Northwestern University's 1851 Charter - creates a corporation and a Board of Trustees with "perpetual succession" authorized "to acquire, hold and convey property...solely for the purpose of education." The Charter also authorizes the Trustees to "place out at interest, or otherwise depose of "property" for the use of said institution in such manner as to them shall seem most beneficial."

The By-Laws of the Board of Trustees establish an elected Committee on Investments to "advise the Board of Trustees with respect to investment and endowment, trust and general funds of the University" and to be responsible for developing and recommending...policies relating to such investments" and for "authorizing by resolution all appropriate actions by the officers or agents of the University" (Investment Office).

The Trustees of the University are subject to the standards applicable to Trustees generally, namely the Prudent Investor Rule. Trustees shall "display the skill and prudence which an ordinarily capable and careful man would use in that conduct of his own business of like character." Specifically with regard to investing trust funds, the Trustees shall "use the care and skill of a reasonably prudent investor."

Investment Objective

The principal objective for the University's Endowment is to preserve their purchasing power and to provide a growing stream of income to fund the University's programs. Stated another way, this means that Northwestern over time must achieve on average, an annual Total Rate of Return (actual income plus appreciation) equal to inflation plus actual spending.