Money for school
Seeking endowment growth, local colleges get creative with alumni, diversify investments
For alumni of the College of the Holy Cross, connections with the alma mater include a lot more than a glossy magazine or occasional reunion. Alums volunteer with the admissions office, help each other out with career networking and take part in "travel/study" tours to Vienna and Tuscany.
"There's a real sense that there is a lifelong connection with the college," said Ellen Ryder, the school's public affairs director.
That connection also manifests itself as cold, hard cash.
Over the past year, 53 percent of Holy Cross alumni gave money to the school's annual fund, one of the highest rates in the country.
The three other major colleges and universities in Worcester do not match that level, but all are working toward higher levels of alumni giving. And all four schools are doing their best to use investment strategies that will make the most of whatever money is donated.
At Worcester Polytechnic Institute, Dexter Bailey, vice president for development and alumni relations, said alumni giving hovers just under 20 percent. One tool he is using to raise that number is a recently launched social networking web site for students, faculty, alumni and friends of the college. While sharing photos of babies and seeking partners in business ventures, he said, alumni could come to feel more connected to the college.
"Now that the class itself has defined its priority as far as giving goes, I can now, as I run the development office, be much more strategic as far as communicating with them," he said.
The gift horse
At Clark University, James Collins, executive vice president and treasurer, said the school encourages undergraduates to get to know alumni. He said in many cases students who receive scholarships meet with the alumni donors who made them possible. That helps raise awareness about what endowment funds are actually used for.
"Overwhelmingly, it's to provide funds to attend school by needy students," he said.
When it comes to growing their existing endowments, the local schools are part of a nationwide trend that appears to be serving colleges well: diversifying their holdings. The National Association of College and University Business Officers reports that, while endowments remain mostly invested in equities and fixed income, schools have ramped up their investments in alternative asset classes like hedge funds, real estate and private equity over the past decade.
Collins said the school has had good success with private equities and has expanded its holdings in real assets, including timber, over the past few years. At Holy Cross, Chief Investment Officer William Durgin said the endowment's growth over the past few years - to about $640 million - has put the college in a place where it can invest in riskier funds. He said the portfolio's investment in bonds has dropped from 30 percent to 10 percent over the past 10 years while the portion in hedge funds, venture capital, real estate and private equity has risen.
Durgin said diversifying the investments is a move designed not only to make more money but also to offer protection when the stock market does poorly.
"It's not difficult to make money" in the current climate of rising stock prices, he said. "The question is, where are you going to be when those markets drop?"
Move your assetts
Assumption College CFO Christian McCarthy said that about two years ago his college expanded its investment committee to include more full-time investment professionals and went through an asset allocation study and adjusted its mix of investment.
"We were very fortunate that both of those exercises took place really before the stock markets have performed very well," he said.
Among other things, he said, the asset adjustment meant increasing investment in international equities and giving asset allocation managers more flexibility to tweak the mix of investments without consulting with the committee.
"Markets are obviously changing, going upwards, downwards and sideways every day of the week," he said.
Meanwhile, WPI has terminated most of its domestic equity managers in favor of tying investments to the Russell 3000 index, according to Executive Vice President and CFO Jeffrey Solomon.
"If you look at studies over time of performance of managers versus the benchmark, it's pretty hard to find managers that historically beat the benchmark," he said. "If that's the case, why try? Just be the market."
Solomon said the change has freed up the school's investment committee to concentrate on managing its high-return, high-volatility investments.
Solomon said it is not surprising that he and other financial managers are feeling good about the state of their endowments, given the strong market environment. But, he said, that does not mean they should stop trying to improve their performance.
WBJ Web Partners
Most Recent
Most Recent
0 Comments