Archive for Tuesday, January 30, 2018

A robust economy fuels KU Endowment gains, but concerns loom on horizon

KU Endowment, at 1891 Constant Ave., is shown in this Journal-World file photo from Nov. 23, 2016.

KU Endowment, at 1891 Constant Ave., is shown in this Journal-World file photo from Nov. 23, 2016.

January 30, 2018

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As the U.S. economy continues its post-Recession upswing, so too are the country’s university endowments. The rising stock market presents concerns for some university officials, however, including a “confident” KU Endowment.

According to a study published last week by the National Association of College and University Business Officers, endowments across the country saw an average return of 12.2 percent in the 2017 fiscal year, up from a loss of 1.9 percent in 2016. KU Endowment also experienced a bump last year, with total assets increasing by 9.3 percent to $1.6 billion.

James Clarke, senior vice president of investments and treasurer at KU Endowment, said his organization chooses to focus on long-term investments.

“We don’t pay much attention to results over a one-year period,” Clarke wrote in an email to the Journal-World. “We’re 126 years old. Our job is to make sure we have the resources to support the University now and for another 126 years.”

The 9.3 percent asset increase over the last fiscal year includes investment returns of 12.2 percent, $154.8 million in new contributions and a record-breaking $185.3 million in institutional support, Clarke said.

There have been concerns raised by Clarke’s peers nationwide about the impact that changes to federal tax law may have on university endowments, the worry being that an increased standard reduction will lessen the incentive for donors to give to charities. But Clarke said he had faith in KU supporters’ willingness to give regardless of tax incentives.

“This is unchartered territory, but we’re confident that Jayhawks will continue to support the great work of the University whether they can itemize deductions or not,” Clarke wrote in an email.

Looking ahead, Clarke’s biggest concerns revolve around stock market valuations, he said.

“We haven’t seen such levels since 1928 according to some metrics. At the same time, interest rates are rising for the first time in about a decade,” Clarke wrote. “So while the 12.2 (percent) we earned in 2017 was nice, we are more interested in our ability to generate returns for decades to come.”

The record-breaking $185.3 million transferred to KU in the last fiscal year allocated $62.6 million toward support of university facilities, $50.5 million toward programs and education, $33.6 million toward student support (not including $3.16 million in student loans) and $38.6 million in faculty support, according to KU Endowment’s annual report for 2017.

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