[BostonCard]

5% is the payout; the return needs to account for both the payout and inflation, and is probably assumed closer to 7%.

Last year, the endowment returned 5.6% (but it was a very strange year).  The 10 year return between 2005 and 2015 was 8.7%, which was a bit better than the average endowment return for all endowments > $1 billion (8.2%).

BC

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Most endowments pay out 3-4%, not 5%. That allows for the principal to grow over time so that the payouts get larger to deal with rising costs for the recipient

Stanford's endowment as a whole pays out almost exactly 5% ($1.4 billion payout on an endowment of just under $29 billion):
https://facts.stanford.edu/administration/finances/

I believe that is a federal requirement to maintain tax-free status.  As I explained to Goose above, the payout is slightly lower than the long-term return to allow the endowment to grow.

BC

[BostonCard]

5% is the payout; the return needs to account for both the payout and inflation, and is probably assumed closer to 7%.

Last year, the endowment returned 5.6% (but it was a very strange year).  The 10 year return between 2005 and 2015 was 8.7%, which was a bit better than the average endowment return for all endowments > $1 billion (8.2%).

BC

---

Most endowments pay out 3-4%, not 5%. That allows for the principal to grow over time so that the payouts get larger to deal with rising costs for the recipient

Stanford's endowment as a whole pays out almost exactly 5% ($1.4 billion payout on an endowment of just under $29 billion):
https://facts.stanford.edu/administration/finances/

I believe that is a federal requirement to maintain tax-free status.  As I explained to Goose above, the payout is slightly lower than the long-term return to allow the endowment to grow.

BC