Endowment funds

An important indicator of the health of the University of Delaware over the last decade is the growth of the endowment--a figure that is quickly climbing toward $1 billion.

In June 1990, the market value of the University's endowment was $362 million, according to Vice President and University Treasurer Stephen M. Grimble. As of June 2001, the value had increased to $919 million.

The endowment is important to the well-being of the institution by providing a stable investment pool from which to draw funds that support excellence through scholarships, professorships and improved educational facilities and opportunities. Cumulative income distributions from the endowment over the past decade totaled $230 million, Grimble says.

Through the years, it has been widely joked that the University of Delaware endowment was stored in the basement of Hullihen Hall, the chief administrative office building.

In fact, the endowment is held in professionally managed liquid assets--stocks and bonds--and represents the living legacy of generous benefactors who have chosen to give of their financial assets to sustain UD's traditions and its future. The investments are for the long term and provide for the future of the institution.

"The endowment is a trust," University President David P. Roselle says. "The money was given to the institution to be forever. We must maintain that trust with our donors."

The University endowment is not one lump sum but rather many smaller sums. Those sums are invested as a whole, with the ensuing profits used to fund the various individual purposes.

"It is kind of like a bank, with lots of accounts within the bank," Roselle says. "The money is pooled and invested and paid out according to what the share has earned."

And, in the case of this bank, the accounts are similar to escrow accounts in that much of the money is earmarked for specific purposes. The University cannot spend income from the endowment fund at will because most of the funds are contributed for specific purposes and their uses are thus restricted.

Some donors have chosen to establish endowments to fund scholarships, so the University can attract the best and brightest students from across the nation. Others have chosen to fund named professorships and chairs, ensuring that the University can attract and retain the finest educators and researchers.

It is the University's duty and obligation to spend the money for the purpose stated by the donor. Money given to establish a scholarship in the College of Arts and Science, for instance, cannot be used by the University to fund beautification or facilities construction or even to fund a scholarship in another college.

Some donors have created unrestricted endowments, the income from which the University can use to meet immediate needs or respond to innovations in higher education.

The endowment fund base is created through gifts from alumni and friends and, as such, represents a special bond between donors and the University. "The alumni and friends of the institution give of their wealth for the health of the institution," Roselle says.

The base grows both through additional gifts and through gains in the money markets.

As a practical matter, the endowment is of value to the institution first and foremost for the money earned through investments. "Annual income--that is the obvious answer," Roselle says. "The endowment is an important source of revenue for the institution. Next year, the endowment will pay out nearly $40 million, which is up from $20 million just a few years ago. It is an important part of what we do."

The University endowment is of additional value in the financial marketplace, through which the institution must from time to time borrow money to fund construction or other projects. "Our endowment is very significant in terms of securing better bond ratings, and thus lower interest rates," says Grimble.

UD's endowment grew at about 12 percent per year during the last decade, a rate of appreciation that has been well above inflation.

The figures are solid, Roselle says, particularly in light of the fact that "the increase is on top of an annual distribution."

The investment of the University endowment in stocks and bonds is overseen by Grimble, University Chief Investment Officer Mark Stalnecker and Edward J. Bassett, vice president of pension fund investments for the DuPont Co., who heads UD's Investment Visiting Committee of financial advisers and businessmen.

The Board of Trustees has delegated to the Investment Visiting Committee the authority to oversee and manage the investments of the endowment.

Roselle says the endowment represents about 6 percent of the University's income, a figure that is much higher than for many other colleges and universities, particularly among state institutions.

The net endowment "draw" has fluctuated over the course of the decade, Roselle says. The "draw" is "the amount of support provided the University from the endowment, minus the amount that is contributed to the endowment by way of gifts. Thus, for example, in FY2000, the endowment paid $30.5 million to the University and our friends contributed $20 million, so the net endowment draw for FY 2000 was $10.5 million."

"We hear commentary to the effect that the endowment draw has increased a lot," Roselle says. "While that is true, it is also true that our successes in having money contributed to the endowment have more than offset those increases. It is impressive, I think, that the combined net draw for FY99 and FY2000 is about equal to the net draw for FY98 and that the net draw for FY2000 is less than for FY90."

The University encourages endowment giving, Roselle says, because "it is a way for our friends to ensure that a favorite activity or program continues indefinitely."

Gifts of $10,000 or more that are not designated for a specific purpose go to endowment. "That has been a Delaware tradition for a very long time," Roselle says, adding, "That helps keep the endowment growing.

"Success succeeds," Roselle says. "The more successful you are, the more people will want to be part of what you do."

The University of Delaware now has more than 115,000 living alumni, with graduates in all 50 states and 101 foreign countries.

About 70 percent of UD alumni have graduated since 1980, and nearly one-third of the total--37,235 students--have graduated during the 1990s.

With a growth in alumni numbers has come a growth in services offered by the Office of Alumni and University Relations and the University of Delaware Alumni Association.

"The University has made a large commitment to alumni activities," says former Alumni Association President Charlotte Waterbury Brown, CHEP '81, who has been active with the organization for nine years. "We've expanded and grown exponentially, in terms of the types of services and activities offered to University of Delaware alumni."

In turn, that has fueled increased interest among alumni. "Our programs are up, our services are up, and, as a result, a greater number of alumni are involved in UD programs," Brown says.

A major innovation, Brown says, is an agreement with MBNA America through which the corporation provides an alumni affinity card and, in turn, funnels a portion of the proceeds from that card back into alumni programs.

Brown cites the MBNA revenues, which amount to more than $200,000 per year, for an overall expansion of services provided by the Alumni Association. Those services include lifelong e-mail and a life insurance package.

And, importantly, MBNA support also has made possible the establishment of Alumni Association scholarships. The organization awarded several one-half tuition grant scholarships in 1999, and hopes to expand the program in future years.

Amenities offered through the Office of Alumni and University Relations include the University of Delaware license plates that feature the letters UD. The special tags--available through motor vehicle departments in Delaware, Maryland and Pennsylvania--are popular among friends and alumni, many of whom sport their graduation year.

The office also offers a variety of programs and services, including theatrical performances, alumni club events in cities across the country and Homecoming activities.

The office also sponsors the Alumni Career Employment Services program, with both free and fee-based programs, in cooperation with UD's MBNA Career Services Center.

"UD alumni tend to be energetic and enthusiastic and are very supportive of the University," Sharon Dorr, director of alumni and university relations, says. "We believe that is because the UD experience is truly unique."

Dorr adds that there is a tremendous spirit among alumni, who recognize that gains made by the University over the last decade have added value to their degrees.

A 1997 survey by The Journal of Blacks in Higher Education ranked the University of Delaware sixth among all public institutions in graduation rates for black students, with 56 percent graduating within six years. Only 10 public institutions had graduation rates for blacks of more than 50 percent.

Today, UD's four, five and six-year graduation rates for each ethnic category remain substantially higher than a sample of other highly selective, public universities, particularly among African-Americans and Hispanics. In addition, more and more freshmen are choosing to remain at UD for their sophomore year.

That's the good news from a new "Retention and Graduation Rate Report" issued by the UD Office of Institutional Research and Planning in October. The report states that the overall 1999 freshman to sophomore retention rate was 89.1 percent, the highest first-year retention rate yet observed at UD for an entering freshman class and an increase of two full percentage points over the previous two entering classes, the executive summary states.

Other universities used to compare graduation rates across ethnic categories included the Georgia Institute of Technology, Virginia Polytechnic Institute, the University of California-Berkeley and the College of William and Mary.

The report also states that the four-year graduation rate for the African Americans in the class that entered in 1996 is 55.2 percent, the highest of any class since 1991. Each year since 1992, the overall four-year graduation rate has increased.

The overall five-year graduation rate for minority entering freshmen ranges from 67-70 percent, with the class entering in fall 1995 showing the highest five-year graduation percentage (70 percent).

Every fall, the Office of Institutional Research and Planning provides statistics on undergraduate retention and graduation rates. Statistics in this report are from first-time, full-time freshmen enrolled at UD from 1991-1999 on the Newark campus.