A r c h i v e d  I n f o r m a t i o n

Biennial Evaluation Report - FY 93-94

Chapter 517

Endowment Challenge Grants (Title III, Part C)

(CFDA No. 84.031)

I. Program Profile

Legislation: Higher Education Act (HEA) of 1965, Title III, Part C, P.L. 96-374, as amended by P.L. 99-498, P.L. 100-50, and P.L. 102-325. (20 U.S.C. 1065a) (expires September 30, 1997).

Purpose: To match endowments raised by eligible higher education institutions that have limited financial resources and serve significant percentages of low-income and minority students.

Funding History

Fiscal Year Appropriation 1/
1984 $ 7,120,000
1985 15,600,000
1986 22,210,000
1987 19,785,000
1988 19,148,000
1989 12,696,000
1990 17,893,000
1991 17,461,773
1992 7,500,000
1993 7,366,000
1994 7,565,000

1/ Endowment appropriation only, does not include the previously funded challenge grant program. The Endowment Challenge Grant Program was first funded in FY 1984.

II. Program Information and Analysis

Services

Endowment Challenge Grants encourage eligible institutions to establish or increase institutional endowment funds. The Federal grant and the institution's matching funds (which together make up the endowment corpus) must be invested in low-risk securities, such as a federally insured bank savings account or a comparable interest-bearing account, certificate of deposit, money market fund, or mutual fund. For a 20-year period after the grant is awarded, institutions may not spend the endowment corpus, but may spend up to one-half of the interest earned on any institutional expense.

Two-year, four-year, or graduate institutions that are eligible for Part A, Part B, or Part B Sec. 326 grants (see chapters 515 and 516) are also eligible for endowment challenge grants. Institutions are also eligible if they make a substantial contribution to graduate or postgraduate medical educational opportunities for minorities and the economically disadvantaged. Institutions that receive an Endowment grant must wait out five or ten years before receiving another grant. The minimum grant must be at least $50,000 and the maximum grant is either $500,000, $1.0 million or $1.5 million based on the appropriation. These grants require one matching institutional dollar for every two Federal dollars. As of FY 1993, 25 percent of funds are set aside for HBCUs. The program has 3 years to obligate fiscal year funds. Most of the funds are obligated in the appropriation year, but if an institution fails to match, the funds are reallocated.

Analysis of Table 1 reveals the following concerning the distribution of Part C funds:

Table 1

Endowment Challenge Grants Program Obligations by Institutional Racial/Ethnic Identification and Institutional Type and Control Fiscal Years 1990 Through 1993

Instititutional Racial/Ethnic of Identification FY 19901 FY 19912 FY 19923 FY 19934
Number of Awards Obligations % of Total Dollars Number of Awards Obligations % of Total Dollars Number of Awards Obligations % of Total Dollars Number of Awards Obligations % of Total Dollars
Historically Black 3 $4,311,754 23.4% 1 $1,000,020 5.7 1 $50,000 0.7% 4 $1,800,000 25.0%
White 13 9,375,278 51.0 12 10,571,753 60.2 15 5,450,000 72.7 13 5,400,00 75.0
American Indian 1 2,445,968 13.3 1 4,000,000 22.8 0 0 0.0 0 0 0.0
Hispanic 4 2,260,000 12.3 1 2,000,000 11.4 4 2,000,000 26.7 0 0 0.0
Total 21 $18,393,000 100.0% 15 $17,571,773 100.0% 20 $7,500,000 100.0% 17 $7,200,000 100.0%
Type and Control
Four-Year Private 8 $9,771,754 53.1% 1 $2,000,020 11.6% 5 $2,500,000 33.3% 4 $1,800,000 25.0%
Four-Year Public 1 2,000,000 10.9 0 0 0.0 0 0 0.0 1 5000,000 6.9
Two-Year Private 0 0 0.0 1 1,000,000 5.8 1 150,000 2.0 0 0 0.0
Two-Year Public 12 6,621,246 36.0 13 14,571,753 82.6 14 4,850,000 64.7 12 4,900,000 68.1
Total 21 $18,393,000 100.0% 15 $17,571,773 100.0% 20 $7,500,000 100.0% 17 $7,200,000 100.0%

Source: Program data.

Note: The predomiant race or ethnicity is defined as an institution that has more than 50 percent of its students of that race or ethnicity.

  1. Tarkio closed, so the $500,000 obligated to Tarkio in FY86 was reobligated in FY90.

  2. Funds from an unmatched challenge grant of $28,910 plus a FY85 grant to Livingstone of $103,992 was reallocated in FY91. Funds $22,902 remain to be reallocated in a future fiscal year.

  3. Institutions funded in FY 1992 had until March 1994 to match their grant.

  4. Institutions funded in FY 1993 have until March 1995 to match their grant. The $206,902 plus $21,813 caryover from FY89 left unobligated can be reobligated until March 1995.

Management Improvement Strategies

A national conference was held that included technical assistance workshops to improve proposals and projects. Mini-workshops were held in several locations around the country to provide technical assistance in program and grants maintenance to grantees with 20-year-duration grants.

III. Sources of Information

  1. Program files.

IV. Planned Studies

An evaluation of the Title III programs is planned to begin in FY 1995. As study of investment strategies for developing institutions got underway at the beginning of FY 1995. Findings are expected by October 1995.

V. Contacts for Further Information

Program Operations:
Caroline J. Gillin, (202) 708-8816

Program Studies:
Jim Maxwell, (202) 401-0182

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