Campus News

February 1, 2010

Endowment market value dips; overall ranking up

An annual snapshot of the state of higher education endowments was reported on Jan. 28 in the 2009 NACUBO-Commonwealth Study of Endowments (NCSE), a national survey of 842 colleges and universities. According to the NCSE survey, the total change in market value (after accounting for the return, annual endowment spending, and gifts) of Emory’s endowment decreased 20.9 percent to $4.3 billion for the one year period ending June 30, 2009.

In the survey, Emory increased its overall ranking in endowment market value to 15th in the nation, up one place from the previous year.  Emory’s ranking in endowment market value was one place behind Duke University and just ahead of Washington University.

Among the 842 schools responding, the NCSE survey reported an average return of -18.7 percent (net of fees) for all endowments, regardless of size. For the survey, Emory’s average rate of return was -19.4 percent, better than the  -20.5 percent average rate of return for endowments over $1 billion. 

The overall market value of Emory’s endowment is reflected essentially by the performance of invested funds in the market (rate of return), plus gift contributions, minus withdrawals for spending.

“Our endowment loss is in line with our peers and not a surprise given the global context. However, a reduction in the market value of this magnitude clearly requires an adjustment in our resource allocation plans going forward,” says Mike Mandl, executive vice president, finance and administration. “These figures reinforce that higher education is navigating a tumultuous economic period. The losses have significant budget ramifications and our pro-active steps to reduce costs over the past 15 months are positioning Emory to excel in a new economic context, including significant reductions in annual expenditures supported by the endowment.”

“Results from the last fiscal year reflected a very difficult market environment. While any loss of market value of Emory’s endowment is disappointing, our actions to reduce risk helped mitigate losses during the financial crisis,” says Mary Cahill, Emory’s vice president for investments and chief investment officer. “We remain focused on long-term success in growing Emory’s endowment and believe the portfolio is appropriately positioned for the current environment.”

In a press release announcing the survey results, NACUBO President and CEO John D. Walda said that, “These results illustrate the extreme difficulties colleges and universities faced at the height of the global economic crisis. Our hope is that the strong first half of FY2010 augurs well for the full fiscal year and that a year hence the story will be much more positive.”

The NCSE survey covered fiscal year 2009 (July 1, 2008 – June 30, 2009).  Emory provided endowment data for this survey period, but operates on a fiscal year that runs from Sept. 1 – Aug. 31.   Emory’s rate of return for its 2009 fiscal year ending Aug. 31 was -14.5 percent.

The NCSE survey is the result of a research partnership between the National Association of College and University Business Officers (NACUBO) and the Commonfund Institute.  Previously both groups conducted separate surveys.

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