AU’s endowment increased by 33 percent last year, a rebound from a 20.7 percent decline between 2008 and 2009, according to Doug Kudravetz, associate vice president of finance and assistant treasurer.
The increase represents the largest growth the fund has ever seen in a single year, according to Kudravetz.
The endowment was worth $370 million as of Dec. 31, 2009 — up from $279 million the year before. Kudravetz estimated the endowment was $372 million at the end of January.
The increase in AU’s endowment was one of the largest in over 200 endowments tracked by Cambridge Associates, a company that produces financial reviews.
Prior to this increase, the endowment decreased 20.7 percent during the 2009 fiscal year from $393 million in 2008, according to an annual study by the National Association of College and University Business Officers and the Commonfund Institute.
The overall average return investment for 863 institutions of higher education across the United States and Canada in the 2009 fiscal year fell 18.7 percent from the previous year, marking 2009 as the worst year for university endowments in the history of the study, according to the Chronicle of Higher Education.
“These results illustrate the extreme difficulties colleges and universities faced at the height of the global economic crisis,” NACUBO president and chief executive officer John Walda said in a press release.
The endowment is a compilation of funds received from a donor with the restriction that the original donation will never be spent, according to Kudravetz. The interest earned on the original donation is then spent according to stipulations set by the donor.
Kudravetz credits AU’s rebound to an unchanging asset allocation policy.
Assets are invested in sectors including large-capital firms, international equities, fixed income, hedge funds, cash, real estate, real assets, emerging market equities and small- capital equities.
“The real intent of this is to have a broad diversification of your investments, so if there is a downturn in a particular sector, you’re not affected as much,” he said. “You don’t want all of your investments invested in one sector, because if there’s a problem in that sector, you’re in trouble.”
Kudravetz said that because AU does not depend on the endowment to support the university’s base operating budget — the endowment only consists of one percent of the operating budget — it was able to weather the financial crisis fairly well.
“In times when the endowment declines—and the endowment income declines—you’re in a tough position if you’re relying heavily on the endowment for your operating budget,” Kudravetz said. “We’ve resisted that over the years.”
Other D.C. schools like Georgetown University and George Washington University have larger endowments than AU. Kudravetz attributes this to their longer histories and more donations.
Georgetown’s student newspaper, The Hoya, reported the school’s endowment was $958 million as of the end of last November. GWU’s endowment stood at $1.01 billion at the end of June 2009, according to its Web site.
You can reach this staff writer at sdazio@theeagleonline.com.
