The NIU Foundation has an obligation to donors to manage their funds to provide support to their specified program in perpetuity. The Commonfund, a nonprofit investment management firm specializing in educational institutions, manages the NIU Foundation's endowment portfolio. To offer a variety of funds representing different segments of the market, the Commonfund selects a combination of two to ten managers, each with a distinct investment style or market focus. Each quarter and on an ongoing basis, managers are evaluated to remain consistent with their clients' investment goals and for performance against applicable benchmarks. Over time, the Commonfund's combination of management styles and asset classes produces higher and more consistent investment returns.
Managers position the investments to take advantage of various market and economic conditions.
Most donors to endowment funds enjoy seeing the funds they have donated grow over time. That is why the NIU Foundation endowment fund's present expenditure policy, adopted in 1995, allows for four percent of the three-year moving average of the fund's market value at December 31 of the three preceding years to be expendable. Earnings and appreciation in excess of this are added to the principal, as are funds remaining unspent at the end of the fiscal year. These investment and spending policies are reevaluated annually by the NIU Foundations Finance Committee. A four percent spending policy may seem low when there has been an 18 percent total return in a given year.