- What is an endowment?
- Why does the endowment matter?
- How large is Georgetown’s endowment?
- How does the size of Georgetown’s endowment compare to that of other schools?
- What percentage of Georgetown’s operating revenues does the endowment fund?
- What is Georgetown’s spending policy?
- What is the objective of the Georgetown University endowment?
- What is asset allocation?
- What return did the endowment have in fiscal year 2015?
- What indices/benchmarks does Georgetown use to measure the performance of the endowment?
- What is Georgetown’s NACUBO ranking?
- Who is responsible for fundraising for the endowment?
- Who sets endowment policy?
- How is the Investment Office related to the Office of Advancement?
- Why are gifts important to Georgetown’s endowment?
- Why should I give money now? Why not invest myself and gift it at a later date?
- If I want to make a gift, whom should I contact?
- How can I get more information?
An endowment is the permanent capital of a university, which provides funding for the academic mission of the institution for current and future students.
The endowment lends fiscal stability to Georgetown and provides critical resources which enable the university to offer competitive tuition, support high-quality academic programs, attract top faculty, and ensure that the brightest students have access to a Georgetown education.
At the end of the most recent fiscal year, ending June 30, 2015, Georgetown’s pooled endowment was approximately $1.5 billion.
A top 25-ranked school, Georgetown has a modest endowment compared to schools with which it competes academically. According to the 2015 NACUBO-Commonfund Study of Endowments, Duke has an endowment of about $7.3 billion, Notre Dame has an endowment around $8.6 billion, the University of Pennsylvania has an endowment of about $10.1 billion, and Stanford and Harvard have roughly $22.2 billion and $36.5 billion, respectively.
In fiscal year 2015, the endowment’s payout covered 5.6% of the university’s operating revenues.
The university spending policy is computed on a trailing 5-year moving average of the endowment’s market value two years in arrears. For fiscal year 2015, the endowment’s spending rate was 4.5%.
The Investment Office’s long-term objective is to produce the highest investment return possible while maintaining an appropriate level of risk and liquidity in order to provide perpetual, sustainable support for the university.
Asset allocation is an investment strategy aimed at balancing risks and rewards by apportioning a portfolio’s capital to various asset classes according to the investor’s goals, risk tolerance, and investment time horizon.
Georgetown’s endowment is allocated to four primary asset classes: equity, absolute return, fixed income, and real assets.
In the fiscal year ending June 30, 2015, the pooled endowment had an annual return on investments of 3.4%.
The Investment Office uses a variety of indices to measure the relative performance of the endowment investment portfolio. The two most commonly cited indices are the Standard & Poor’s 500 Index (S&P 500) and the MSCI All Country World Index (MSCI ACWI).
- The S&P 500 is composed of 500 U.S. stocks and is a leading indicator of U.S. equity performance.
- The MSCI ACWI is composed of stocks from 46 countries and measures equity market performance broadly across both developed and emerging markets.
The endowment’s two benchmarks are the Georgetown Policy Benchmark and the 70/30 Benchmark.
- The Georgetown Policy Benchmark is comprised of a blend of indices which correspond to each asset class of the portfolio. The indices included in the benchmark are weighted according to the portfolio’s target asset allocation. Georgetown’s Policy Benchmark is designed to measure how the portfolio might perform if it were invested passively through indices corresponding to each asset class.
- The 70/30 Benchmark is 70% the MSCI ACWI and 30% the Barclays Capital Aggregate Bond Index. This blended benchmark has approximately the same volatility as the endowment’s asset allocation targets and permits comparison to a strategic portfolio that could be managed passively.
Georgetown has the 61st largest endowment according to the 2015 NACUBO-Commonfund rankings.
The Office of Advancement is responsible for fundraising in support of the mission of the university, its faculty and students.
Endowment policy is set by the chief investment officer of the university and the members of the Subcommittee on Investments of the Board of Directors.
The Office of Advancement is responsible for developing relationships with key constituencies, connecting and reconnecting alumni, and working with donors to highlight Georgetown’s unique position in higher education and the opportunities for partnership with the university. The Investment Office is responsible for investing the endowment portfolio, adding value through asset allocation and the selection of investment managers.
Gifts are essential to Georgetown because it is only through donations that the university endowment will catch up to and remain viable against other competitive educational institutions. Investments are subject to overall market conditions and encourage slow growth. Donations not only add significantly to the size of the endowment more immediately, but also increase the amount of money being invested, making larger investment returns possible.
A top 25-ranked university, Georgetown has a modest endowment compared to the schools with which it competes academically. Georgetown needs gifts because it is primarily through donations that the university endowment will catch up to and remain viable against other competitive educational institutions.
Donations made to the university benefit from:
- Governance: The Investment Office employs seven full-time professional staff dedicated solely to the management of endowment assets. In addition, the portfolio benefits from the fiduciary oversight and expertise of the Subcommittee on Investments of the university Board of Directors, the members of which are all experienced and active financial industry professionals.
- Manager selection: Georgetown has access to and hires a broad array of the most skilled and highest quality investment managers in the market.
- Tax free returns: A tax exempt organization, Georgetown can reinvest its portfolio returns without losing large portions to the IRS.
If you would like to make a gift, please contact Bryn Dolan in the Office of Advancement at (212) 302-5686 or explore giving options online at http://giving.georgetown.edu/. We thank you for your support.
For more information, please contact the Investment Office by calling (202) 687-6881.