Endowment climbs 12.2 percent

GW’s endowment grew 12.2 percent over the last fiscal year, slightly more than the national average, according to a report released late last month by the National Association of College and University Business Officers.

The market value of GW’s endowment – which consists of gifts to the University from individual, corporate and non-profit donors and is mostly invested in financial markets – reached an all-time high of $823 million for the fiscal year that ended June 30, 2005.

The figure is up from $733 million on that date a year ago, giving GW the largest endowment among D.C. universities. The national average increase for university endowments this fiscal year was 9.3 percent, down from 15.1 percent in fiscal year 2004. GW’s endowment decreased significantly in 2000 with the downturn in the economy, but has steadily made gains since then.

According to the report, a voluntary survey of the endowment returns of the nation’s universities, GW ranks 69th out of 746 schools; Harvard University ranks first, boasting an endowment exceeding $25.5 billion, which is about the same as Syria’s gross domestic product.

University President Stephen Joel Trachtenberg said he is pleased with GW’s endowment returns for the past fiscal year but has greater goals for future endowment values. GW’s endowment has doubled over the last 10 years and grown fivefold over the past two decades.

“It can only do good,” Trachtenberg said, referring to GW’s largest endowment to date. “My goal is to see if we can take it over a billion dollars in the next years, but it’s all good news.” Fifty-six respondents to the survey had endowments exceeding $1 billion.

Executive Vice President and Treasurer Louis Katz said it was a “good year” for the University’s financial portfolio.

“It was a positive market, and we did better than the market,” Katz said. “The more endowment money you have the more you can realistically get in the spending policy. The bigger the endowment the better because it means more support throughout the entire University.”

Other GW administrators credit the increase to thorough oversight and key departmental improvements within the University.

“The reason GW’s endowment was so successful was because of our sound management,” said Scott Morey, GW’s executive director of Alumni Programs.

Morey cited GW’s recent management changes, including the creation of a separate endowment management investment office; and the installation of Don Lindsey, who has 18 years of endowment management experience, as GW’s chief investment officer in 2003.

A university endowment is typically funded through contributions of all ranges from alumni, local interest groups and other friends of the university. Departments such as GW’s Advancement Division and Alumni Programs seek and strengthen relationships with those they see as potential contributors.

“We are happy with the success of the endowment thus far,” Morey said. “But we’ll continue to make improvements and seek new relationships until all the alumni contribute.”

“It’s usually the biggest donation of a person’s life,” said Laurel Price Jones, GW’s vice president of Advancement. “So we develop the relationship over a long period of time.”

Jones said the endowment contributions are unique because they have a perpetual impact on the University’s funds since only the interest earned on the principle of the endowment is freed each year to finance operating expenses or other University improvements.

Katz said at Friday’s Faculty Senate meeting that his office will ask the Board of Trustees to increase the endowment’s payout from about 4.5 percent in fiscal year 2006 to 5 percent in fiscal year 2007, yielding an additional $4.3 million to GW’s annual revenue to be budgeted. Fiscal year 2007 starts July 1.

He said that if the Board of Trustees approves the plan at its meeting this Friday, the University’s proposed budget would allocate $1 million of that sum to the Advancement Office to bolster its fundraising efforts, with the goal of raising more money for the endowment. The rest would be used to fund GW’s Strategic Plan initiatives.

Damon Manetta of The Chronicle of Higher Education said the upturn in the nation’s financial markets over the past two years played a large role in the across-the-board endowment increase. Erin Strout, also from The Chronicle, attributed the expansion to “asset growth, or an increase of private donations, or a combination of both” at universities across the country.

-Brandon Butler and Ryan Holeywell contributed to this report.

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