Explaining University Endowments
Cathy Zaharis (82BBA) credits her parents for so much of what she’s accomplished in life.
“I’ve always felt fortunate, because my parents paid for my college degree,” says Zaharis, who is retired from a career at Principal Global Investors and the University of Iowa Henry B. Tippie College of Business. “They allowed me to get a great education and go onto a successful career.”
Submitted Photo
Cathy Zaharis (center) poses with her parents, Leona and George, after graduating from the University of Iowa in 1982. Zaharis says her parents were integral in helping her find success in life, and that's why she's created two endowed scholarships at Iowa.
That’s, in part, why Zaharis created two endowed scholarships at Iowa.
“I wanted to honor my parents, give back, and pay it forward,” she said. “One scholarship is for medical students, because my dad did his residency at Iowa. My mom loved to travel and see the world, so I created a scholarship so that other students can pursue international travel.”
These endowed scholarships are part of the University of Iowa Center for Advancement’s endowment pool, which provides resources to the university to help lower tuition, advance research efforts, create a stronger Hawkeye State, and more. However, in recent years, endowments have faced increased scrutiny while higher education costs have continued to rise.
Learn more about endowments and how they provide a sustainable source of funding for Iowa’s campus community.
Endowed and Annual Funding Impact for Fiscal Years 2021–25
What is an endowment fund?
An endowment is made up of charitable donations from multiple donors that are invested to produce steady and reliable income. The original investment—or principal—isn’t touched, while the income earned is distributed to areas on campus according to the wishes of the donor.
The UI Center for Advancement’s endowment is made up of more than 3,000 unique funds that have been created by donors. These resources are designed to last indefinitely, enabling Hawkeyes to make a lasting impact on a cause they value.
“An endowment is an asset pool that facilitates consistent funding for now and in the future,” says Dan Grana, the UI Center for Advancement’s interim chief investment officer. “It provides stability in perpetuity, but it has to keep growing—despite us spending a piece of it each year.”
While the UI Center for Advancement endowment is approximately $1.7 billion, there are two additional endowment funds on campus—the University of Iowa endowment, which is largely made up of donations received prior to the UI Center for Advancement’s inception, and an endowment that was created from a 2020 public-private partnership for the operation and improvement of the university’s utility system.
As of July 2025, the three endowments totaled $3.7 billion.
UI Center for Advancement Endowment as of June 30, 2025
What is an endowment, and how does it support campus?
Endowment funds touch nearly every facet of Iowa’s campus. In fiscal year 2024–25, the UI Center for Advancement provided more than $171 million to areas on campus—including to all 12 colleges and other areas such as the UI Department of Intercollegiate Athletics, UI Health Care, and more.
“The actual number we provide to campus changes from year to year—balancing inflation with our ability to ensure consistent funding,” says Grana. “We utilize a banded inflation payout policy, so campus has an idea of what funds they will receive each year.”
Under a banded inflation model, payout for each fiscal year is tied to the U.S. Bureau of Labor Statistics’ Consumer Price Index—or otherwise known as the inflation rate—at the end of the previous calendar year. The bands—4 percent minimum and 6 percent maximum—keep spending steady during market fluctuations.
Once the calendar-year inflation rates are announced, the UI Center for Advancement can determine the dollar amount that will be distributed for the next fiscal year. This provides colleges and departments around campus with an idea of how to budget for the future.
Why can’t Iowa use its endowment to reduce tuition or cover other costs?
It’s a common misconception that endowment funds can be used like an ATM or bank account. At Iowa, there are several reasons why it does not spend down its endowment.
- Donor intent—Most of Iowa’s endowment has specific purposes—set by the donor—as to how those funds are used, and the UI Center for Advancement has a legal duty to honor those restrictions. For instance, Zaharis gave funds to create endowed scholarships for medical students and to study abroad, and those funds can only be used for those purposes.
- Fiduciary responsibilities—Iowa is one of 49 states that follow the Uniform Prudent Management of Institutional Funds Act, which guides investment decisions and endowment expenditures for nonprofits. This act limits how much of the income earned from endowments is spent on operations.
- Liquidity concerns—Whether it’s real estate or private equity, endowment funds may be tied up in investments that aren’t easily or quickly accessible. The UI Center for Advancement has approximately 110 separate funds that invest in areas such as biotechnology companies, hotels, music royalties, and much more.
- Intergenerational equity—The goal of a perpetual endowment is to provide opportunities for members of the UI community—both now and into the future. The amount of payout is chosen specifically to treat each generation equitably.
How are investment decisions made?
Grana is part of a team of in-house investment professionals who are dedicated to this work. Unlike some of the largest university endowments—which may use a specialist model and focus on one asset class per team member—the UI Center for Advancement follows a generalist model.
“We have a small team, so we utilize a generalist model,” says Grana. “It works well for us. When everyone looks at all the asset classes available, we’re able to build a better portfolio.”
His team monitors, researches, and underwrites new opportunities. To pursue a new investment opportunity, it can take as little as six to eight weeks to go from interest to investor—but it can take many months for something to come to fruition.
Zaharis is on the UI Center for Advancement Board of Directors Investment Committee, and once an opportunity arises, she and her counterparts have five days to approve or deny the investment opportunity.
“I think about three major things when looking at investments for the endowment,” says Zaharis. “I want it to grow—that’s the main goal. But I also want to find opportunities where we can have growth while being able to have stability and current income.”
After getting approval from the investment committee, Grana and his team perform a legal review with outside counsel and then an operational due diligence review. If those steps all go smoothly, the UI Center for Advancement will invest.
What are the benefits of a donor creating an endowment?
Creating an endowment fund at the UI Center for Advancement provides donors with an immediate tax benefit. It also means the individual’s financial contributions will last in perpetuity.
Learn more about how you can create your own endowment.