New Delhi: The Indian Institutes of Technology (IIT), the Indian Institutes of Management (IIM), the National Institutes of Technology (NIT) and all technical institutions run by the central government will now have individual endowment funds.
An endowment fund is an investment trust established by a foundation that makes continuous withdrawals. It is often used by universities, non-profit organisations, churches and hospitals for specific needs or to further their operations.
An established concept in premier western universities, endowment funds only made a debut in India last year with IIT-Delhi.
The fund, which will be called the CFTI Endowment Fund, will be powered by donations from alumni, industry and philanthropy.
How it will work
According to the guidelines laid down by the HRD ministry for the CFTI Endowment Fund initiative, a copy of which has been accessed by ThePrint, each institute will have separate bank accounts to deposit the money.
Donations for the fund will be received under different heads, including scholarship, infrastructure development, and establishment of chairs (to further research in a certain field).
“Separate and transparent accounting shall be maintained for each subhead within the CFTI Endowment Fund bank account,” the guidelines read.
The guidelines state that the fund will be governed by a board, which will be able to take all major decisions regarding expenses. The board will be chaired by the director of the institute, while other members will include professors and prominent alumni-donors.
The ministry has also provided an outline for the structure of the fund and how it will be spent.
“Donations for the corpus will be invested and only earnings from them can be spent for the purposes of developing the CFTI. The corpus amount will not be spent,” the guidelines state.
“The governing board of the endowment fund may decide on how the fund will be managed and if it needs to open a new section 8 company/trust,” they add. “If the latter option is taken, then the director of the CFTI will be the chairman (ex-officio) of the board of this company trust.”
Under Indian law, a non-profit company can be registered under Section 8 of the Companies Act, which oversees firms established for the “promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object”.
The HRD ministry guidelines also state that each institute will fix an aspirational value to the amount of corpus fund, which will be mobilised on the basis of alumni strength and average salary of each alumnus, and possibly from philanthropy, among other sources.
For example, the IIT-Delhi endowment fund started with an initial commitment of Rs 250 crore for the corpus and aims to raise nearly $1 billion in the next six years.
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