In establishing an endowment, a donor provides perpetual funding for a valued purpose. The Board of Trustees (the “Board”) of Princeton Theological Seminary (the “Seminary”) is grateful for the generosity of donors in providing important, ongoing support to the Seminary. This information provides guidance for the establishment of endowments in support of scholarships and fellowships, programs, lectures and seminars, commencement prizes, and faculty chairs.

Endowment Defined:
An endowment is a gift whose funds are invested to provide continuing support, in perpetuity, for the general or specific purpose stated in the written agreement between the donor and the Seminary. Donor established endowments may be used only for the purpose(s) specified in the endowment agreement which must be approved by the Seminary as well as the donor.

Endowment Income:
New endowed funds are pooled and managed with the Seminary’s other endowment funds in accordance with approved Seminary investment and management policies. Starting with the end of the fiscal year after the full funding of the fund, the income, including any accumulated capital gains will be withdrawn in accordance with the Seminary’s spending rule policy as established by the Board (which historically has been in the range of 3.5-5.0% of the market value of the fund as of December 31 of the immediately preceding year). Endowment income in excess of the approved expenditure rate is retained in the fund and is available for future disbursement unless stipulated otherwise by the donor. This should enable the endowment to keep pace with inflation and allow the original intent of the donor to be fulfilled over time.

Endowment Focus:
Endowment gifts may be unrestricted or they may be restricted for a particular purpose. Unrestricted gifts enable the donor to help to support the total program of the Seminary in perpetuity. Such gifts provide institutional stability and flexibility. Restricted gifts enable the donor to provide funds for a stated purpose in perpetuity. All restrictions must be approved under the Seminary’s gift acceptance policy.

An endowment for any restricted purpose must be established through a written agreement between the donor and the Seminary. The agreement includes the specified amount to be contributed by the donor, the period of time over which the gift will be made (usually no more than four fiscal years), the purpose of the fund and, when appropriate, the criteria for selection of a recipient or candidate. In some instances, the agreement may allow the fund’s earnings to be retained in the fund rather than expended for a fixed number of years not to exceed three to ensure that the fund reaches the required or agreed upon level necessary to support its purpose.

Procedure for Donor Recognition:

The Board may recognize the generosity of a donor(s) who creates a endowment fund by conferring on the Fund the name of the donor or a person of the donor’s choosing.

How to Give:
Endowments may be created by gifts of checks/cash, appreciated securities, beneficiary designations of life insurance and retirement plans, and a variety of planned giving instruments that can be beneficial to both the donor and the Seminary.

Savings Language:
Since endowment gifts are made in perpetuity, it is important that they be flexible so they can continue to benefit the Seminary for generations to come. Hence, all endowment gift agreements will contain or be deemed to contain the following language:

The Seminary fully agrees and intends to use this generous gift for the purposes expressed above. However, because circumstances sometimes change with the passage of time, should the Seminary in the future deem that any of the terms of this Agreement have become impracticable, the President of the Seminary may in the President’s discretion direct the use of the gift for a purpose at the Seminary as close as possible to the Donor’s or Donors’ original intent.