Sunday, April 26, 2015

Study: College endowments hit hard by markets


From page A1 | February 07, 2013 |

On average, college and university endowments’ investments lost 0.3 percent in the last fiscal year, a sharp drop from the average return of 19.2 percent in fiscal 2011, according to a study by the Commonfund Institute and the National Association of College and University Business Officers, known as Nacubo.

The returns were dragged down mostly by the dismal performance of international equities, whose returns declined by 11.9 percent, attributable in good part to the economic turmoil in Europe and the slowdown in China. Domestic stocks had an average return of 2 percent, and fixed-income assets 6.8 percent.

The University of California endowment’s investments lost 0.7 percent and UC Davis Foundation endowment’s 0.4 percent — compared to gains of 20.2 percent and 18.7 percent, respectively, in 2011.

The Nacubo study, based on data from 831 American colleges and universities with a total of more than $400 billion in endowment assets, showed more positive long-term results.

“Over the last 10 years, the average rate of return was 6.2 percent,” said John Walda, the president of Nacubo. “That’s a good number when you compare it with various indices.”

In the fiscal year that ended in June 2011, the average 10-year return was 5.6 percent.

The study, which includes large and small institutions, public and private, found that those with the largest endowments had the greatest returns last year. Among universities with endowments greater than $1 billion, the average return was 0.8 percent. Those with endowments of $25 million to $500 million had negative returns, and those with endowments under $25 million had a return of 0.3 percent.

Altogether, 71 institutions have endowments greater than $1 billion, and 145 have more than $500 million.

The value of the UCD Foundation’s endowment stood at $204 million at the end of the fiscal year, up 1.5 percent.

UCD raised a total of $132 million — its second best fundraising year ever. Of that, $24 million was pledged to various endowments, including the UCD Foundation, according to Shaun Keister, vice chancellor for development and alumni relations.

The foundation’s endowment has benefited from the Campaign for UC Davis, which seeks to raise $1 billion by 2014. The campus’ first comprehensive fundraising effort has tallied $915 million since July 2006. UCD launched the campaign’s public phase in the fall of 2010.

The colleges and universities in the Nacubo study spent an average of 4.2 percent of their assets last year to support their operations, down from 4.6 percent the previous year. But while the spending rate had declined somewhat, the average dollars spent per institution grew by about 7 percent.

Most colleges and universities have a policy of spending 4 percent to 5 percent of their average endowment value over the previous three years, so the sharp rises in endowment values in 2010 and 2011 increased the amount paid out last year. The UCD Foundation’s spending rate is 4.25 percent.

The institutions with the largest endowments, which get a significant portion of their operating budgets from endowment spending, spent an average of 4.7 percent last year. The institutions with the smallest endowments spent slightly under 4 percent.

“The long-term goal of most endowments is to exist in perpetuity and grow with the rate of inflation,” said Verne Sedlacek, president of Commonfund.

To do that while paying out 4 percent to 5 percent a year, he said, would require annual returns of at least 8 percent, given that the higher education price index has been rising about 3.8 percent a year over the last decade. “Universities are still not back to where they need to be,” Sedlacek said.


— Tamar Lewin of the New York Times and Enterprise staff writer Cory Golden contributed to this report.



Wire and staff reports

  • Recent Posts

  • Enter your email address to subscribe to this newspaper and receive notifications of new articles by email.

  • .


    Davis team wins world robotics championship

    By Anne Ternus-Bellamy | From Page: A1 | Gallery

    Nepal quake death toll exceeds 1,800

    By The Associated Press | From Page: A2 | Gallery

    Spring storm delivers late rain, snow to Northern California

    By The Associated Press | From Page: A2

    At the Pond: Plenty of pleasures in our bioregion

    By Jean Jackman | From Page: A3 | Gallery

    Pioneering organic chef presents her memoir Monday

    By Special to The Enterprise | From Page: A4

    Suspect in UCD assault arrested

    By Lauren Keene | From Page: A4

    Dog park marks anniversary with cleanup

    By Special to The Enterprise | From Page: A4

    Rail-safety bill passes Senate committee

    By Special to The Enterprise | From Page: A4

    Free Family Bike Clinic set Sunday

    By Enterprise staff | From Page: A4

    Watch them in action

    By Julia Ann Easley | From Page: A5

    Stocks rise on tech earnings; Nasdaq adds to record

    By The Associated Press | From Page: A8

    Dodd speaks as part of public policy series

    By Special to The Enterprise | From Page: A9

    We did it (together)!

    By Enterprise staff | From Page: A10

    $2.72 million judgment ordered against Dollar Tree Stores

    By Special to The Enterprise | From Page: A10

    UCD hosts bike auction Saturday, May 2

    By Enterprise staff | From Page: A11 | Gallery

    Fly Fishers to hear about advanced streamer tactics on Tuesday

    By Special to The Enterprise | From Page: A11 | Gallery

    Bicycle activist will speak Monday at Hall of Fame

    By Enterprise staff | From Page: A11 | Gallery



    Study questions accuracy of tumor gene mapping

    By The Associated Press | From Page: B6

    New ways of giving locally and beyond

    By Marion Franck | From Page: B6

    Mayor’s Corner: A spirit of renewal permeates Davis

    By Special to The Enterprise | From Page: A12

    More work to do for a safe Picnic Day

    By Our View | From Page: A12

    Tom Meyer cartoon

    By Debbie Davis | From Page: A12

    Poker proceeds help youths

    By Letters to the Editor | From Page: A12

    Invest in water of the future

    By Letters to the Editor | From Page: A12

    Water, water everywhere?

    By Letters to the Editor | From Page: A12

    Anaheim, where The Force is with you

    By Sebastian Onate | From Page: A13 | Gallery



    Energy, fan-friendly happenings highlight UCD spring football game

    By Bruce Gallaudet | From Page: B1 | Gallery

    Blue Devil golfers capture CAL Invitational title

    By Enterprise staff | From Page: B1

    Davis gets two baseball wins in two days

    By Spencer Ault | From Page: B1

    Grizzlies dominate young Blue Devils on Senior Night

    By Thomas Oide | From Page: B1 | Gallery

    UCD roundup: Aggies reach water polo semifinals

    By Enterprise staff | From Page: B2

    Blue Devil swimmers are up to the challenge

    By Enterprise staff | From Page: B2 | Gallery

    DHS softball struggles continue against Sheldon

    By Enterprise staff | From Page: B12 | Gallery

    Babich brings the heat as DHS girls stick it to Oak Ridge

    By Enterprise staff | From Page: B12 | Gallery





    History comes alive in ‘The Sacramento Picture’

    By Derrick Bang | From Page: A1 | Gallery



    Big Italian food, sports bar to fill Little Prague

    By Wendy Weitzel | From Page: A7 | Gallery

    Yolo County real estate sales

    By Zoe Juanitas | From Page: A7

    Davis Roots hires new general manager

    By Special to The Enterprise | From Page: A8

    Comcast announces speed upgrade

    By Special to The Enterprise | From Page: A8



    Valente Forrest Dolcini

    By Special to The Enterprise | From Page: A6

    Whitney Joy Engler

    By Special to The Enterprise | From Page: A6



    Comics: Sunday, April 26, 2015

    By Creator | From Page: B8