Vice President for Finance and Business Affairs
Drew University has been fortunate over the years to have a substantial endowment, which now stands at approximately $200 million, to support its fine academic programs. The income from our endowment supports about 17% of our total operating budget and is a key element that helps us provide scholarships and program support. However, a comparison of Drew’s endowment to peer and aspiration schools points to the need to develop this crucial resource. Last year Drew reported $84,084 of endowment-dollars-per-student, while Skidmore College reported $102,310 and Franklin & Marshall $123,994 for the same timeframe.
The University endowment is managed by the Investment Committee of the Board of Trustees chaired by Dean Criares C’85. The Investment Committee meets regularly throughout the year in person and on conference calls. It is supported by me, Joe Kelly our Treasurer and Jeff Balog our Associate Treasurer as well as Fund Evaluation Group (FEG), an external endowment consultant that was engaged in 2008 after a nation-wide search. FEG serves a number of University clients and advises endowments with a combined value of over $30 billion.
The results of the recently released 2010 NACUBO-Commonfund Study of College and University Endowments shows that Drew University’s endowment’s performance was in the top quartile for the last one and ten years. With a net of fee return of 14.2% for fiscal year 2010 and an annualized return of 4.8% for the ten-year period ending June 30, 2010, Drew outperformed the average and the median by 2.3 and 2.1 percentage points, respectively for the 2010 fiscal year and 1.4 and 1.6 percentage points, respectively for the ten-year period. Further, Drew’s return was 0.5 and 0.4 percentage points above the top 25th percentile of the NACUBO endowment universe for the one and ten year periods, respectively.
During the past 36 months, the endowment has undergone numerous strategic and tactical structural changes which commenced with the hiring of FEG as an external consultant. University staff and the Investment Committee have worked closely with FEG to develop a target asset allocation which consists of a diversified pool of asset classes. More recently, the long/short equity, emerging market equity, distressed debt, global credit, non-agency mortgage backed securities, multi-strategy credit, and private energy asset classes have been added to the portfolio. FEG, University staff, and the Investment Committee will continue to actively investigate new opportunities, such as real estate, and rigorously monitor existing managers.
During 2009, the New Jersey State Legislature passed and the Governor signed the Uniform Prudent Management of Institutional Funds Act (UPMIFA). UPMIFA provides guidance for investment conduct and standards for delegation of the management or the investment of endowments and other similar funds. Under this Act, the institution must act with prudence and care in the manner in which funds are invested. In response this Act, we have revised our investment policy statement which will be reviewed by our Investment Committee.