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Endowments are vital for institutions facing state-driven budget cuts, WNC financial offers say
North Carolina college and university higher-ed endowments – which can fund high-level research, scholarships and programming – are on the rise, some more than 20 percent since 2009.
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The National Association of College and University Business Officers and Commonfund Institute’s report, released in January, studied 865 participating colleges and universities across the country. Of those, it listed 25 North Carolina institutions. [PDF of rankings here] Among the 25, Duke University’s $4.8 billion endowment, in 2010, ranked the institution as 15th in the nation. The smallest endowment was at Fayetteville State University, at nearly $13.6 million.
Among those in North Carolina, four Western North Carolina colleges and universities were included.
All were below the 2010 national median amount of $73.6 million, and all but one, Appalachian State University and Foundation, were below the state median of nearly $55 million.
Warren Wilson College, the only private college listed – and the one with the smallest student body – had the second-highest endowment in 2010.
Their values were, in 2010:
- Appalachian State University and Foundation: $56.1 million
- Warren Wilson College: $47.9 million
- Western Carolina University: $40.8 million
- UNC Asheville: $23.2 million
Still, the percentage increases between 2009 and 2010 for all four was above the national median of 7.4 percent.
Financial officers said the reasons for the increase are unique across the group, which could include everything from the up-tick in investment returns to increased donor gifts and contributions.
Part of the 20.6 percent increase at Western Carolina University, which was the biggest jump across WNC institutions, could be found in the university’s first comprehensive capital campaign, said Jim Miller, associate vice chancellor for development at Western Carolina University.
The campaign ended in June 2009 and donors are still paying on their commitments. While not all of the campaign’s contributions were directed to the endowment, it could explain a portion of the increase, he said.
The increase – and the endowments, in general – is important because most universities use the interest from investments to fund things like scholarships, professorships, research and some programs. When the interest declines – as it did when the recession began – fundraisers must call on donors to make up the difference.
“It’s been really encouraging to have donors understand the marketplace,” Miller said. Some donors are willing to make out-right gifts, he said, to continue supporting university programs when returns were too low, or non-existent. “They are absolutely willing to help when and where they can.”
And regardless of the increases or amounts, endowments represent a commitment to a college’s or university’s long-term mission and interests.
“Universities are intended to be perpetuities,” Miller said. “We have to take a very long view of the sustainability, and supporting the fundamental purpose, of the university.”
Private institutions such as Duke University are more reliant on endowments and private donations than are public universities, explained John Pierce, vice chancellor for finance and operations at UNC Asheville, simply because they can’t rely on public funds to support the mission of the institution.
That, in part, explains why Western and UNC Asheville both rest in the bottom-half of the state’s endowment rankings.
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“We’ve got a relatively small endowment relating to a lot of places,” Pierce said. “That’s the nature of being a small school. We don’t have nearly as many alumni as Western or an App State. Being a public school, that is a factor in evaluating the endowment.”
UNC Asheville is part of the U.N.C. Management Company, which allows the school to combine its endowment with UNC Chapel Hill’s. That can boost the school’s returns, save on fees and allows the fund’s administration to be handled there.
About half the UNC Asheville endowment is dedicated to scholarships, with 30 percent more dedicated toward professorships. This year, he said, returns have been more than 11 percent.
But even though the percentage increases are notable, Pierce said, the increase won’t mean the school will be able to increase scholarship offerings or programmatic funding. It simply keeps up with demand, over time.
“We’re in a situation where we’re facing a lot of pressure with the state budget cuts, especially with being a small university,” he said. “The endowment and the investment returns and fundraising are very important to us.”