Posts Tagged “Endowment”
President DeGioia announced today that Michael K. Barry, former chief investment officer of the University of Maryland System Foundation, would become Georgetown University’s CIO.
As the CIO of the UMSF since 2005, Barry managed the investment funds of 21 Maryland state universities and community colleges. Before starting at the foundation in 2003, he was a senior research associate at the Cambridge Associates consulting firm.
Barry also coordinates the investments of Association of Public and Land-grant Universities and serves as and advisor to No Greater Sacrifice, a non-profit that provides scholarships to children of fallen soldiers.
He replaces Larry Kochard, who left in January to serve as UVa’s CIO. Under the last year of Kochard’s tenure, the University’s endowment ranked 61st in the nation in 2010 according to the National Association of College and University Business Officers, which was six points higher than the previous year. But the office also faced scrutiny over where it chose to invest.
Barry received his B.A. in Philosophy at Fairfield University.
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According to an AP report published yesterday, Larry Kochard, Georgetown’s first-ever chief investment officer, will leave on January 1 to manage approximately $3 billion of the University of Virginia’s endowment.
Kochard, who was hired as the founding director of Georgetown’s investment office in 2004, will become the Chief Executive Officer of UVa’s Investment Management Company as well as a member of the University’s Board of Members, reports the UVa Daily. According to his biography, Kochard has quite a few ties to UVa—he earned his Master’s and Doctorate degrees in economics from UVa in 1996 and 1999, respectively, and taught as an finance professor in the McIntire School of Commerce from 1997 to 2000.
“UVIMCO has one of the strongest and most respected teams in the investment world and one of the strongest and most respected boards,” he told the Daily. “I love the University of Virginia and this community, so this is really coming home for me.”
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Georgetown, Divest! will re-emerge this semester to oppose the University investment policies, after attempting to end practices last semester that allegedly violate the University’s Catholic and Jesuit identity.
In a Facebook message sent to Divest! members, David Schwartz (SFS ’12), a leader of the group, criticized the University for failing to invest in a socially responsible manner.
“[W]e have been deceived to believe that ethics are a part of Georgetown’s investment history,” Schwartz wrote. “Now, as students, faculty, and clergy of Georgetown University, we must stand up for social responsibility in its investment policy.”
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In a press release provocatively entitled, “Georgetown University Admits Complete Lack of Oversight of Endowment Investments,” members of Georgetown, Divest!, the student coalition seeking University divestment in companies that perpetuate human rights abuses in Israel and Palestine, said that their Friday meeting with administrators revealed to them “that ethical concerns play no role in the way the university invests its endowment.”
Accusing the University of hiding behind the type of investment in which it engages to avoid ethically investing—because Georgetown invests its money through diversified funds, the group said they were told by administrators, it cannot selectively divest from ethically suspect companies—the group also said that Georgetown University’s promise to divest from companies operating in Sudan in April 2008 was misleading and false.
“[Lawrence Kochard, the Chief Investment Officer] disputed that the University had released any statement of divestment from companies operating in Sudan. Indeed, upon review of University statements released at the time, it appears that the University used this loophole of “direct investment” versus investment through fund managers to mislead the student body into believing that action had taken place and silence student advocates,” the release said. “The university rarely invests directly in individual companies, so its April 2008 declaration that it had zero direct investment in companies operating in Sudan had no functional impact.”
Kochard told the group, the release said, that his office does due diligence of fund managers before they are hired. The Voice has contacted several school officials and we will update this post when we hear back. Below, read the full press release from Georgetown, Divest!.
“April 9, Washington, DC- This morning, five members of the Georgetown, Divest! Coalition met with four Georgetown University administrators, Lawrence Kochard, the Chief Investment Officer, LaMarr Billups, Assistant Vice President of Business Policy Planning, Dan Porterfield, Senior Vice President for Strategic Development, and Jeanne Lord, Associate Vice President of Student Affairs.
In a meeting that lasted for over an hour, the coalition members and the administrators discussed Georgetown University’s investment strategy and whether it addresses concerns of social responsibility. CIO Larry Kochard emphasized that Georgetown University generally does not directly invest in individual companies, but rather in funds overseen by managers whose actions are guided by certain allocation and risk policies set forth by the Investment Office. Therefore, he argued, Georgetown University cannot divest from the several companies the coalition is highlighting, because the University is not directly invested in them.
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The Washington Post has the most definitive numbers yet for the hit that Georgetown University’s endowment took in fiscal year 2009. In the midst of a global financial crisis, it’s reporting, the endowment shrunk to $883 million, or by 17 percent. And Georgetown is not alone in its misfortune—far from it. A survey conducted by the National Association of College and University Business Officers found that in 2009, college endowments suffered worse than they had in any time period since the Great Depression.
Of course, the drop doesn’t come as a surprise to anyone. At different points in time in the final months of 2009, the University estimated that its endowment would sink to $900 million or $830 million—with the loss coming not even two years after reinvigorated University management of the endowment had sent it over the billion-dollar mark.
But the Post reminds us that this is not the end of the world for Georgetown. “Georgetown is far less dependent on its endowment than Harvard or Yale universities, which have the largest endowments among U.S. colleges, funding only 6 percent of its operating costs with endowment dollars,” it writes.
The Voice‘s Sam Sweeney detailed the University’s response to the capital crunch in a terrific September cover story. Georgetown made budget reductions that delayed faculty and staff salary increases through 2009 and for senior administrators through June 2010. At the same time, it actually raised its financial aid by 18 percent.
And of course, the endowment is already recovering. As of December, it had already grown to $957 million. “Despite its conservative positioning,” University spokesperson Andy Pino wrote in an e-mail to Vox, “the endowment has participated in some of the market recovery, returning 8 percent during the first quarter of fiscal year 2010.”
Photo from Flickr user werewegian used under a Creative Commons license.
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The lame titular genitalia joke was supposed to grab your attention. Did it work?
Georgetown is still compiling all the information about how its finances performed in the last fiscal quarter, but some preliminary statistics are available. In the last financial quarter (which ended in December) the University’s endowment saw modest growth and ran a better-than budgeted operating deficit, albeit still in the millions, for the entire fiscal year 2009.
While Harvard and Princeton’s much larger endowments both saw losses of 30 percent each and Yale’s lost 25 percent (those figures being from their fiscal quarters ending in June), Georgetown’s grew by 8 percent last quarter, according to University Spokesperson Andy Pino, and was about $957 million as of December. In a Friday speech before the Faculty Senate, President John DeGioia waxed enthusiastic about the growth and Georgetown’s use of its endowment:
“I have joked that I never thought I would be extolling the virtues of tuition dependency, but with an endowment of approximately $1 billion before the global financial crisis, the impact for Georgetown is not commensurate with our peers. Harvard funds 35% of its operating costs from its endowment …Yale funds 44%…Princeton funds 52%–while we fund only 6% of our operating costs from our endowment. Our endowment had a return of 8% … which brings it back to $957 million as of December.”
Georgetown ran an operating deficit of $12.5 million for the whole fiscal year 2009, which was better than it budgeted for. However, Pino wrote in an e-mail, “In FY10, the effects of the recession are materializing, and we expect that number to be larger. We are working to ensure we can continue to operate and carry out our mission at the highest level.”
Photo from Flickr user AMagill used under a Creative Commons license.
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The National Association of College and University Business Officers recently crunched the numbers to come up with a complete ranking of U.S. college and university endowments for fiscal year 2008.
Granted a lot has changed since then, but with an endowment of $1,059,075,000 at the end of fiscal year 2008, Georgetown was ranked 71st. That figure represents a very slight decrease from the end of fiscal year 2007 endowment, when the endowment stood at about $1.06 billion.
Harvard had the largest endowment nationwide with a total of $36.5 billion. Yale, Stanford, Princeton and the University of Texas system rounded out the top five.
As Campus Grotto noted, Georgetown and Carnegie Mellon are the only two schools in U.S. News and World Report’s Top 25 Universities that aren’t in the top 33 in terms of endowment size.
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The Sustainable Endowments Institute just released its 2010 College Sustainability Report Card, and while Georgetown is still in the B range, we’re making some improvements. This year we received an overall grade of B, up from the B- we received for the past two years and the C+ we received in 2007.
Georgetown’s biggest gains came in the areas of Climate Change & Energy and Shareholder Engagement.
For Climate Change & Energy, where Georgetown jumped up to an A from last year’s C, the College Sustainability Report Card praised us for decreasing our carbon emissions by 12 percent between 2006 and 2008. We also got plaudits for installing monitors in dorms that display real-time energy use per resident.
In terms of Shareholder Engagement, where we also now have an A rather than a C, we got good marks for involving students, faculty and staff in the decision-making process, not just administrators and trustees as had previously been the case.
We also inched up in terms of Endowment Transparency, earning a D this year, rather than the F we received for the previous three years, thanks to a slight liberalization of the University’s policy on disclosing endowment decisions.
The only area where Georgetown’s grades suffered this year was Transportation. While we’d previously earned a B in that category, this year we came away with a C.
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No campus-wide wireless for you scalliwags!
Bad times globally mean bad times for Georgetown, with the endowment dropping 12.5% to under $1 billion. I guess we won’t be beating 23 this year (emphasis added):
As of September 30, 2008, Georgetown’s endowment was valued at $964 million. While this represents a 9.5% drop from the previous quarter and a 12.5% loss calendar year-to-date, returns continue to outperform both the 70% Russell 3000 and 30% Lehman Aggregate benchmark, and the Mellon Trust Universe of more than 100 foundation and endowment peers over 1, 3 and 5 year periods.
It looks like the good news is that we’re not losing as much money as other endowments.
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The good folks at the Sustainable Endowments Institute must have missed the Voice’s article this week about how GUSA, EcoAction, and the Corp are painting the campus green. At least, that might explain the B- Georgetown got in the SEI’s 2008 College Sustainability Report Card. Take heart, though. Georgetown students might cringe at the idea of getting a B- on anything, but it’s not all bad in this case.
The good news: In the category breakdowns, we received an A in Investment Priorities. Also, Georgetown’s grade was a bump up from last year’s. Though it’s only slightly higher than the average grade of a C+, it’s a whole lot higher than the D+ that both GWU and American received and Howard’s F.
The bad news: That being said, where would Georgetown be if we only defined success as being better than GWU and American? Georgetown was behind all of the Ivies, except for Princeton, which also received a B-. And we received an F for Endowment Transparency and C’s in Climate Change & Energy and Shareholder Engagement.
Georgetown’s report is viewable here and the entire report card is here.
- Sam Sweeney, senior writer
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