University reports slight endowment recovery

The University’s endowment is continuing to recover from an 18 percent drop from 2008 to 2009, growing slightly more than 10 percent since the end of the fiscal year, a University official said this week.

As of Dec. 31, GW’s endowment stands at $1.064 billion, up from $1.008 billion on June 30, 2009, Chief Investment Officer Don Lindsey said. The total is still down from the endowment’s peak of $1.256 billion in 2008.

About 5 percent – approximately $50 million – of the endowment was withdrawn at the beginning of the fiscal year for operating costs, and the 10 percent increase is measured from the endowment’s level after these operating costs were removed. In October, The Hatchet reported that the endowment stood at $1.054 billion.

“We are very pleased about where the portfolio is positioned,” Lindsey said. “Over the next three to five years we are going to have solid if not strong growth.”

Schools that the University uses for financial comparison, like Boston University and Northwestern University, have also seen a rise in their endowments since the end of the fiscal year.

Northwestern saw a severe drop when the financial crisis hit in 2008, as its endowment dropped from $7.2 billion to about $5 billion, said Alan Cubbage, vice president for university relations at Northwestern. Cubbage said Northwestern has recouped and their endowment now stands at $6 billion.

Cubbage said all administrative departments at Northwestern were forced to cut about 3 percent from their operating budgets due to the drop in the endowment. GW administrators did not have to make cuts, however, because GW is not an endowment-dependent University – using about 4 to 5 percent of the endowment to fund operating costs annually, according to the University’s operating budget.

Because GW doesn’t use the endowment to fund most of the operating budget, Lindsey said he has been able to be creative in his investment techniques.

“We also have a great deal of flexibility in regard to investing on a longer-term basis,” Lindsey said. “We have a good portion of our endowment that can be in illiquid assets. The key is really balancing liabilities against assets.”

Lindsey said GW has invested heavily in overseas markets recently – most notably in China, Latin America and southeast Asia – and said the financial instability in European nations like Greece, Portugal, Ireland, and Spain can have a real effect on global markets, potentially halting endowment growth in the future.

“I am optimistic but am also being extremely cautious in looking and trying to analyze where the downside would be coming from,” Lindsey said.

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