Two recent articles in The New York Times reported on the annual endowment investment returns for Harvard Univerity and Yale University (click on each of their names to see the full article in The Times).
Harvard University reported a gain of 8% to bring their endowment fund to $36.9 billion. Yale University noted a 4.5% gain for a total endowment of $22.5 billion.
Both universities returns are in the top 5% of the 165 largest institutional funds tracked by the Trust Universe Comparison Services. Harvard's annualized return over the last 10 years is 13.8% while Yale is the nation's leader at 16.3%.
Yale also reported $232 million in new gifts to endowment in this past year. It's endowment fund contributes 44% of the operating budget while Harvard's endowment contributed more than a third of its operating budget.
So what implications does this have for major gift fundraisers?
These two universities are great, in part, because of their great endowment funds. A benchmark of having 20% to 30% of your operations coming from endowment proceeds has been exceeded by both of these schools.
This is a tough year for endowment investing. Many organizations won't have a positive return.
How do you raise endowment money when the market is like this?
Remind your donors of your past performances. As Yale has been getting 16% a year averaged over the last 10 years, it retains these excess returns in the endowment as a "rainy day" fund for the future. Instead of dipping into the principal of the endowment when your return is lower than this year's investments, you are using the excess earnings from prior years to support this year's distribution.
Point to your fund's track record over time. Or, if you're new, point to the your investment managers' track record over time.
TomWilsonMajorGiftsGuru@gmail.com
Permanent Link: Endowment Fundraising Challenged by Low Investment Returns
http://majorgiftsguru.com/2008/09/endowment-fundraising-challenged-by-low.html
1 comments:
hi tom!
seems to me like harvard and yale (and probably many other universities) could give free tuition to all undergraduate students just from a small part of the interest the endowment earns!
for example, harvard: 7000 undergrads x $40,000 a year = $280,000,000 -- not even 10% of the ANNUAL INTEREST! and if we include all students (about 20,000), then we "only" get to $800,000,000.
yale's figures are: 5500 x $35,000 = $192,500,000 which is about 20% of the ANNUAL INTEREST!
now, let's take someone down on the other end (decent school, decent endowment, decent enrollment) - university of illinois: they could not give everyone free education based on interest alone, but could reduce tuition across the board by about 15% (about $1500 for most students), just from the annual interest.
anyway, it would be nice to see universities spending some of their endowment INTEREST on the students, and maybe, on feeding hungry people or other such basic needs as well.
arnie draiman
www.draimanconsulting.com
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