Inside UD’s $50 million endowment: a conservative and diversified fund

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José Healy
News Editor

The University of Dallas’ endowment is a conservative portfolio. The University’s endowment committee does not typically invest endowed funds on risky assets – assets which could lead to phenomenal gains, but also to phenomenal losses.

“We are not trying to hit a home run on something really weird,” Director of Finance Leonard Robertson said. “Hopefully, we’ll lose less than everybody else, and we will gain as much.”
The university holds an endowment worth $50.4 million, as of the 2011 fiscal year, which ended in May 2011. The endowment rose in the past year by 16 percent from the 2010 fiscal year, when it stood at $43.8 million, according to “U.S. News & World Report.” Before the 2008 economic downturn – at the end of the 2007 fiscal year – UD possessed $48.8 million in endowed funds, but the amount dropped due to the recession.

“The endowment did go down based on the market,” Business Office Controller Meg Stinson said. “We’ve seen the market go down and then come back up again.”

She said UD did not lose as much endowed money as other universities during the downturn. Of course, some of those other universities have endowments that make UD’s look like a water drop in the ocean.

Harvard – which has the largest endowment in the U.S. – went from having a $36.9 billion endowment before the crisis to $26 billion in 2009, according to an article published in Sept. 2010 in “The Wall Street Journal.”

The earnings from university endowments typically serve the purposes of lowering tuition for students and of attracting high-ranking professors to teach and often granting them chairs, explained Robertson and Stinson in an interview last week. The larger the returns on the invested funds, the more scholarship money and professorial chairs the university can grant.

UD currently holds about 75 endowments. In other words, 75 donors have granted sums of money towards the university endowment, specifying what they wish the earnings on those invested funds to benefit – academic scholarships, professorial chairs, lecture series,  and everyday operations, among others.

Stinson said that the earnings on UD’s endowment are fairly well-divided between instruction – including lecture series and professors’ salaries – and academic scholarships. Since the amount of money invested is relatively large, that ensures that UD’s endowment keeps producing earnings that benefit the students, the professors and the academic institution as a whole, as Stinson and Robertson explained.

And even if the market turns sour, the allocation of funds in a wide range of investments – from marketable securities and international funds to mutual funds and hedge funds – ensures that
some investments will still post gains.

“It’s all about risk minimization,” Robertson said.

As great a sum as $50 million may seem to be, Robertson says it’s really not that much for an endowment.

“It sounds like a lot of money, but mini colleges that are not much bigger than us have upwards of twice or three times as much as that,” he said.

San Antonio’s Trinity University – a small private college with close to 2,400 undergraduates, compared to UD’s approximately 1,300 – has an endowment of $862 million as of 2010, according to “U.S. News & World Report,” more than 17 times bigger than UD’s.

UD’s relatively young age  –  the university was founded in 1956  –  could excuse the size of its endowment, according to Robertson.

Still, the endowment should reflect the confidence of the school community and the outside community about the university’s quality and mission.

“If they consider this place worthwhile, they should be trying to add to this endowment,” Robertson said. “The endowment is a call for us to support the long-term viability of this school.”

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