Identifies various roles of a college or university's endowment fund, such as serving as a rainy day fund, funding one-time capital requirements, and enhancing program quality. Considers implications of various roles for asset allocation and endowment spending. (DB)

Strategic planning enables colleges to direct discretionary dollars into high-impact areas that can enhance critical core activities, improving output. When the institution can disinvest financial resources in weak or noncritical core areas and redirect them through careful budgeting, it improves its chances for success. (MSE)

Discussion of asset allocation for college/university endowment funds focuses on three levels of risk: (1) the absolute risk of the portfolio (usually leading to asset diversification); (2) the benchmark risk (usually comparison with peer institutions; and (3) personal career risk (which may incline managers toward maximizing short-term returns,…

Recommendations for investing college/university endowment funds focus on identifying structural and skill-based competitive advantages. These include the long institutional time horizon and the ability to endure short-term volatility. Implications for endowment management are applied to selecting an endowment manager and asset allocation. (DB)

To meet demand for increased funding, in a period of probable declining investment returns, colleges and universities must fine-tune their asset suballocations to enhance returns. While the institution should adhere to major asset allocation classes, there can be much flexibility, and enhanced return, in shifting suballocations within the major…

Five strategies for realistic deficit management in the college or university during fiscal stress are examined: (1) comprehensive strategic and operational budget planning; (2) examination of tenure-stream faculty positions; (3) program review and evaluation; (4) self-supporting auxiliary and service units; and (5) increased flexibility in use of…

Successful college and university investments hinge on an asset allocation strategy capable of meeting the institution's needs for income and growth in principal at the lowest possible risk. Periodic adjustments must be made when there is a shift in the institution's risk tolerance, modification in need for income distribution, and changes in…

The principles of ratio analysis can help measure use of financial resources to achieve college mission by quantifying status, sources, and use of resources and the institution's relative ability to repay current and future debt. Business officers and boards can use these measures to measure institutional performance; ratios can also help focus…

Results of a national survey of college and university fiscal 1995 endowment investments found the average nominal performance (15.5%) far surpassing the previous year's return (2.9%) and higher even than double-digit returns in fiscal 1993 and 1994. Overall investment pool allocations are charted, and 460 institutions are ranked by endowment…

Steps taken by Phillips Academy (Massachusetts) to contain costs during a serious deficit included short-term measures (increasing tuition and some fees, increasing enrollment, tightening administrative procedures, reduced personnel costs, and reducing programs) and long-term actions (early faculty retirement, increased retirement benefits,…

This article discusses the impact of resource reallocation by colleges and universities using Virginia Commonwealth University as an example. Alternative areas for creative reallocations noted include increased productivity/efficiency, quality improvement, growth by substitution, targeted fund raising, planned savings, categorical funding, tuition…

Financial strategies, plans to increase return--and risk--up to the point (but not beyond) where the protection of core activities may begin to break down, are addressed. The stages for developing a financial strategy are: (1) formulate and examine academic program, research, and marketing strategies; (2) define core activities necessary to…