Endowments can transform lives

By William F. Merck II, Vice President for administration and finance and chief financial officer for the University of Central Florida.

Only the truly wealthy can create an endowment.

Or, at least that is what I thought. However, the reality is that many of us have an opportunity to make a difference through an endowment. Perhaps the scale will be smaller than the ones that garner national attention, but even a modest endowment can be large enough to transform the life of a college or university student.

An endowment is a tax-deductible charitable gift. What makes it different is that the principal is never spent. Rather, earnings are used to fund a special purpose designated by the donor — such as scholarships.

Think about this. We have seen a national decline in state support for our colleges and universities. At the University of Central Florida, our state support has been cut nearly in half during the past five years. 

We have seen a portion of that loss replaced by double-digit tuition increases in order to maintain a quality educational experience for students.

Some of those tuition increases are covered by scholarships, but increases often lead to more student debt. For example, as a result of the cuts in state support, the tuition increase for the typical student at UCF for next year will exceed $500.

Here is where an endowment can help: a $25,000 endowment, the minimum amount at UCF for establishing an endowment, could generate a 4 percent annual return.

This return could produce a $1,000 scholarship that could be awarded to a student each year — potentially forever. Think of what that would mean to future students working their way through college.

What if those of us who have been fortunate enough to have experienced the transformational benefit of college vowed to establish a $25,000 scholarship endowment at a college or university of our choice? Or what if two or more of us joined forces to create such an endowment?

The aggregate legacy of tens of thousands of graduates leaving such endowments would amount to a massive influx of financial support to the next generation of students who will shape our world.

Higher education transforms lives. It certainly did so for my family, and that is why my wife and I are committed to this goal. We hope you will be, too.