Your Foundation Has Millions in Assets. How Much Can It Actually Spend?

University foundations often report hundreds of millions of dollars in assets, and some report billions. At the same time, the universities they support may be cutting budgets and making hard choices about academic programs. University leaders can reasonably ask why more of the foundation’s resources can’t help. 

The financial statements don’t answer that question well. They show what the foundation owns and owes. They don’t show how much is available to spend, what it can be used for, or when it can be accessed. Foundation leaders should be ready to explain that difference with real numbers. 

Understanding What’s Actually Available 

Consider a hypothetical foundation with $500 million in total assets, most of it in a $425 million endowment pool. 

The $415 million of donor-restricted resources includes $270 million of permanent endowment gifts, $110 million of accumulated appreciation on those endowments and $35 million of restricted current-use gifts. About $16 million of next year’s $18 million distribution can only be spent on each fund’s purpose. The $8 million available for a priority the board chooses is the $6 million undesignated balance plus about $2 million of unrestricted distributions. The board could add up to $45 million more by releasing a board-designated quasi-endowment, although part of it may be invested in less liquid alternatives. The figures are illustrative, and each line measures something different rather than a running total. 

A note on permanent endowments: UPMIFA doesn’t prohibit spending from a fund whose value has fallen below the original gift, and boards can approve appropriations beyond the regular policy when that’s prudent. But endowed gifts exist to support their purposes permanently. They aren’t a reserve to draw down when the university’s budget is tight. 

Donor Restrictions 

Most gifts to higher education come with a purpose attached. CASE reported that 81% of contributions in fiscal 2025 were designated for specific uses, most often student success programs, financial aid and research. Those restrictions exist for good reason. Donors give expecting their gifts to support what they chose, and foundations are responsible for honoring that. 

Restrictions also limit flexibility. On the statement of net position, restricted expendable net position appears as one line or a few broad categories. A foundation can report $145 million restricted expendable and still have nothing for an unexpected university operating need, because the money belongs to scholarships, professorships and projects donors chose. Restrictions can sometimes be modified with donor consent or through procedures state law allows, but that takes time and won’t close this year’s budget gap. 

New gifts are the better opportunity. I’d encourage foundation and advancement staff to build reasonable flexibility into gift agreements, such as language allowing support to move to a related purpose if a program is renamed, merged or closed. Donors also respond when the need is clear. Unrestricted current-use giving to higher education rose about 19% in fiscal 2025, and CASE’s Jenny Cooke Smith suggested the federal funding cuts of early 2025 may have been a factor driving that increase. 

Endowment Spending Policies 

Investment returns don’t turn into spending dollar for dollar. Most foundations distribute a set percentage of a trailing average market value, often over 12 quarters, so a strong year raises the next distribution by only a fraction of the gain. That smoothing is intentional. It keeps program support steady and protects purchasing power for future students. 

UPMIFA, as adopted in each state, lets a board spend what it determines is prudent, subject to the donor’s terms. A board can approve a special appropriation above its policy rate. Before it does, it should look at what the additional spending will do to each affected fund’s future distributions. 

Boards should also revisit the spending policy itself from time to time, with no presumption that the rate should change. The board should understand how the policy drives annual distributions, how much flexibility it has, and what alternative approaches would mean for future spending capacity. 

Investment liquidity 

A portfolio can be strong and still short on cash when it’s needed. Morgan Stanley’s 2026 survey of 100 endowments and foundations, all with at least $150 million in assets, found that alternatives now make up 36% of portfolios, and 47% of respondents named liquidity as their biggest challenge with alternatives, up from 21% in 2023. 

That affects the quasi-endowment in the example above. If it’s invested in the same pool as the permanent endowment, a meaningful share may sit in private funds that can’t be redeemed quickly. Unfunded commitments to those funds add another claim on cash. Before approving a distribution outside the normal policy or a large new commitment to the university, foundation leadership should look at cash and liquid investments, expected distributions, outstanding capital commitments and other cash needs together. 

Funds That Are Available but Not Being Used 

This is the part of the discussion I think deserves more attention. Restricted money that can’t be spent is a donor-intent question. Money that’s eligible to spend and sitting idle is a management question. 

Each year, endowment distributions move into spendable accounts. If no one draws on them, the balances grow. Current-use gifts can sit the same way. A scholarship may require a major the university has merged into another program. A department may not know the money is there. Turnover, or unclear responsibility between foundation and university staff, can leave a balance untouched for years. 

A clear spending policy helps. A foundation can address unspent distributions directly, for example by returning distributions that go unspent within a set period to the endowment, where the gift agreement permits. That keeps idle balances from building and gives departments a reason to plan how they’ll use the money. 

Foundations should review funds with significant balances and no recent expenditures, together with the university departments involved. The point is to understand why the money isn’t moving and whether there’s a better way to carry out the donor’s wishes. A review like this can put money to work without changing a restriction or the spending policy. 

What the Financial Statements Don’t Show 

Foundations reporting under FASB already disclose the availability of financial assets to meet general expenditures within one year. GASB has no equivalent requirement, so readers of a GASB foundation’s statements have to assemble that picture themselves. Even the FASB disclosure answers a narrower question than university leaders are asking. They want to know what’s available, for which purposes, and when. 

A Better Report for the Board 

I’d suggest that foundation boards and university leadership receive a periodic report built around three questions: 

1. What’s available, and for what purposes? Unrestricted resources and amounts available under donor restrictions, grouped by the purposes they can support. 
2. When can it be used? Normal endowment distributions, investment liquidity, capital commitments and other timing limits. 
3. Is money that’s already available being put to work? Funds with significant balances and no recent spending. 

This doesn’t need to be a large new reporting project. Foundation accounting, advancement and investment staff already maintain most of the information. The work is bringing it together, ideally timed with the foundation and university budget cycles. 

Foundation leaders should be able to explain what the foundation holds and what it can do with it. That leads to better decisions about spending policy, fundraising priorities and reserves, and to a more productive conversation with the university about what the foundation can realistically support. 

For a related look at why foundation numbers don’t always match, see Four Numbers, One Fundraising Story. 

If your foundation is evaluating its spending policy, reviewing unspent fund balances or looking for a clearer way to show its board and university what it can realistically support, our Higher Education team can help you think through the financial, governance and reporting considerations. Learn more about James Moore’s Higher Education services.