Despite a 10% plunge in endowment in March, university endowment has increased from last year.
“An endowment is a fund intended to benefit the university every year in perpetuity. Unlike current-use gifts, which are spent completely for immediate needs, endowed funds are invested for long-term growth and a portion of the return on those investments is spent each year,” the ACU Alumni Association says.
Endowment funds are typically given by a donor and fall into one of four categories: unrestricted endowments which support the general purposes of the university, student scholarship endowments, endowed chairs, professorships and fellowships and ACU’s department centers and programs. On average, 4.5-5% of endowment funds are dispersed for use in university operations, and the rest are invested.
“We’ve tried to invest in a way in a diversified portfolio so that we can dampen some of the volatility and some of the up and downs in the markets by the way we invest so that we don’t have the extreme drops in value that you can see if we were just invested in the equity market,” Jack Rich, chief investment officer, said. “It’s hard to predict where things will be but we feel comfortable that we have the appropriate mix of assets in our endowment to try to provide the most protection that we can.”
Endowment experienced a 10% decline following the uncertainty around the COVID-19 pandemic in March.
“Since the decline in March we have not recovered 100 percent,” Jack Rich, chief investment officer, said. “But we have recovered a good part of the decrease.”
Looking at reports from September 30, endowment was valued at $454 million but today is around $460 million.
While endowment continues to increase despite the decline in March, the future is uncertain as the pandemic continues.
“It’s hard to predict what the rest of the year may bring,” Rich said. “There are so many factors in place right now that add to the uncertainty in the stock market just like it adds to uncertainty in the life of the university and the lives of its students. We have a significant election taking place, and it’s unclear what happens with the virus moving forward. All these are factors that make it very difficult to predict what the markets might provide in return for the remainder of this year and into next year.”