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Archive for Saturday, August 16, 2008

Endowment assets solid despite slowing economy

August 16, 2008

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Just like seemingly everyone else out there trying to wade through a struggling economy, Dale Seuferling's work has him grappling with the effects of rising gasoline prices, tightening credit conditions, climbing foreclosure rates and other indicators of economic woe.

Only he's got a little more at stake than most of us.

Seuferling, as president of the Kansas University Endowment Association, oversees an organization that carries a portfolio of $1.2 billion in assets to manage - a pool of investments, real estate and other assets designed to support the advancement of KU through financial assistance that helps add buildings, attract faculty, assist students and address an ever-growing list of campus needs.

Not that there's any pressure.

"It weighs heavily on us," Seuferling said. "But it's not unlike people and their retirement funds. It's all relative."

Despite difficulties in the overall economy, Seuferling reports that KU Endowment is "holding its own" in the challenging environment.

The association is providing $26 million in student support for scholarships this year, up 10.6 percent from last year. Donors have answered the call for among the most pressing needs at the university, where tuition increases have increased financial pressure on students.

Final audited numbers aren't in yet for the 2008 fiscal year that ended June 30, but he's confident that the association will continue to show strength in challenging times.

"We just have to work harder and smarter, and look for new opportunities to present to donors for them to partner with us, and the university, to do something they want to achieve," Seuferling said. "The University of Kansas is a great product and attracts people's interests for investment - whether it's to help students or initiate arts programs or address health care-related issues, whatever that may be."

Major donations have been coming in for a variety of initiatives, whether it's to help with projects in KU's push for a National Cancer Center designation, building new scholarship halls or opening a multicultural resource center on campus.

Campaign to come

The momentum comes as the association prepares to embark on its next major fundraising campaign, one to follow up on the Kansas First effort that closed in 2004 with total giving of $653 million, or $153 million beyond the stated goal.

Preliminary work already is under way, with officials "actively starting to plan the campaign" by endeavoring to identify volunteer leaders who will help lead the campaign, Seuferling said. University leaders also are working to identify KU's needs for the coming years, and how donors might be involved in helping achieve certain goals.

No date has been set for the new campaign to start.

"It will be a comprehensive campaign that involves every school and academic program at the university, and will involve the core areas of student support, facilities, faculty salaries and, no doubt, outreach - how the university serves Kansas and its communities," Seuferling said.

While no decisions have been made about how much money will be sought during the campaign, Seuferling is certain the association won't be looking to downsize its efforts.

"It'll have to be greater than the last one," he said. "The stakes are higher."

Enduring a downturn

Even as the stakes continue to rise, association leaders find themselves facing especially difficult conditions for giving.

As capital markets have slid, Seuferling said, endowment officials have seen a "chilling effect" on some potential donors, who previously might have been more willing to enter arrangements to contribute their capital gains to the university.

To smooth out some of the effects on endowment's assets during such periods of volatility, the association adheres to a spending policy of working from a three-year average. That way, Seuferling said, the association decides to allocate money based on the average achieved during the previous three years, instead of any particular one.

"We have an investment strategy for the long term," he said. "And we try to mitigate, as much as possible, the downturns."

Not that the association has all that much room to maneuver.

About 93 percent of the association's assets are considered donor-restricted funds. As such, they are allocated, spent, invested or simply held according to arrangements previously established by the donors themselves.

Whether it's for a medical research purpose, a lecture series, a faculty fund or anything else, the association takes its commitments to donors seriously.

"We have an obligation, and always have an obligation, to carry out the wishes of the donors," he said. "We, first and foremost, stay committed to that: meeting the donor's wishes."

Facing pressure

Endowment leaders nationwide continue to make such points, as some lawmakers in Congress have indicated an interest in requiring endowment associations to spend at least 5 percent of their net worths in any particular year for specific endeavors. Seuferling expects Congress to conduct hearings about such issues.

KU Endowment responded to a survey from two senators, who have sought information about policies and spending practices for 150 colleges and universities that have endowments of at least $500 million.

Seuferling is confident that once the information is compiled and studied, endowments such as KU's will be seen as performing well in a fairly limited financial environment.

"Just saying, arbitrarily, 'Spend more for tuition relief?'" Seuferling said. "We don't have that flexibility."

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