Endowment makes up market losses

By By Frank Tankard

Wednesday, September 14, 2005

The Kansas University Endowment Association made significant gains in the stock market this year and appears to have offset losses incurred during the recent recession.

After the market value of the association’s endowed funds dropped 14.4 percent from $855.5 million in 2000 to a low point of $732.2 million in 2002, the value climbed back to $849.3 million in 2004.

The market value has not been released for fiscal year 2005, but the association has reported a 13.7 percent return on investments, showing the association has bounced back significantly since the stock market went down.

Dale Seuferling, president of the Endowment Association, warned against making too much out of yearly gains or losses.

“Our horizon is 50 years, 100 years,” he said. “We’re not so focused on one-year or two-year returns.”

When the Endowment Association receives a donation, it invests that money in stocks to accrue interest before making a contribution to the University.

The Endowment Association provided $76.6 million to the University in 2004, which helped fund scholarships, endowed professorships, research funding and building improvements.

The losses of the Endowment Association that followed the downturn in Internet and technology stocks at the start of the century mirrored losses of endowment associations nationwide. Its recent gains have also been paralleled by other universities.

When the association posted a rise of 18.1 percentage points on annual returns on investments for fiscal year 2004, the nationwide average rose 12.1 percentage points, according to a survey of 747 universities by the National Association of College and University Business Officers.

The association hit a low in investment returns in 2002 when it lost 7.9 percent on its investments. The national average that year was a six-percent loss, according to NACUBO.

While it was losing money in the stock market, the association benefitted from KU First, a large-scale fundraising campaign that operated from 1998 to 2004. The fundraising campaign raised $653 million throughout its duration, exceeding its initial $500 million goal.

Jeff Davis, senior vice president of finance and treasurer of the Endowment Association, attributed the association’s ability to bounce back in the market to investing in a wide variety of stocks and bonds rather than overinvesting in high-tech stocks.

“It’s a very high-quality, well-diversified portfolio,” he said. “I don’t think there’s been any one major, dramatic change to it.”

— Edited by Alison Peterson

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