Consolidated Endowment Fund (CEF)


The mission of the Endowment is to provide financial support, in perpetuity, to the beneficiaries involved in implementing the broader mission of the University.

The Consolidated Endowment Fund is comprised of a pool of endowments from both public and private sources. Essentially permanent funds, endowments have the longest investment timelines. Funds should be invested in CEF when principal appreciation is the main goal and funds will not be expended for a minimum of three years. The accounting for CEF is done on a unitized market value basis. Investments are exposed to market fluctuations and the value of individual endowments is adjusted on a monthly basis.

The investment objectives of CEF are to generate investment returns that preserve the inflation adjusted value of the fund after annual spending distributions and charges for operational expenses, execute an investment program that maximizes the total return (income plus capital appreciation) within acceptable risk parameters and provides a stable, predictable distribution of income for spending purposes annually. The process of managing the Endowment must accommodate two opposing financial claims: the need for current income by the institution and its constituencies vs. the obligation to preserve the Endowment's purchasing power for use by future generations. It is crucial to maintain this intergenerational equity.

Asset allocation is the cornerstone of the investment program and policies. Selecting appropriate broad asset allocation policy targets represents the single most important element of the investment process and is a significant determinant of the Endowment's future performance. Targets are reviewed periodically when invested asset classes approach defined operating boundaries. The long-term policy for the fund targets a 60 percent investment in domestic equities including alternative investments and 20 percent investment in international equities. The remaining 20 percent is targeted for fixed-income related investments. The allocation policy is implemented through a diversified group of external investment managers overseen by the Office of Investments & Banking.

Agreed upon investment strategies for each individual investment manager are described in annually renewable contracts with the University. Such contracts, executed by the Office of Investments & Banking, outline the operating fiduciary responsibilities, investment objectives and specific benchmarks to be used in the performance monitoring process. Investment managers acting as fiduciaries, assume the following responsibilities:

  • Executing the Investment Program
  • Financial Reporting
  • Regular Review Meetings
  • Ongoing Communication with OAM & the IAC
  • Brokerage Services

The specific portfolios constructed and owned by the University are compared against appropriate benchmarks to determine relative performance. This information is used as a tool that suggests possible changes or improvements. The following criteria are used in the selection of benchmarks: unambiguous, investible, measurable, appropriate, specified in advance, and one for which the manager accepts accountability and responsibility. Benchmarks respresent the investment performance of standardized and universally defined portfolios or broad market indexes.

Types of Endowments

  • True Endowments - Must remain permanently intact, principal may not be spent.
  • Quasi Endowments - Remain an endowment based on management prerogatives; principal may be spent for purposes of the gift.
  • Term Endowments - Remains an endowment for a specified period of time.
  • Life Income Fund Endowments - Remains an endowment for the life of the donor. All or a portion of the income is paid to a life income beneficiary for the remainder of the donor's life.

Income Distribution Rate

The Regents have authorized a distribution rate of 5% of CEF's three year average trailing market value. The spending rate is gradually reduced to 5% if the total return of the fund falls below 9.5% for a three, four or five year trailing period. Any excess earnings (income & appreciation) over the required distribution are left in the endowment.

Administration Fees

Fees are charged to Non-PUF University endowments in order to provide partial support for funding of capital campaigns by the University of Minnesota Foundation. Fee rates are set by the Board of Regents. The rate is typically a small percentage of market value (historically less than one percent). The annual fee is reviewed periodically.

Endowed Chairs

See the policy on University Endowed Chairs, Professorships and Faculty Fellowships.


For questions concerning your endowment, please contact a staff member in Treasury Accounting.