9 No. 5
Managing Emory's endowment for the present and future
What is an endowment?
Asset allocation of Emory's endowment
“I tried to think of issues that the faculty might bring to the investment committee, and it's difficult to find one.”
“We want to spend today and benefit the students and faculty of today, but we don't want to do that at the expense of the next generation.”
100 Semesters: My Adventures as Student, Professor, and University President, and What I Learned Along the Way
William M. Chace, President Emeritus and Professor of English
Academic Exchange: What is the role of the faculty counselors?
Dwight Duffus: I believe what the counselors do is different from committee to committee. For instance, my role on the investment committee was largely as an observer. The investment committee is really a technical committee in the sense that it has oversight of endowment management. Most importantly, it has oversight of the Emory Investment Management group (EIM), run by Mary Cahill. Most committee time is spent ensuring that the endowment is being well managed. But the day-to-day management of the endowment is in the hands of EIM. The board committee really discusses mostly big picture issues, namely, the way allocation percentages in various investment categories are determined and overall performance of the various sectors. Committee activity is largely high-level management of professional managers, so there is really not a role for direct faculty input. It may well be that on certain committees, like campus life, the faculty play an active role. But for others, like investment, it’s going to be limited just by the nature of the committee.
If you ask a faculty member the foremost issue regarding the endowment, they’ll ask, Why can’t we spend more aggressively? That’s not a decision that’s made by the investment committee. That’s a decision that’s made by some combination of the finance committee and the executive committee in conjunction with the central administration, though the investment committee would certainly be interested in the spending rate.
I tried to think of issues that the faculty might bring to the investment committee, and it’s difficult to find one. One that would occur would be social policy versus investment policy: Are there certain kinds of investments that Emory shouldn’t make because of ethical considerations? That is not a very hot topic these days. On campus last year there was some discussion about Coke; here and on other campuses, investment in companies doing business in Darfur was an issue.
AE: Were you able to report back to the faculty members what the trustees were telling you?
DD: There are two kinds of conversations that go on in those meetings. One kind would be about general policy decisions that would be public—they would appear in the published reports of eim or Mike Mandl’s office or other Emory publications. And of course I would be free to explain to my colleagues what was going on, if it wasn’t clear. For example, there are frequently stories that report Emory’s endowment performed at level x. And that level x was perhaps not so impressive. And in fact the reason that x was not so impressive was because it reflected the return on the total endowment, not just the actively managed
portion, which actually had a return of y, larger than x. The endowment has investments that the university is, or feels, obligated to hold, and whose return might suppress overall performance. I could explain this to my colleagues and provide more information than they might otherwise get. But then there’s another kind of discussion that takes place, say around Emory’s relationships with various entities like the Woodruff Foundation or corporations in the Atlanta area. Those conversations would be extremely delicate. Now the investment committee always invited me to stay for their executive sessions and these conversations. Though I might make a comment about how a certain action might play in the community from a faculty member’s point of view, for the most part, I was just listening. The clear understanding was that this was very private and delicate information.
AE: What is the purpose of the faculty counselors?
DD: This is a good question. And I think it’s something that the chairman of the board may not yet have an answer for that he is completely satisfied with. I think that we’re still trying to find good strategies for improving faculty/board and faculty/administration communications. And the counselors are an attempt to do that.
AE: How do you find the balance between growing the endowment but also making Emory a top-notch university?
DD: That’s an ongoing struggle. There are examples on both
sides, historically, of universities that have spent aggressively and have benefited terrifically, and there are examples of those that have really suffered as a result of profligate spending. I think it’s an ongoing struggle, and it will depend upon the financial times and the opportunities that, say, a president or provost sees for developing the academic reputation.