Finance FAQs

The following set of FAQs outlines how financial decisions are made at the university level with specifics on several strategic initiatives. If you have other questions you would like answered, please let us know by completing this online form.

University Priority Setting

Endowment

  • For what does Vanderbilt use its endowment? The role of Vanderbilt’s endowment is to provide a permanent source of support for the university’s students, faculty and programs to advance the university’s mission of teaching, research and service. While current-use gifts support the university’s immediate needs, only the endowment ensures long-term sustainability.
  • What is an endowment?Vanderbilt’s endowment is a set of funds that holds the principal in perpetuity and pays out a small portion, about 5 percent per year, in support of campus programs. Endowment investments have dual goals: to grow the principal and to generate income.More specifically, Vanderbilt’s endowment comprises more than 2,700 individual accounts, each owning endowment units (similar to shares of a mutual fund). The payout from each account is directed towards its donor- or institutionally designated purpose, such as a scholarship, endowed chair, or research program.Each account within the endowment has a specific purpose for which the payout must be used. For nearly 60 percent of the accounts, use of the payout is legally bound by donor designations. Some accounts were created with institutional dollars, thus internally designated to support the university’s top priorities in perpetuity.
  • How do monies from Vanderbilt University’s endowment further the university’s goals? The endowment supports goals of accessibility and affordability by providing need-based scholarships that ensure every qualified student has access to a Vanderbilt education, regardless of background and socioeconomic status. It supports the recruitment and retention of gifted faculty through the creation of endowed chairs and funding for graduate education and research. It supports research and discovery by providing programs and grants to support students and faculty as well as funding trans-institutional initiatives.
  • How important is the endowment to Vanderbilt’s financial strength? Vanderbilt’s endowment is the financial foundation for the university, ensuring the long-term sustainability of our mission. We owe the university’s very existence to an endowed gift made by our founder and namesake, Cornelius Vanderbilt. Almost 150 years later, that gift, along with countless others, continues to help Vanderbilt flourish as a world-class hub for education, research and service.
  • How much is the endowment worth? As of June 30, 2017, Vanderbilt University’s endowment was $4.1 billion. The average compounded rate of return over the most recent five years is 6.5 percent. At Vanderbilt University, endowment distributions are based on 5 percent of the average of the previous three calendar year-end unit market values.
  • What percentage of Vanderbilt’s annual budget does the endowment fund? In fiscal year 2017, endowment distributions comprised 15 percent of the university’s operating budget. The remaining 85 percent came from other sources such as government and nongovernment grants and contracts, student tuition and fees, and philanthropy.

VU-ETOB budgeting

  • What is VU-ETOB? VU-ETOB, or “VU-every tub on its own bottom,” is an economic term that refers to how revenues and expenses are allocated to and used within each school. With VU-ETOB, schools and colleges directly collect revenue through tuition, grants (including indirect cost recoveries) and endowment funds and in turn pay directly for expenses such as salaries, supplies, utilities and maintenance.
  • What is the benefit of ETOB? VU-ETOB gives deans more autonomy to focus their resources on their strategic priorities while maintaining the central efficiencies the university has realized as a result of One Vanderbilt. The university’s aim is to best align resources in a way that is sustainable, transparent and accountable.
  • How exactly does VU-ETOB work? Under VU-ETOB, all revenues flow directly to the colleges and schools in which they are generated. For the schools and colleges with undergraduate tuition revenue, the new model marks a shift from the recent past, in which this tuition revenue was collected by the provost and then reallocated.All the colleges and schools contribute toward supporting shared services such as the library and admissions. For example, utility and custodial charges might be based on square footage of the school’s or college’s buildings. Schools and colleges also pay for a portion of central administrative services, such as Human Resources, Information Technology, General Counsel and Public Safety.
  • What incentives do schools and colleges have to participate in collaborations and trans-institutional initiatives? Funding opportunities like Trans-Institutional Programs, University Courses, and Discovery and Research Scholar Grants seed and support faculty efforts across departments as well as across schools/colleges. This creates incentives not only for faculty but also for the schools and colleges to support them in doing so. These and other strategic investments and initiatives, such as Graduate Education and Research Endowment Planning, are supported through allocations of university revenues, including institutional endowments and gifts. These initiatives and investments are often broad-based, benefiting all (or most) of the schools/colleges, depending on the particular initiative, which ensures collaboration and One Vanderbilt engagement.See the provost’s Open Dore newsletter for more on VU-ETOB.

Capital Projects

  • What is a capital project? A capital project is defined as a project that helps maintain an asset or infrastructure. More specifically, it refers to new construction, an expansion or a renovation for new or existing facilities on campus. For more information, click here.
  • How does a project get approval and a green light to proceed? Most capital projects originate with the school/college or department, with the exception of some campuswide strategic projects, which go through a rigorous planning process with university leaders and the Board of Trust. Following concept and feasibility studies, project sponsors develop a proposal that includes funding sources and project justification consistent with academic and university priorities. Projects over $1M require chancellor approval; projects over $2M require Board of Trust approval.
  • How are capital projects like residential colleges or academic buildings funded? While there is not a one-size-fits-all model, most buildings are funded using a combination of philanthropy and the school/college or department’s cash reserves. For large strategic projects, we may also use debt. The funding plan is determined early in the process, during the development of the concept and feasibility studies.
  • Does the university take on debt by issuing bonds? Yes, the university issues bonds in accordance with our debt policy, and with the approval of the chancellor and Board of Trust. View the university’s credit ratings here.
  • How does philanthropy support capital projects? Philanthropy is a critical component of many of the university’s capital projects. Development and Alumni Relations helps match donors’ philanthropic interests with Vanderbilt University’s strategic priorities. In some cases, this includes support for capital projects.

Residential Colleges/College Halls

  • What are residential colleges and why are they an investment priority for the university? Residential colleges are much more than traditional student living—they are tight-knit communities where undergraduates live alongside faculty and graduate student mentors; where students can initiate and lead programs of their choosing; where dining is incorporated as an expression of community; and where the experiences stimulate a life-long passion for learning.A core principle of Vanderbilt’s Academic Strategic Plan is to enhance the undergraduate residential experience through the expansion of the residential college system. This is grounded in the belief that residential colleges are critical to educating the whole person and establishing a passion in our students for lifelong learning. They also build a strong sense of community and further our commitment to inclusive excellence. See more on the website.
  • How will these residential colleges be funded? Residential colleges are paid for with a combination of philanthropy, debt and housing cash reserves.
  • What’s the timeline for these new residential colleges? The E. Bronson Ingram College Hall will welcome students in fall 2018. Three additional residential colleges will be completed by 2023, which also marks the 150th anniversary of Vanderbilt.

Financial Aid and Opportunity Vanderbilt

  • What is Opportunity Vanderbilt and why is it an investment priority for the university? Opportunity Vanderbilt is the university’s undergraduate financial aid program, which meets 100 percent of an undergraduate student’s demonstrated needs, not with loans but with additional scholarship funds. It supports the university’s commitment to replace need-based undergraduate student loans with grants and scholarships.Opportunity Vanderbilt is a key initiative in our commitment to make a Vanderbilt undergraduate education affordable and accessible to all students who have earned it, regardless of their ability to pay.Opportunity Vanderbilt ensures Vanderbilt remains competitive in attracting the largest demographic of highly capable future students— including those who will need some financial aid to attend Vanderbilt.
  • What percentage of undergraduates receives financial aid? Vanderbilt has expanded its undergraduate financial aid significantly over the past decade. In 2017, more than 70 percent of the entering first-year students received some form of financial aid; 54 percent of first-year students received need-based aid. More students than ever are receiving Pell Grants, with 15 percent of the 2017 entering first-year students receiving these federally funded, need-based grants. That’s up from 8 percent of the entering first-year students in 2008. (Source: Class of 2021 profile)
  • What has been the impact of Opportunity Vanderbilt? Since Opportunity Vanderbilt was introduced in 2008, Vanderbilt’s entering first-year student cohort has steadily become more diverse and more academically accomplished. Vanderbilt’s upward trajectory in the rankings is also tied to our expanded financial aid efforts.
  • How much money has been raised to support Opportunity Vanderbilt? Opportunity Vanderbilt is a key component of the Academic Strategic Plan, making it a top fundraising priority for the university. Donors have contributed more than $296 million to the endowment for Opportunity Vanderbilt since it launched in 2008.
  • How many students have benefited from Opportunity Vanderbilt? Since 2008, more than 9,800 undergraduate students have received Opportunity Vanderbilt scholarships.
  • How do we fund Opportunity Vanderbilt? Funding for our undergraduate scholarships comes from a number of sources, including the endowment, other university investments, external agencies and current-use (non-endowed) gifts. A portion of financial aid is unfunded. Unfunded aid is a grant to the student, which permits him or her not to pay portions of their tuition; they simply receive a discount. For more information, please read this article from the National Association of College Business Officer’s magazine.

Immersion Vanderbilt

  • What is Immersion Vanderbilt and why is it an investment priority for the university? Immersion Vanderbilt, an initiative of the Academic Strategic Plan that will launch in fall 2018 as a degree requirement for all entering first-year undergraduate students. The initiative calls for each undergraduate student to participate in an intensive learning experience that takes place in and beyond the classroom, culminating in the creation of a tangible final project. Students can engage in one of four tracks: civic and professional, creative expression, international, or research. Immersion Vanderbilt will help students explore their passions, transform ideas into action, and make a difference in the world. Visit the Immersion Vanderbilt FAQ for more information.
  • What resources are available to support Immersion Vanderbilt? Nearly $2.5 million of annual endowment distribution support was given directly to the schools and colleges this year (FY18) and that initial level of support will continue on a yearly basis going forward. The amount per school and college varies, ranging from over $700,000 to about $100,000 (depending on the size of the school). Each unit makes its own decisions on how to best deploy these funds in support of faculty and students engaged in immersion. Examples of investments include student stipends, research supplies, travel grants and funds to support curricular development and faculty effort. This support demonstrates the commitment to ensuring faculty have support to make Immersion Vanderbilt a success. A shared Office of Immersion Resources supports school/college immersion efforts.

Graduate Education and Research

  • What investments is the university making in graduate education and research? In August 2016, the chancellor committed to building a $300 million endowment to support graduate education and research. Following a collaborative, rapid-cycle process, an ad-hoc faculty committee released a short report identifying four proposed thematic areas for future investment in graduate education and research. They are:
    1. Establishing an endowment for new Russell G. Hamilton graduate Ph.D. scholarships.
    2. Establishing an endowment for a new Russell G. Hamilton Graduate Leadership Development Institute.
    3. Establishing an endowment to launch and sustain new faculty research across disciplinary, interdisciplinary and global engagement endeavors.
    4. Launching fundraising initiatives to create new endowed chairs and faculty fellows.

    The university announced in October 2017 that $125 million will be devoted to the Hamilton scholarships and leadership institute, and $30 million to support the new endowed chair fundraising initiative.

  • What about trans-institutional and global research? The university is at the midpoint of the five-year, $50 million TIPs initiative, launched by Chancellor Nicholas S. Zeppos, and a foundation of the university’s Academic Strategic Plan. In its first three years, the TIPs program has supported 44 trans-institutional research and teaching projects. To date, 340 faculty members and several hundred graduate and undergraduate students have been involved in TIPs grants.The global engagement effort, outlined as part of the university’s investment in graduate education, is in the planning stages and will be linked to a recent faculty report.