A colleague over at the Association of Theological Schools sent me a link to an item in yesterday's Chronicle of Higher Education news blog. The item is called "Colleges Are Tapping Restricted Endowment Funds, Survey Finds." It notes that since 2006, 37 states (plus the District of Columbia) have passed laws allowing increased flexibility in spending money from "underwater" restricted investments. (An "underwater" investment is one that is now worth less than it was worth when it was first given.)

A survey from the NACUBO and the Commonfund Institute has found that 38 percent of the total value of the endowments of 184 surveyed colleges are now underwater, the item says.

Of the surveyed institutions, only 27 percent had frozen all spending from endowment funds that were worth less than original value, a decrease of 11 percent from the number before the new spending law was enacted. About 31 percent were tapping underwater endowments at the same rate that applies to healthier funds.

Read the entire blog item here.

The blog post contains links to several items that are of interest to boards of theological schools:

• A page on the AGB Web site on "The Uniform Prudent Management of Institutional Funds Act," which is the legislation (being adopted state by state) that allows increased flexibility for boards to spend from underwater funds. See AGB's UPMIFA page here.
• The report that AGB, NACUBO, and the Commonfund Institute issued on their survey of . Read the report, called "Management of Underwater Endowments under UPMIFA," here (PDF).
• An article that appeared in AGB's excellent magazine, Trusteeship, called "What's a Prudent Payout from an 'Underwater' Endowment?" In particular, this article focuses on the board's role in setting the payout from underwater investments. Read the article here (PDF).
• The full text of theUniform Prudent Management of Institutional Funds Act, as published by the National Conference of Commissioners on Uniform State Laws. Read the text here.

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