Optimizing Optimization: The Next Generation of Optimization Applications and Theory (Quantitative Finance)

Optimal solutions for optimization in practice 79

The true scale of Foundations is impossible to quantify but the Charities Aid
Foundation identifies the Top 500 UK Trusts in 2006 7 with aggregate assets
of £ 33.3 billion, generating an income of £ 4.5 billion. The Top 500 Trusts
includes a spectrum of research and grant-making Foundations but does not
include community foundations, schools, universities, or religious organiza-
tions. The scale and variety of Foundations and their endowments is illustrated
in Table 3.6 , which has been drawn from the Top 500 UK Trusts in 2006.

3.7.3 Managing endowments

The benefactors of Foundations often stipulate criteria within which trustees
must operate and, not infrequently, this will compel the trustees to manage
the bequest in perpetuity. Even where the obligation to maintain the endow-
ment in perpetuity is not explicitly specified, many institutions depend on their
endowment to sustain their operation through time. In all such instances, the
requirement to balance the desire for maximum current income and future
sustainability is foremost in the operation of an appropriate investment pol-
icy. The balancing of intergenerational interest has been highlighted by Tobin
(1974) , writing on the nature of permanent endowment income:

The trustees of an endowed institution are the guardians of the future

against the claims of the present. Their task is to preserve equity amongst

generations. The trustees of an endowed university like my own [Yale

University] assume the institution to be immortal.

7 CAF Charity Trends 2006. Published by Charities Aid Foundation and Caritas Data Ltd.

Table 3.6 UK foundations

Organization Founded Objective Assets ( £ million)

The Wellcome Trust 1936 Biomedical research 11,674

Garfield Weston

Foundation

1958 Grant-making to a range

of projects spanning arts,

community, education,

welfare, medical, social,

religion, youth, and

environment

3,196

The Leverhulme Trust 1925 Financial support for

research & education

1,014

The Henry Smith

Charity

1628 Releasing people from need

and suffering

622

The Royal Society 1660 The pursuit of science 130

The Clothworkers ’

Foundation

1977 Capital grants to charities

engaged with young people,

the elderly, social inclusion,

disability, visual impairment,

and textiles

66