Kazakhstan adopts endowment fund model inspired by Harvard and Oxford

Kazakhstan’s lower house of parliament, the Mazhilis, has adopted in the first reading a draft law on endowment funds, establishing a legal framework for their operation.

According to the draft law, an endowment fund is a non-profit organization that manages assets transferred to it. These assets may include money, securities, real estate and intellectual property contributed by individuals and legal entities.

The profit generated from the investment of assets transferred to such funds is used to finance charitable and social programs related to education, science, healthcare, mass participation sports, social protection and innovation. The core capital of these funds is not used for these purposes.

The Nazarbayev Fund, which operates in the same way as the endowment funds of Harvard University and the University of Oxford, is such an entity in Kazakhstan. Annually, it allocates about $15 million to support Nazarbayev University. The money is donated by patrons, graduates and various businesses. The funds are invested, and the profit generated is used to fund scholarships, scientific research, campus development and more.

Under the new law, endowment funds will be required to conduct audits, publish reports and maintain separate accounting. The fund’s organizational structure will include a supervisory board, an executive board and an internal audit function. Each organization will be required to have an investment policy statement — a document that defines the investment strategy and limitations.

If an endowment fund’s assets exceed 10,000 minimum calculation indexes (approximately $76,400), they must be transferred to fiduciary management by a specialized company. The law also limits expenses, setting a cap of 15% on investment income or 0.5% of the average asset value if there is no investment income.

The draft law underwent revision during 14 briefings and discussions in the dedicated committees.