Final answer:
A split-interest agreement is an agreement in which the donor receives a pro rata share of the investment income earned by the university on the donor's contribution.
Step-by-step explanation:
An agreement in which the donor receives a pro rata share of the investment income earned by the university on the donor's contribution is best defined as a Split-interest agreement. In a Split-interest agreement, the donor retains an interest in the donated funds, and the university or institution receiving the donation also benefits from the investment income generated by the donation. The donor receives a share of the investment income based on a predetermined formula.
For example, let's say a donor contributes $100,000 to a university as a split-interest agreement. The agreement states that the donor will receive 25% of the investment income generated by the donated funds each year. If the university earns $10,000 in investment income in a given year, the donor would receive $2,500 (25% of $10,000).