As of June 30, 1999, the market value of all endowments held by the Virginia Tech Foundation, including pledges to endowments, totaled $340 million, an amount that was held in 1,763 individual accounts. Of the total endowment, $321 million is invested in the foundation's pooled consolidated endowment fund, while $19 million is held separately in real estate partnerships, notes, deeds of trust, and contributions receivable, as well as other corporate securities. Endowment value per full-time student surged to more than $13,000, a record and an increase of more than 200 percent over the last decade.

The June 30 allocation of the foundation's pooled endowment fund consisted of 46.7 percent domestic equities, 16.1 percent international equities, 21.2 percent fixed income, 9.5 percent cash, and 2.0 percent alternative investments and 4.5 percent cash. The total return achieved for the past 12 months was 5 percent, and the fund has earned an annualized return of 11.7 percent over the last 10 years.

The overriding principle of the foundation's consolidated endowment program is simple: funds should be managed so that a gift today will fund a donor's objective in perpetuity. For example, if a benefactor wants to endow a scholarship, the money is managed to maintain the real value of the endowment and keep pace with inflation.

Each gift entering the consolidated endowment fund purchases units analogous to shares in a mutual fund. A payout-per-unit is determined each fiscal year, and payments are made on a quarterly basis.

Once a year, the payout rate is adjusted by the annual change in the Consumer Price Index. In an effort to maintain the purchasing power of the consolidated endowment pool, historical real-return data is used to determine upper and lower boundaries for total spending. The foundation's policy increases endowment support at a steady pace to assure annual increases of at least the rate of inflation, or greater.

A three-year average is used to smooth out the unit values when determining if spending falls between the upper and lower boundaries. Without this moving average, funding might dramatically rise in one year, then fall drastically the next, leaving the beneficiaries of the endowments vulnerable to increased volatility in the stock and bond markets.

Decisions on how to manage the foundation's consolidated endowment pool are made by its investment committee, which chooses money managers with philosophies consistent with the objectives of long-term growth embodied in the mission of the consolidated endowment program. To completely diversify its portfolio, the foundation employs several management firms offering a variety of investment styles.