds of clients contributing to these commingled funds. In most cases, Whitman’s investment stake constitutes 5% or less of the fund’s total value.

Each investment manager typically employs a specific investment strategy based on their domain of expertise (e.g., private equity, venture capital, emerging markets, international markets, private credit). The Investment Committee uses a diverse collection of investment managers to construct a balanced portfolio. This portfolio is intentionally structured to produce strong risk-adjusted returns over long periods of time.

Asset Allocation

What is meant by a public or a private investment fund manager?

Similar to most endowments of comparable size, the college’s endowment is invested with both public and private investment fund managers.

Public investment fund managers invest in publicly-traded companies that are listed on major national or international stock exchanges. A public investment fund manager rarely takes an active role with the management of individual companies represented in their funds.

A private investment fund manager invests in private equity, private credit, venture capital and other alternative assets that are not listed on major national or international exchanges. In some situations, the manager takes a more active and direct role in the fund’s investments to deliver strong risk-adjusted performance.

Why is it sometimes difficult to know if ³Ô¹ÏÍø’s endowment is invested in a particular company?

The college’s endowment is invested with a collection of 40-50 public and private investment managers across 60-80 investment funds. Each fund may have dozens to hundreds of individual investments that change overtime. Investment managers make investment decisions across a wide array of individual investment opportunities (e.g., cash, fixed income, publicly-traded equities, privately equities, real estate, venture capital, currencies).

Investment fund managers often require a certain degree of confidentiality because publicly revealing their funds’ holdings could undermine their investment strategies. The endowment’s underlying investments are constantly changing and are often confidential in nature and disclosed a lagged basis. 

Miscellaneous

What is the holding period of the investments held in the college’s endowment, i.e., how long does the college stay with investment managers?

Some of the college’s holdings in its endowment can be converted into cash within a matter of days or months. However, other investments are effectively locked up for 5-15 years. These lockup periods are necessary because the nature of the underlying investment strategies takes a long time.

Is ³Ô¹ÏÍø a significant actor in financial markets?

The college’s endowment is valued at approximately $900 million (as of January 2026).  Although this endowment is large compared to many other institutions on a per full-time-equivalent (FTE) student basis, it is a tiny fraction of the trillions of dollars of investable capital circulating around global financial markets.  Even among just the investment assets controlled by domestic foundations and endowments, the college’s endowment constitutes less than 1/10th of one percent (1%) of that space.

Is ³Ô¹ÏÍø’s endowment taxed? If so, how?

The college’s endowment-connected unrelated business income tax (UBIT) liability varies from year to year, but is generally very marginal with respect to the value of the entire endowment.

Historically, the college endowment’s net investment income was taxed under the Tax Cuts and Jobs Act of 2017 at 1.4% of the endowment’s annual net investment income less certain allowable deductions. 

However, the One Big Beautiful Bill Act of 2025 has a provision exempting colleges and universities with fewer than 3,000 tuition-paying students from paying this tax. So, after 2026, ³Ô¹ÏÍø will no longer be subject to this tax.