Somewhere amid the knots of Yale’s bureaucratic red tape, alumni gift money may be being wasted, one Law School administrator said.

When Yale’s professional schools receive donations, they turn the money over to the University to invest. Yale Law School Associate Dean Steve Yandle, who oversees the budget and directs financial matters for the Law School, said the University does not provide a viable mechanism to invest certain types of alumni gifts in accounts that will yield substantial returns.

Currently, when a Yale entity like a professional school or a residential college receives a gift, the money is usually invested in one of two accounts: a short-term pool or an endowment pool.

The short-term pool is designed for donations that will be spent within one to five years and are usually intended to finance projects like building construction. Because these gifts are spent in only a few years, short-term pool accounts yield low returns.

As a general rule, money invested over a longer period of time will normally yield a higher return than a gift invested over a shorter period of time, said Amoret Heise, director of investment accounting at Yale’s controller’s office.

The endowment pool, on the other hand, is designed for gifts donated specifically for the Yale endowment. The principals of these gifts are put in the endowment and cannot be withdrawn, but a substantial return is earned each year.

These returns can reach very high figures — in the last fiscal year, the endowment posted returns over 40 percent — partly because gifts to the endowment represent extremely long-term investments, since their principals can never be withdrawn.

The issue at hand, however, are medium-term gifts, which would be spent over a span of five to 10 years. Investing such gifts in the short-term pool prevents Yale entities like the Law School from receiving as high of a return as they could.

Yandle said gifts donated to finance the Law School’s renovations during the 1990s were prime candidates for medium-term investment. Yandle said that in the past, the Law School has had to put such gifts in the short-term pool, where the principal did not earn as high of a return as it could.

“What I’m envisioning doesn’t involve some sort of sophisticated investment strategy,” Yandle said.

But Associate Vice President for Finance Janet Ackerman said that currently there is a mechanism for such long-term funds.

“If they’re for a certain purpose, there are some gifts that can be put into some kind of combined fund, with some of the [gift being invested] in endowment-like investments,” she said. “If it’s a significant gift for a longer time horizon, we do have a mechanism. It’s treated gift by gift, depending on the circumstances of that gift.”

Yandle, however, said he has never been able to access such a mechanism.

“I’ve expressed interest in this for 15 years now and was told that we’ve been thinking about it, and more recently have been told that such a mechanism exists, but I have not received any information on it,” Yandle said.

Ackerman said the administration has tried to make this information available. But Abby Scott, associate director of finance for the School of Management also said that, though the SOM has never made a formal inquiry into the matter, she is not aware of any method by which to invest medium-term gifts in accounts that will receive proportionally higher returns.

Ackerman said intermediary accounts have been set up in the past. She said that currently there is no formalized procedure because the central administration receives many short-term donations but few medium-term.

Yandle said if the intermediary accounts were well publicized, there would be a demand for them.