THE UNIVERSITY OF WASHINGTON ENDOWMENT
In 1905, the University received its first cash endowed gift of $400, the Philo Sherman Bennett Endowed Prize. This endowment, as well as the bulk of the University’s endowments, invests in the Consolidated Endowment Fund (CEF). Though distinct in purpose or restriction, endowed funds are commingled in the CEF and tracked with unit accounting much like a large mutual fund. Endowed gifts are exchanged for units that represent a claim on a portion of the entire CEF.
Since the initial cash gift, the value of the CEF has grown to $3.0 billion as of June 30, 2016.
Value of the endowment FY 1996-2016 ($ in millions)
ENDOWMENT FOCAL POINTS
Fiscal Year 2016
- 143 new endowment funds were created
- Distributed $113 million in endowed program support
- Returned -1.6 percent
Fiscal Years 2007–2016
- 2,258 new endowments were created
- Distributed $870 million in endowed program support
- Earned an annualized average return of 5.6 percent
|
Fiscal Year |
|||||
|---|---|---|---|---|---|
| 2012 | 2013 | 2014 | 2015 | 2016 | |
| Market Value (in millions) | $2,111 | $2,347 | $2,833 | $3,076 | $2,968 |
| Return | -0.9% | 13.5% | 15.8% | 6.8% | -1.6% |
| Number of endowments | 3,782 | 3,982 | 4,211 | 4,363 | 4,506 |
| Distributions to campus (in millions) | $85 | $87 | $94 | $105 | $113 |
IMPACT
ENDOWMENT GIFTS AT WORK
At the end of fiscal year 2016, approximately $113 million in endowment distributions significantly advanced research and education across our campuses. Scholarships and fellowships constitute the largest number of individual endowments established by supporters. While details of these scholarships differ, they share the universal goal of expanding access to a life-changing University of Washington education.
While student funds are the largest category of endowed funds, individual endowments support and drive all aspects of the University’s mission from facilitating faculty and student research, to supporting athletics programs, to creating a healthier tomorrow for Washington and the world. These are just few of the thousands of stories endowment gifts make possible every single year.
Creating a world of good, fueling faculty achievement and boosting student aspirations; that is exactly what UW Tacoma endowments are doing for students and faculty.
“Mom, I knew I was smart.” Learn how a daughter’s learning disability inspired a family of diehard Huskies to ensure all UW student-athletes have every academic advantage.
College of the Environment endowments are creating hands-on learning opportunities and attracting students committed to making our world more sustainable.
Endowments at UW Medicine support everything from rural physicians to innovative research to unparalleled patient care. At UW Medicine they accelerating hope for Washington and the world.
When Keon Vereen needs to take a breather from his studies in aeronatics and astronautics he turns to another form of science — baking. His creations are helping create community on campus.
A classic legacy of learning helps students research our ancient past, while inspiring students to turn opportunity into action. This incredible legacy has changed the lives of more than 100 students.
ENDOWED PROGRAM SUPPORT BY PURPOSE AND AREA
Generous donor support, coupled with investment returns, resulted in the growth of endowment distributions over the past decade. The impact on students, faculty and programs has been substantial with $870 million distributed over the past 10 years touching every part of campus.
Many unique purposes are supported by the CEF and provide opportunities for students and faculty in their quest for excellence and innovation. The majority of endowments benefit specific departments and programs with approximately 74% are restricted to the donor’s designated purpose. The remaining 26% consists primarily of long-term operating monies invested by policy in the CEF.
Endowment support by area
Endowment support by purpose
| Benefiting area |
Endowment value at 6/30/16 |
Number of individual endowments |
| UW Medicine | 609,014,550 | 932 |
| College of Arts & Sciences | 332,462,635 | 925 |
| College of Engineering | 204,552,676 | 400 |
| Foster School of Business | 157,921,232 | 227 |
| Student Financial Aid | 131,862,497 | 233 |
| Offices of the President and Provost | 105,456,429 | 84 |
| Law School | 88,697,949 | 104 |
| College of the Environment | 87,896,184 | 269 |
| Intercollegiate Athletics | 63,366,428 | 191 |
| University Libraries | 43,428,564 | 91 |
| Graduate School | 43,230,281 | 92 |
| School of Nursing | 41,621,765 | 131 |
| Tacoma Campus | 38,364,729 | 71 |
| Undergraduate Academic Affairs | 36,916,019 | 32 |
| College of Built Environments | 34,453,949 | 114 |
| School of Dentistry | 27,480,923 | 91 |
| School of Social Work | 23,134,818 | 46 |
| College of Education | 21,218,511 | 76 |
| Evans School of Public Policy & Governance | 19,322,515 | 31 |
| School of Pharmacy | 18,812,663 | 65 |
| School of Public Health | 17,355,466 | 87 |
| Health Sciences | 15,872,407 | 4 |
| Office of Research | 7,413,840 | 4 |
| University of Washington Press | 6,252,989 | 16 |
| Information School | 6,129,013 | 46 |
| Bothell Campus | 3,894,832 | 20 |
| Office of Minority Affairs and Diversity | 3,534,003 | 36 |
| CoMotion | 4,935,386 | 2 |
| Finance and Facilities | 2,346,745 | 4 |
| Office of the Vice President of Student Life | 1,289,345 | 14 |
| Educational Outreach | 909,422 | 2 |
| University Advancement | 894,656 | 6 |
| $2,200,043,421 | 4,446 | |
| Non-University Endowments | 37,373,060 | 57 |
| Operating Funds | 730,596,046 | 3 |
| $2,968,012,525 | 4,506 |
INVESTMENT
ENDOWMENT SPENDING POLICY AND OBJECTIVES
Spending policies provide a disciplined approach to moving money from the endowment to support the purpose designated by the donor on a foreseeable, consistent basis. Therefore a good spending policy must strike a balance between providing a predictable and stable stream of revenue for current beneficiaries and maintaining the purchasing power of the revenue stream for future beneficiaries. The CEF spending policy, which was set by the Board of Regents on October 21, 2011, is 4% of a 5 year rolling average. An administrative fee of 1% of a five year rolling average supports campus wide fundraising and stewardship activities (0.80%) and offsets the internal cost of managing endowment assets (0.20%).
Value of a hypothetical $100,000 endowment over 20 fiscal years
A $100,000 gift invested in the CEF 20 years ago would have earned $234,653 in investment returns. A portion of this return would have been distributed to campus, and the remainder reinvested in the CEF. As a result, the endowment’s value at June 30, 2016 of $178,438 exceeds the inflation adjusted value of the initial gift of $153,527. The endowment distributed $156,215 to campus while increasing its purchasing power.
CEF INVESTMENT STRATEGY
The Board of Regents of the University of Washington by statue is vested with responsibility for the management of the properties of the university, including the Consolidated Endowment Fund. In September of 2015, the Board of Regents approved the establishment of an internal investment management company, known as the University of Washington Investment Management Company, or UWINCO. Under the new structure, the UWINCO advisory committee was transitioned into an investment management company advisory board. These changes reflect industry best practices and trends among other peer institutions.
ASSET ALLOCATION
Endowment portfolios are commonly managed around a core set of objectives focused on the need to provide support for endowed programs in perpetuity. The Board of Regents, in conjunction with the UWINCO Board, establishes the policy asset allocation judged to be most appropriate for the University of Washington from a long-term potential return and risk perspective. The policy asset allocation is reviewed annually for its continuing fit with the University’s risk profile and with consideration of the changing dynamics of the capital markets.
The CEF asset allocation includes two clearly defined categories of investments: those which facilitate growth or appreciation (Capital Appreciation), and those which preserve endowment values (Capital Preservation). At June 30, 2016, 77% of the CEF was invested in Capital Appreciation and 23% in Capital Preservation. The UW maintains ample liquidity within Capital Preservation to meet its funding requirements, as well as to take advantage of market dislocations if opportunities arise.
PERFORMANCE
For the fiscal year ending June 30, 2016, the CEF returned -1.6% versus -0.2% for the passive benchmark. The CEF’s Emerging Markets Equity, Developed Markets Equity and Fixed Income strategies drove both absolute and relative under-performance. All other CEF strategies had strong relative performance against their benchmarks. Market conditions were exceptionally tough, particularly during late 2015, when a sluggish Chinese economy and falling energy prices weighed heavily on markets. With the exception of the S&P 500, every major equity index had negative returns in FY2016 and nearly all, including the S&P 500, posted lower returns than FY2015. This lower return trend is expected to continue with the negative to low interest rate environment remaining a major driver of investment performance.
Longer-term, the CEF has consistently maintained solid absolute and relative performance, outperforming both the benchmark and public university peers for the five, 10 and 20-year periods. The 20-year return for the CEF stands at +8.4%.
| Performance as of 6/30/2016 | 1 year | 5 year | 10 year | 20 year |
|---|---|---|---|---|
| CEF Return | -1.6% | 6.5% | 5.6% | 8.4% |
| Passive Benchmark (70% MSCI ACWI & 30% BC Government Bond) | -0.2% | 5.4% | 5.2% | 6.2% |
FOR ADDITIONAL INFORMATION
This online report on the management of the University’s endowed funds was prepared for donors and other interested parties, a printable version is available here. Reports are also available, upon request, to donors and fund administrators for each of the 4,506 funds in the Consolidated Endowment Fund.
Investments
If you have questions or comments about this report, or would like copies of the Consolidated Endowment Fund investment policies, please contact:
Keith Ferguson
Chief Investment Officer
(206) 685-1822
invest@uw.edu
Barbara Wingerson
Senior Associate Treasurer
(206) 685-1822
bwinger@uw.edu
Endowment Giving
If you would like to receive information on how you can support the University’s programs, please contact:
Connie Kravas
Vice President for University Advancement
(206) 685-1980
ckravas@uw.edu
