About the Orchestra's Endowment
What is the Minnesota Orchestra’s endowment?
The Minnesota Orchestra’s endowment fund acts as its savings for the future. Donors give “gifts in perpetuity” to our endowment with the intent to protect the Orchestra for decades to come. Typically the core funds (or principal) are invested and grow over time, and the nonprofit can withdraw a percentage of the investment income to support its operations.
Can the endowment be used as a “rainy day” fund to help the Orchestra through tough financial times?
Yes, it can. In order to safely steer the organization through a volatile recession while simultaneously meeting the financial commitments of the 2007 musician’s contract, our Board agreed to take additional draws from the endowment. However, the endowment has its limits, and the Board agreed that a strategic plan would be created for 2012-15 that would create a more prudent draw policy to protect the endowment going forward.
The Orchestra’s endowment is large. Can it really be in jeopardy?
An endowment is not an infinite resource. Our organization has been taking a draw rate of 9.4 percent annually over the last decade in order to manage musician’s contracts and downturns in the economy. This is not a sustainable practice: If the Orchestra continues to operate at its current rate of spending, our endowment will be depleted by 2018. It is our Board’s duty to ensure that the endowment is available to help protect the long-term future of the musicians and the institution.
What draw rate is proposed in the Strategic Plan?
One of the key provisions of the Orchestra’s new strategic plan is an average 5 percent draw rate across all Minnesota Orchestra investments. Resetting our expenses to live within the financial parameters of an average 5 percent draw is one of the key economic issues discussed in these negotiations. This work is difficult, but learning to live within our means is in the best interests of our organization, our community and, ultimately, our musicians who will have jobs for decades to come.
To find out more about the Orchestra’s endowment, click the sections of our strategic plan below.