Stevens Institute of Technology has reached a record-breaking $207M endowment in Fiscal Year 2018 (FY18), according to a new report. Endowment gifts are “typically comprised of cash or securities, or sometimes real estate or assets,” which are given to a university by individuals, charitable organizations, and sometimes other institutions. With the endowments on the rise, J. Scott Swensen, the Chair of the Investment Committee, stated in the FY18 Stevens Endowment Report, “Rest assured that we will continue to steward the Endowment with great care as it grows and enriches our students, faculty and academic programs.”
The university’s endowment has grown by $51 million during the past five years from $156 million in 2013. $34 million of the Endowment has been distributed over the past five years to support faculty, academic programs, and students.
The endowment return rate for the fiscal year of 2018 was 5.37%. This is lower than 2017’s 9.69% return rate, but remains in the black. This puts Stevens on the path for betterment in all aspects. It is important to realize that universities are practically ranked by these metrics. In “The Chronicle of Higher Education,” universities are ranked by their endowments per year, and the list strongly coincides with 2019 Best Colleges list on U.S. News & World Report.
Nearly 400 individual funds, some of which have dedicated donors and specific purposes, compose the endowment portfolio. This past fiscal year, Stevens received one of the largest single gifts for scholarships in the history of the university. Swensen says in the FY18 Endowment Report, “$15 million, from the A. James and Alice B. Clark Foundation,” was bestowed upon the university.
Though these funds may be pooled into a single portfolio, but the benefits are felt throughout all aspects of the institute. For example, 42% of the endowments are used for scholarships and financial aid. The second largest category is instruction (28%), which provides for the professors and teaching assistants. The third largest category (18%) of the endowments is for professorial chairs, professors who are involved administratively with Stevens and serve on higher boards.
The remaining endowments are then used on smaller venues, like the library or laboratory maintenance. In addition, the Board of Trustees approved of, per Swensen, $2.3 million for the Endowment on the support of faculty in FY18.
Stevens also goes through endowment management in accordance with the Investment Committee. The FY18 Stevens Endowment Report states, “The Investment Committee is to oversee the Endowment to support the university’s Strategic Plan and ensure that the Endowment benefits both current and future generations.” Currently, Stevens’ Outsourced Chief Investment Officer (OCIO), Goldman Sachs, manages 82% of total assets in the portfolio.
When investing, risk management takes a role when striving to optimize return for the portfolio. In addition, growing the value of the Endowment is critical for ensuring a steady source of income, and that is achieved by “a well-diversified portfolio and a conservative spending policy,” according to the Stevens Endowment Report of FY18. A considerable 25% of the endowments are invested in U.S. equity, with another 18% invested in Investment Grade Fixed Income. Another 15% is invested in non-U.S. equity with the remaining few percentages put into areas like private equity, hedge funds, real estate, and others.
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