Endowment Overview
Endowed gifts are expected to be held by Penn State in perpetuity. The initial gift is invested, and an annual distribution is allocated to the purpose designated by the donor. Through this distribution process, an endowed gift today is intended to have relatively the same inflation-adjusted value and impact for future generations.
Penn State strives to be a good steward of its endowed gifts and follows a prudent management philosophy in investing gifts.
To demonstrate the impact of an endowed gift, assume $100,000 was gifted in July 2004 to establish an endowment. Over the last twenty years, the endowment gift would have generated $102,400 in aggregate distributions to support the endowment’s purpose. As of June 30, 2024, due to compounding of investment returns, the original gift is now worth $199,600 and will benefit future generations.
The University’s Board of Trustees has established four basic investment management principles to guide the University’s Investment Council. These four principles help ensure that the spending power of each endowment gift will be maintained in the face of economic fluctuations:
Basic Endowment Management Principles
- Provide sufficient total return on investments to meet the investment objectives.
- Focus on long-term performance.
- Accept a reasonable and prudent level of risk while maximizing total return.
- Diversify investments to reduce risk.
Based on current Penn State endowment spending policy, endowments receive an annual spending distribution based on a percentage of the endowment’s unit value moving average. In FY25, for example, the annual spending distribution that is directed to gift purposes is 3.59 percent. Following common practice across higher education, an additional spending distribution from endowments is directed to the University’s advancement budget, helping us to build the relationships and secure the support that will sustain our strength into the future. Additional appreciation, if any, is added to the market value of endowments as protection against inflation to ensure our donors’ philanthropic goals will be fulfilled for generations to come.
LTIP Endowment Gifts
(Years ending June 30)
In millions of dollars
Investment Management Update
LTIP’s investments consist of a diversified investment portfolio of equities, fixed income, real assets, and other opportunistic strategies. In managing our investments, we adhere to a prudent, long-term investment strategy.
To focus on the long term and assist in reducing the short-term fluctuations of distributions due to near-term changes in the investment markets, the actual distribution each year is calculated by multiplying the 5 percent policy level distribution by the twenty-quarter average of the market value per unit of endowed pool assets.
The use of a rolling twenty-quarter average, instead of the most recent unit value, is intended to smooth out the peaks and troughs in the investment markets, saving a portion of the earnings in the good years to offset the less profitable years. This provides generous current distributions while preserving future purchasing power, which is known as “intergenerational equity.”
Endowment Market Value Summary by Year
In millions of dollars
As of the end of fiscal 2024, total endowment assets were valued at $4.91 billion, of which $4.9 billion was invested in the Long-Term Investment Pool.
For the fiscal year ending June 30, 2024, the total endowment assets increased $347 million, and they have increased a cumulative $1.8 billion over the last five years. This amount reflects the impact of investment returns and generous giving, net of annual distributions to support scholarships and other intentions defined by each endowment. Over this same period, endowment assets invested in LTIP have provided $741 million of distributions, including $173 million in fiscal 2024.
LTIP Performance Summary
As of June 30, 2024, LTIP’s investment return was 10.6 percent over the last year, 10.3 percent average over the five-year period, 8.2 percent average over the ten-year period, and 9.1 percent average over the twenty-year period. These annualized investment returns are net of investment manager fees and investment expenses. These results demonstrate long-term growth even when considering periods of negative investment returns. Penn State’s diversified approach has allowed the endowment to support endowment intentions, such as scholarships and faculty positions, while maintaining inflation-adjusted growth for the future generations.
Average Annualized Total Returns
for periods ending June 30, 2024
Total returns include interest, dividends, and market price changes less external investment manager fees and some other expenses.
LTIP Asset Class Allocations
as of June 30, 2024
The Penn State endowment portfolio is broadly diversified, with 15.1 percent in fixed income as of June 30, 2024; 40.1 percent in public equities (Global, U.S., and non-U.S.); and 20.6 percent in private equity. In addition, 13.8 percent is invested in real assets including real estate, natural resources, and commodities, while 10.4 percent is invested in opportunistic assets. The majority of the endowment’s assets are equity-type investments that, over the long term, are expected to generate returns more than inflation to preserve the endowment’s purchasing power for future generations.
Penn State Investment Council
Ex Officio Council Members
Dr. Sara F. Thorndike, Chair
Senior Vice President for Finance and Business/Treasurer
The Pennsylvania State University
Joseph M. Cullen
Chief Investment Officer, Office of Investment Management
The Pennsylvania State University
Mary Lee Schneider
(Penn State Board of Trustees Member and Chair of the Committee on Finance and Investment)
Former President and CEO
SG360°
Matthew W. Schuyler
(Penn State Board of Trustees Chair)
Former Chief Brand Officer and Chief HR Officer
Hilton Worldwide
At-Large Council Members
Randall E. Black (2025)
CEO and President
First Citizens Community Bank
James P. Brandau (2025)
Managing Director, Private Wealth Management
William Blair & Co.
Barbara L. Doran (2026)
CEO/CIO
BD8 Capital Partners, LLC
Blake Gall, CFA (2024)
Founder and President
MicroPlusPlus Investment Management
J. Alex Hartzler (2026)
Managing Partner and Founder
WCI Partners, LP
Edward R. Hintz Jr. (2024)
President
Hintz Capital Management Inc.
Joseph B. Markovich (2024)
Managing Director
J.P. Morgan Private Bank
Colleen Ostrowski (2025)
Senior Vice President and Treasurer
Visa
J. David Rogers (2026)
Chief Executive Officer
RPO, LLC
Brandon D. Short (2024)
Executive Director
Portfolio/PGIM Real Estate
Sources of Gifts Received 2023–24
Where the $261 million came from
Designated Purposes of Gifts Received 2023–24
Where the $261 million went
Growth in Private Support and Donor Base
New Commitments
Gift Receipts
Number of Donors
Information about the full University budget can be found on the Office of Budget and Finance website at budgetandfinance.psu.edu.
Support for Penn State Students
Growth in Philanthropy-Funded Scholarships
(Fiscal year ending June 30, 2024)