Growing Investments: Endowments on the rise at West Michigan colleges
February 23, 2012
Published: Tuesday, February 21, 2012, 2:40 PM Updated: Tuesday, February 21, 2012, 3:06 PM
The pool of money that colleges and universities across Michigan use to fund scholarships and pay for operations grew in 2011, an event that administrators said was driven by resurgent financial markets and wise investment decisions.
Endowments, financial gifts to universities that administrators invest in various markets, showed significant growth at Grand Valley State University, Ferris State University and Hope College, according to a study from the National Association of College and University Business Officers.
“The main factor is that the financial markets in general for that 12 month period had very strong returns,” said Brian Copeland, associate vice president for Business and Finance at GVSU.
GVSU’s endowment grew by 22 percent from 2010 to 2011, bringing its market value to $74.1 million, the study shows. Of the 25 Michigan colleges and universities included in the study, Central Michigan University saw the biggest percent increase in its endowment value --- 27.9 percent.
Behind Central was Ferris State University, which saw its endowment grow from to $36.7 million in 2011, a 26.8 percent jump.
The growth was enough to push Ferris’ endowment to its highest point in a decade, said Jerry Scoby, vice president of Administration and Finance at Ferris. Its market value has now recovered from losses it suffered during the economic downturn.
“We’ve recovered and we’ve went beyond that,” Scoby said. “Our return (on investment) was significantly higher than other similar sized endowments.”
Administrators say endowments are crucial to funding scholarships and numerous programs and activities. Endowment support has especially been crucial in recent years as state aid to higher education was reduced.
In 2011, Ferris’ endowment funded $631,000 in scholarships, Scoby said.
At GVSU, administrators used $2.5 million from its endowment in 2011 to cover scholarships and other services.
About forty percent went to scholarships. The remainder helped fund a variety of services, including science equipment, student services, and WGVU, a Grand-Rapids based public radio and television station sponsored by GVSU.
“It certainly does help, especially in times when state support has decreased,” Copeland said of the endowment.
The University of Michigan and Michigan State University by far had the biggest endowments, according to the study. U of M’s was valued at $7.8 billion; MSU’s was worth $1.4 billion.
In a statement, John Walda, president and chief executive officer of the National Association of College and Business Officers, said that while recovering financial markets were a boost to endowments, the study doesn’t reflect concerns over the European debt crises, which hurt financial markets.
“Fiscal 2011 closed before equity markets encountered headwinds and high volatility beginning in July 2011 caused by concerns about the debt crises in Europe, the stubbornly high U.S. unemployment rate, and much slower growth in the U.S. economy,” he said. “Endowments very certainly were stressed by these factors during the late part of the calendar year 2011.”
Still, administrators said they were pleased with the performance of their endowments and expressed optimism that their investments would remain strong.
Hope College’s endowment helps administrators offer scholarships, fund endowed faculty positions and provide summer research programs for students, said Tom Bylsma, the college’s vice president for Business and CFO.
Hope’s endowment grew to $153.8 million in 2011, a 14 percent increase, according to the study.
“Without endowments you rely more heavily on tuition, room and board for expenses,” Bylsma said. “We’re trying to make higher education as affordable as possible. Endowments help.”
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