By Mallory Schlabach, Editor in Chief
The university’s endowment fund reached its goal of $250 million with three weeks to spare and achieved two records in the process.
Ten years ago, Dr. Money, president of the university, and the Board of Trustees met to set a Centennial Vision. The endowment fund was approximately $70 million, said Jack Rich, senior vice president chief investment officer. The board envisioned the endowment reaching $250 million by the end of 2006. In 2006 alone, the endowment fund grew $40 million.
When the university reached its goal, it also achieved a record as the No. 4 university in the nation for investment returns on an endowment fund. Out of the 700 universities considered, the top three universities ranked by the National Association of Colleges and University Business Officers for their investment performances were prestigious Ivy League schools.
“No. 4 looks pretty good for the university,” Rich said. “Of the 700 schools considered, these are schools that have significant endowments in the country.”
No other university in Texas has an endowment fund of $250 million either, placing ACU first among Texas universities.
Rich said he first found record of the endowment fund dating back to 1950 when the fund was at $250,000.
The endowment fund works like a savings account interest. The only principle is that the university cannot spend any of the money donated; it can only use a portion of the money earned on the interest, which ends up being about 4 to 5 percent of the endowment value, Rich said. The other portion of the interest earned on the endowment is then reinvested.
Kelly Young’s role is to spend the interest, or the spending policy as it is officially called.
“The side we watch is how much is available to use for university operations,” said Young, associate chief financial officer.
He said the university uses the money to pay everything needed to keep it operating on a daily basis, which includes paying all employees, paying utilities and paying scholarships.
“The endowment fund provides a financial foundation for the university, so regardless of how enrollment is for the university, business can continue as usual. The larger the endowment, the more ACU can do to enhance the learning on campus,” Young said.
In order for Young to be able to spend part of the interest, the endowment has to be successfully invested. Enter Rich, who builds off of what generous donors give to the university.
“Our goal is to provide a substantial, sustainable and stable flow of funds for the university to use in meeting its mission, which is to educate students,” Rich said. “We do that by managing how we invest our funds.”
He said 45 percent of the earnings are used for student scholarships. The remaining 55 percent is used to enhance the quality of education and to keep the university operating.
“Without gifts, we wouldn’t have an endowment. Its because of the generous gifts of people who love the university that make everything possible,” Rich said. “We’ve been very, very blessed with substantial returns in the past four to five years.”