Endowment may soon top $1 billion

Endowment The stock market could push the University's endowment past the $1 billion mark sometime this semester, moving the University into an elite group of schools with similarly high endowments, University officials said. Vice President of Development Rick Nahm said the milestone could be this semester with some favorable moves in the stock exchange. Nahm, who has directed the University's Capital Campaign -- a project aimed at raising $1 billion in donations in four years -- since its beginning almost three years ago, said that "symbolically it would put the University in the group of a dozen or so other institutions with $1 billion endowments." The University invests the endowment primarily in common stocks and fixed income securities from which it draws five percent each year to fund research, professorships and other projects. The principal remains untouched in perpetuity. A large endowment allows universities to lure more professors, more students and provide better facilities. Therefore, the best universities generally have large endowments. For Nahm, much of whose work has been tied to increasing the endowment, the day on which the endowment reaches $1 billion will be a "benchmark," he said. Nahm said that "its hard to tell [when the endowment will reach $1 billion] because much of it is linked to the stock market." But he said that the value of the endowment could slip over $1 billion for several days and fall back below that mark, depending on how well the investments perform. Much of the endowment is invested in equity investments whose value fluctuates daily with moves in the stock market. "It could happen within a couple of weeks, but the market had a bad week last week," Nahm said. "It's a matter of keeping an eye on it." At a meeting of the Executive Committee of the Board of Trustees two weeks ago, Investment Board Chairperson John Neff told Trustees that his board believes the University's Associated Investments Fund, part of which is endowment money, is undervalued. But he said it is difficult to predict the near future of the fund because of the recent economic volatility in Europe. One important reason for the reinvigorated endowment is the success of the Capital Campaign. The campaign, kicked off in 1988, has been one of the most ambitious project's in the University's financial history. The campaign is the four-year-long attempt by the University to actively attract donations and investments to the University. Part of the campaign is directed towards increasing the endowment. As of this month, the capital campaign has reached $847 million and is ahead of its overall schedule. Donors have pledged $400 million to the endowment, but as of yesterday, the University has received $220 million, Nahm said. That $220 million has already been calculated into the endowment figure. The University has been criticized in the past for being under-endowed considering the number of students who attend the University.

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