I was going to post this in the "A Vision" thread, but thought it deserved a thread of its own. There have been numerous complaints about our sad fundraising and our even sadder endowment, and I got to wondering.... what is this endowment anyway? What is it for? Universities don't seem to spend the money, they just keep banking more. Why is it there? Where does it come from? Benefactor and alumni donations? Obviously, it gets invested, so there is a return that gets rolled back into the "general" endowment. For what?

I saw a documentary recently about the rapidly rising tuition costs and it blamed the easy access to education loans and grants that universities have taken advantage of, and claimed that colleges are making record profits these days. They can basically charge plenty extra because the young kids who get these loans just don't comprehend what it means. They just know they can get a college education and defer the payment, worry about it later.

There are over 70 universities nationwide with endowments over a billion dollars, with Harvard in the lead at $30 billion, making our $59 million appear ridiculous.

Some (embarrassing) notables in the billion dollar plus club are W&L, with an endowment of $1.2 billion; Grinnell, at $1.3 billion; Georgia Institute of Technology, $1.6 billion; Lehigh, $1.0 billion; Pomona College, $1.6 billion; Smith College, $1.4 billion; Delaware, $1 billion; Richmond, $1.8 billion; Rochester, $1.5 billion; Williams College, $1.8 billion; and Washington University in Saint Louis, $5.2 billion. Say whaaaaaaat?!!!! Washington University in Friggin' Saint Louis? $5.2 billion?!!!!

I believe the reason that schools (some with enrollments under 2,000) kick us mightily in the groin in endowment funding is not because we graduate a bunch of broke-ass mofos, but rather because the concept of "giving back" has not been adequately communicated from our admin (Lin Rose). Imagine that, our admin not communicating with us. Hopefully, Jon Boy has a plan. We are more than capable of responding. With our number of alumni alone, we are like the Chinese of endowment funding. If we all donate just a little, we raise a bunch. Link....

http://en.wikipedia.org/wiki/List_of_col..._endowment

One more.... Bridgewater College has an endowment about the same as ours ($54M vs. $59M). EMBARRASSING!!!!

Bulldog - to expand on what you said think about this.

JMU is a reasonably priced school, even coming as an out of state student. JMU's annual fundraising goes into various funds (general, athletics, etc.). These funds are not banks, but spent each year. The endowment will never grow until the school stops spending.

Now, all Rose bashing aside, there is little doubt he grew the size of the university and constructed some great facilities (Bridgeforth aside). And while we didn't move athletic conferences our increased student body and facilities are great bargaining chips that we are using right now. That is the type of investing that gets schools on the national map. Way more than a Delaware size endowment. That will come eventually.

Alger's goal sounds is to put us on the national stage. I like that. In order to do that, we'll need to increase our academic offerings, do some more research, and maybe (hopefully) change out of a small time athletic conference. All of that costs money. While I do think Alger will grow the endowment. It's hard to believe he won't focus fundraising on JMUs immediate financial needs (much like Rose and Carrier).

I'd also like to add that there has to be some correlation between tuition and endowment size. Higher tuition means fundraising can focus on savings. I bet this correlation would be a real equalizer to factor out student body and living alumni. Just a theory.

I also theorize there is a strong correlation between parents socioeconomic status and schools endowments. Maybe even more than salary figures for the schools. Rich parents means no student debt, which can equate to a lot of extra disposable income for the first decade after graduation. Plus rich parents like to buy houses (or at least down payments) and cars for their kids. This leads to more disposable income, way more than getting a marginally better paying job.

(05-27-2013 06:01 AM)CharlestonDuke Wrote:  Bulldog - to expand on what you said think about this.

JMU is a reasonably priced school, even coming as an out of state student. JMU's annual fundraising goes into various funds (general, athletics, etc.). These funds are not banks, but spent each year. The endowment will never grow until the school stops spending.

Now, all Rose bashing aside, there is little doubt he grew the size of the university and constructed some great facilities (Bridgeforth aside). And while we didn't move athletic conferences our increased student body and facilities are great bargaining chips that we are using right now. That is the type of investing that gets schools on the national map. Way more than a Delaware size endowment. That will come eventually.

Alger's goal sounds is to put us on the national stage. I like that. In order to do that, we'll need to increase our academic offerings, do some more research, and maybe (hopefully) change out of a small time athletic conference. All of that costs money. While I do think Alger will grow the endowment. It's hard to believe he won't focus fundraising on JMUs immediate financial needs (much like Rose and Carrier).

I'd also like to add that there has to be some correlation between tuition and endowment size. Higher tuition means fundraising can focus on savings. I bet this correlation would be a real equalizer to factor out student body and living alumni. Just a theory.

I also theorize there is a strong correlation between parents socioeconomic status and schools endowments. Maybe even more than salary figures for the schools. Rich parents means no student debt, which can equate to a lot of extra disposable income for the first decade after graduation. Plus rich parents like to buy houses (or at least down payments) and cars for their kids. This leads to more disposable income, way more than getting a marginally better paying job.

Good points, all.

Washington University is a hell of a good university.

All good points. This sort of was said, but maybe not quite, when money's become part of an endowment, the endowment rarely if ever goes down (of course some bad investments or negative economic news will impact its value).

I am simply guessing, but JMU's endowment, most likely, consist of large gifts made up by estate giving. Over the years, JMU has had much greater needs for immediate use of our donations; thus, they have not pursued individuals to give gifts towards the endowment. As has been stated before, we have been in this growth curve for a long, long time and until this settles down, you can expect our endowment dollars to remain lower than where we might like it.

Take a look at most of the schools which have these large endowments, they haven't built a building in 50 years. Sure, we need to do a better job of growing in all areas of our giving, but I wouldn't want to exchange what we have for what a W & L alumni gets for his/her gift.

(05-27-2013 07:59 AM)19Duke97 Wrote:  Washington University is a hell of a good university.

This is absolutely true. If your kids get in there, it's like winning the lottery. Great school with majors that businesses actually need. Huge corporate sponsorship. Wonderful school.

(05-27-2013 01:10 AM)bulldogg Wrote:  I got to wondering.... what is this endowment anyway? What is it for? Universities don't seem to spend the money, they just keep banking more. Why is it there? Where does it come from? Benefactor and alumni donations? Obviously, it gets invested, so there is a return that gets rolled back into the "general" endowment. For what?

I saw a documentary recently about the rapidly rising tuition costs and it blamed the easy access to education loans and grants that universities have taken advantage of, and claimed that colleges are making record profits these days.

There are over 70 universities nationwide with endowments over a billion dollars, with Harvard in the lead at $30 billion, making our $59 million appear ridiculous.

Some (embarrassing) notables in the billion dollar plus club are... Washington University in Saint Louis, $5.2 billion. Say whaaaaaaat?!!!! Washington University in Friggin' Saint Louis? $5.2 billion?!!!!

I believe the reason that schools (some with enrollments under 2,000) kick us mightily in the groin in endowment funding is not because we graduate a bunch of broke-ass mofos, but rather because the concept of "giving back" has not been adequately communicated...We are more than capable of responding. With our number of alumni alone, we are like the Chinese of endowment funding. If we all donate just a little, we raise a bunch. Link....

http://en.wikipedia.org/wiki/List_of_col..._endowment

All good questions and observations bulldog...let me see if I can answer some of them for you...

1. What is it for? Endowments are typically used to enhance a school's operation. For private schools (and increasingly for public schools) that means scholarship money for students, development support for faculty, and money for varsity athletics. For private schools it can also mean money for bricks and mortar and for paying the electric bill. For a public school, it's money for things the state does not provide.

2. The Universities don't seem to spend the money, they just keep banking more. This perception is incorrect. Endowments are typically organized and managed as a legally separate entity from the university. And if the corpus of money is managed well, it grows, but as we both know, the growth of an endowment also depends on new gifts. At JMU, funds from our endowment (managed by the JMU Foundation) are disbursed based on a formula. Simplified, the formula is a rolling 3 year average of investment returns, minus a small percentage that is allowed to help the corpus grow as a hedge against inflation. Bottom line, healthy endowments are always growing, but they are also disbursing large sums of money in support of the school.

3. Why is it there? See answer #1. To provide a specific answer for JMU, our endowment is there to support the school's mission with enriched support for those areas that the state will not fund. Principle among those is support to enrich academics...scholarships to recruit the best and the brightest students, and also to make the school affordable to those deserving students who otherwise could not afford it; to sponsor visiting scholars and speakers, host symposiums and invest in specialized equipment; and provide faculty support through supplements to research, travel and salary. It can also support/enhance varsity athletics by providing money to send the band to away games or coaches to far-flung places on recruiting trips.

4. Where does it come from? Benefactor and alumni donations? Obviously, it gets invested, so there is a return that gets rolled back into the "general" endowment. For what? It starts with benefactors and alumni...which are generally one and the same, but not always. If a school has wealthy friends who are not alums, but who can be convinced there is a need or an area that is of interest to the benefactor, they can help an endowment take huge leaps forward. Gifts to the JMU Foundation in the multiple millions have been rare at JMU (mostly for the construction of the Forbes PAC and Plecker) and a one-time $1 million gift to the College of Education to support student scholarships. But the Harvards of the world regularly receive gifts in the multiple tens of millions. How do they do it? Well, money begets money I suppose. But all it takes is one billionaire to get the ball rolling by dropping $100-500 million on JMU. As for the roll-over, see answer #2. The small holdover on investment income is a formula primarily intended to protect against inflation and also market downturns.

5. I saw a documentary recently about the rapidly rising tuition costs and it blamed [on] the easy access to education loans...and claimed that colleges are making record profits these days. While this isn't a question, it deserves a response because left unanswered it allows an inaccurate commentary (one with a political agenda I dare say) to mix fact with fancy, and thus paint all colleges and universities with the same brush. To be sure, there are some "for profit" educational enterprises out there...the "University of Phoenix', "National Business College"...to name just a couple, that take full advantage of the governmental loan and grant programs to enroll warm bodies and make HUGE sums of fast money. There are also some small, private colleges out there...often serving distinct minority or faith-based populations... that really need those loan dollars to keep their doors open. Those operations are often duping the students they serve, and are not providing the now in-debt student a return on their investments. In essence those kind of schools are today's snake oil salesmen.

6. Some (embarrassing) notables in the billion dollar plus club are... Washington University in Saint Louis, $5.2 billion. Say whaaaaaaat?!!!! Washington University in Friggin' Saint Louis? $5.2 billion?!!!! Not picking on you bulldogg...but the fact that you have no awareness of Washington University in St. Louis says more about you than it does about one of America's great universities. Washington-St. Louis is a medium sized school...probably around 12k total enrollment...but fully half are in professional graduate studies, which probably accounts for how and why its endowment grew so large. I'd compare Washington-St. Louis to John Hopkins in the academic food chain.

7. I believe the reason that schools (some with enrollments under 2,000) kick us mightily in the groin in endowment funding is not because we graduate a bunch of broke-ass mofos, but rather because the concept of "giving back" has not been adequately communicated. I couldn't agree more. The JMU culture of giving back needs to change...and that change typically starts when the leadership of an organization lays out a compelling vision and effectively communicates it to the body of believers.

8. With our number of alumni alone, we are like the Chinese of endowment funding. This made me laugh out loud! Bulldogg, you are exactly right. I read this as I was watching a Memorial Day special about the Korean War (which my father served as a decorated infantry officer on Line Kansas in the Punch Bowl area) and those damn Chinese bugles and mass charges got me to thinking about what would happen if all 100k+ of JMU's living alumni got motivated. Hell, I bet even at $100 a person, that a sustained alumni giving plan would generate $200-300 million for our endowment. Here's to hoping that Alger can communicate more effectively than the previous prez, and start blowing that bugle.

(05-27-2013 08:16 AM)fanofallthatisjmu Wrote:  ...
The endowment at JMU has created a vicious cycle. An endowment is used to grant professorships and grant student aid. JMU is terrible in granting student aid. This has an affect on the student body demographic. We are losing a lot of smart people and those of different backgrounds than middle class white kids. If you are coming out of state from an urban area and are the first member of your family to go to college and you get into JMU. However, you also get into another similar academic school and they offer a 75% academic scholarship and JMU offers you nothing. Even if you love JMU you would take that scholarship.
...

So very true. We have a friend, down here in Charlotte, who decided to visit JMU as she was about to graduate HS. She loved it and applied and was accepted.

She also applied to NC State. The kid has so much going for her in what we might think would get her some help. She even has an oriental ethnicity (though adopted by a white American family), great grades, SAT, active in many areas, JMU offered nothing. State put a package together, thus she is now a sophomore in Raleigh.

I would like to believe that had we had a significant endowment, we could have brought this Carolina girl up to the Valley for four years. We'll never know...

most of those schools have also been around for much, much longer than JMU.

(05-27-2013 08:19 AM)BleedingPurple Wrote:  All good points. This sort of was said, but maybe not quite, when money's become part of an endowment, the endowment rarely if ever goes down (of course some bad investments or negative economic news will impact its value).

I am simply guessing, but JMU's endowment, most likely, consist of large gifts made up by estate giving. Over the years, JMU has had much greater needs for immediate use of our donations; thus, they have not pursued individuals to give gifts towards the endowment. As has been stated before, we have been in this growth curve for a long, long time and until this settles down, you can expect our endowment dollars to remain lower than where we might like it.

Take a look at most of the schools which have these large endowments, they haven't built a building in 50 years. Sure, we need to do a better job of growing in all areas of our giving, but I wouldn't want to exchange what we have for what a W & L alumni gets for his/her gift.

Estate giving has actually been one of the weaker areas of JMU's endowment growth (or non-growth)...generally it's been more of the small "drip-drip-drip" of "Thousand-aire" type giving. Until the one-time $1 million gift for scholarships in the College of Education was made, the largest pool of endowed scholarship money was raised by the School of Art, Design and Art History faculty over a 35 year period of time. This money (approximately $700k today) was raised by patrons of the visual arts through the JMU Art Auction. The event started back in the early '80s, and is now held every 3rd year at the Homestead. The JMU Art Auction raises about $150k for the art scholarship endowment each time it's put on, which is great, but hardly the kind of "real" money JMU needs to be raising.

The notion that an endowment grows when a school is stable, and is no longer building buildings is frankly, rather silly. Indeed, the notion that stasis in bricks and mortar...i.e campuses of old, ivy covered buildings promote an increase in endowments is true only in as much as we all love those quaint, pretty quads. In point of fact, a large gift (tied to a vision of building or buildings) can spur a large donation. For example, Texas @ Austin has finally decided to build it's own med school (separate from the UT Medical System), all because of a vision of UT's current administration and a gift from Michael Dell of Dell computers. Texas is also expanding/building a large new graduate business facility because of major gifts. I recall VT also received a major gift recently (of some $100 mil or so) to start a med school. The examples of this type of building tied to endowments are endless. And can you imagine what kind of gifts JMU might raise if it wanted to expand/build new facilities for the COB? I dare say such a project/effort on behalf of JMU's COB is long overdue.

To become a "national university" (whatever that means to Alger...it hasn't been explained well enough to me that I understand what that entails) might involve actually building more, not less, buildings. Let's just hope Alger makes the connections and successfully articulates that vision to us all, and the endowment skyrockets.

I think you will find that most of the aforementioned (billion dollar), including Washington, have established and well reputed law schools.
There is a lot of pride and competition, as well as a self serving attitude among lawyers. The more they can enhance their law alma maters, including through donations, the bigger the bragging rights and potentially the better advancement opportunities (or so some think) within firms.

JMU (and ODU), likely should aspire to an endowment similar to that of say Virginia Tech (627 million).

(05-27-2013 09:08 AM)BleedingPurple Wrote:  

(05-27-2013 08:16 AM)fanofallthatisjmu Wrote:  ...
The endowment at JMU has created a vicious cycle. An endowment is used to grant professorships and grant student aid. JMU is terrible in granting student aid. This has an affect on the student body demographic. We are losing a lot of smart people and those of different backgrounds than middle class white kids. If you are coming out of state from an urban area and are the first member of your family to go to college and you get into JMU. However, you also get into another similar academic school and they offer a 75% academic scholarship and JMU offers you nothing. Even if you love JMU you would take that scholarship.
...

So very true. We have a friend, down here in Charlotte, who decided to visit JMU as she was about to graduate HS. She loved it and applied and was accepted.

She also applied to NC State. The kid has so much going for her in what we might think would get her some help. She even has an oriental ethnicity (though adopted by a white American family), great grades, SAT, active in many areas, JMU offered nothing. State put a package together, thus she is now a sophomore in Raleigh.

I would like to believe that had we had a significant endowment, we could have brought this Carolina girl up to the Valley for four years. We'll never know...

Spot-on. This has been happening now for the better part of 15+ years. JMU can only reverse this if we have the endowed scholarship funds to in essence, make competitive offers to the best and brightest. We are increasingly losing them to schools with deeper pockets.

Threads like this restore my faith in JMU alumni...

Endowments usually spend around 5% of the corpus on annual spending. A school like UR draws more from the endowment annually than JMU's entire endowment.

JMU really needs to look at an OCIO (outsourced chief investment officer) model. With an endowment of only $60 million, we do not have access to top flight money managers. I think they are currently invested with Northern Trust, and are looking at various new options right now.

What is odd is that hasn't our own COB investment teams done extraordinarily well over the past 20+ years? Do we not invest in our own graduates run funds? Clearly building a base is required, but if the funds are well run, we should see a good ROI.

(05-27-2013 10:32 AM)19Duke97 Wrote:  What is odd is that hasn't our own COB investment teams done extraordinarily well over the past 20+ years? Do we not invest in our own graduates run funds? Clearly building a base is required, but if the funds are well run, we should see a good ROI.

Richmond's MBA program incorporates students choosing, monitoring and managing UR endowment funds. How much I've not heard, don't know. Joe Ben Hoyle is/was an accounting professor at UR. I love that guy, I may owe being a CPA to that man's review course.

Thanks for helping me wrap my head around this whole endowment thingy, guys. Suffice it to say that we are not very well-endowed. Here's hoping the future changes that and someday we'll be "hung like Harvard."

Longhorn said: "Not picking on you bulldogg...but the fact that you have no awareness of Washington University in St. Louis says more about you than it does about one of America's great universities."

Well, horny, maybe I am a dummy, but honestly, I had NEVER heard of Washington University in St. Louis, and it isn't so much the fact that they are members of the billion dollar club, it's that it is $5.2 billion!

Honestly, I think a lot of alums just look at JMU as "that time in their life" and have since moved on. It does amaze me sometimes how little students/alums know about the school/history/traditions. I bet if you polled most students, they'd just assume JMU was flush with money.

I think a little education to the students at orientation would go a long way to be perfectly honest.

Not only are many of these institutions with large endowments well established, but they also have large extensive graduate programs offering Ph.Ds, Medical Schools, Dental Schools, and Law Schools. These programs graduate students who will definitely be making good sums of money, and are more likely to be donating back to their respective schools. I think JMU will soon grow to a "National" university under President Alger, and as we grow, our endowment will too in the next couple of decades. Hopefully we continue to grow while still offering the JMU experience for undergraduates and begin to receive substantial funding to begin a Medical School or other various health professional graduate schools.