Due to success in investing and fund raising, Iowa State’s endowment has almost tripled since 1994. ISU officials said the biggest use of the endowment is financial aid for students.

Both the university and the ISU Foundation acquire and manage gifts given to ISU, including endowments, which are invested. The interest from the initial investment is spent on a purpose specified by the donor.

Tom Mitchell, president of the ISU Foundation, said the endowment fund for the ISU Foundation in 1998 was $154 million, up from $54 million in 1994.

Mitchell said both ways to increase the endowment — through investment strategy and additional gifts — have been successful in recent years.

“We’ve had a very strong stock market, so it has paid off,” Mitchell said. “Our rate of return was 17.4 percent.”

Warren Madden, vice president for Business and Finance, said the average rate of return for his office, which manages donations given directly to the university, is 18.7 percent.

“That’s a 93.5 percent increase in a five-year period,” Madden said.

The return rate has contributed to the growing endowment.

“The goal we have set is for our return to stay 3 to 5 percent above the rate of inflation,” Madden said. He said ISU pays out 5 percent of the value of the endowment per year.

Mitchell said the ISU Foundation also has received several large gifts in the last few years that have contributed to the large increase of the endowment.

Endowments are beneficial to ISU students because much of the money is used for financial aid, Madden said.

“Students should be hopeful that it continues to grow because that means scholarships for more students,” Mitchell said.

Endowments also are used to improve the university by providing scholarships, faculty support and research and laboratory equipment.

Madden said many of the new buildings and facilities on campus have been paid for by the ISU endowment.

However, he said the university has little control over how the money is used.

“The donor designates where they want their money to go,” Madden said. The donors sometimes set up scholarships, and ISU finds students who fit the criteria.

Mitchell and Madden expect the endowment to continue to grow in the future.

However, Madden said the rate of return probably won’t be as high.

“The rate of growth won’t likely stay at such high rates,” he said.