Investments FAQ

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General

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What is the university's investment strategy?

The university’s investment strategy is designed to produce steady growth over the long term while mitigating downside risk. We are committed to preserving the impact of every donor gift in perpetuity.

What is the Long-Term Investment Pool?

The LTIP contains thousands of endowments funded by private gifts, strategic investments by the university, and rainy-day funds that the university has saved to protect the financial health of the university and Wexner Medical Center.

The LTIP includes two types of funds:

  • The gifted endowment includes funds created by donors through gifts to The Ohio State University.
  • University funds include endowed funds and quasi-endowed funds created by the university.

Does the university manage the entire LTIP the same way?

Yes. The entire LTIP is managed under a common strategy. The portfolio is diversified across various types of investments, and all endowments share proportionately in the overall rate of return.

Each individual endowment fund is assigned a number of shares in the LTIP depending on the size of the gift. This process is similar to the way a mutual fund works. Earnings are distributed proportionately based on the number of shares owned by each fund.

Why use endowments to fund priorities instead of spending money as it comes in?

Endowments provide steady, perpetual funding for academic and medical center priorities and help protect Ohio State against economic downturns or other short-term fluctuations.

Through sound investment strategy over an extended time horizon, the university seeks to grow the principal while providing annual distributions. This ongoing funding is particularly important for universities, where costs tend to be ongoing rather than one-time.

How does the university distribute earnings from endowments?

The LTIP works like a mutual fund in that there are “shares” owned by different funds, and earnings are distributed across the funds.

Distributions to each fund are made at the beginning of every fiscal year. The university's policy sets annual distributions at 4.5 percent of the seven-year moving average of the market value per share of the LTIP.

By utilizing a seven-year moving average for distributions, this formula provides stability and avoids sudden changes in funding from year to year that could result from market dynamics. The distribution policy was last updated by The Ohio State University Board of Trustees in April 2016.

Does the university use internal or external fund managers?

The Office of Investments determines the investment strategy for the LTIP, makes asset allocation decisions and places investments with external fund managers.

The university selects investment managers based on their record of success, alignment with our strategic investment priorities and approach to risk.

Why should donors give now?

There are compelling reasons for contributing to the university, with benefits to acting now:

  • Gifts that are invested in the LTIP generate annual support for the university while they continue to grow. This means immediate and long-term support for priorities including scholarships, faculty positions, student programs and capital projects.
  • Endowments allow the university to plan, based on committed resources. An endowment that funds a faculty chair, for instance, supports that chair and also frees up college resources for other priorities.
  • There are advantages to Ohio State’s status as a public institution and institutional investor. Gifts that support Ohio State grow tax-free, because the university is a public institution. Our size as an institutional investor provides both economies of scale and investment opportunities that are not available to individual investors.
  • Endowments provide consistent, sustainable income that helps offset variations in state funding and other sources.

For information on how to give, go to give.osu.edu