Worcester Business Journal

wbjournal.com | September 2, 2019 | Worcester Business Journal 11 Endowment growth Endowments at Central Massachusetts colleges have soared in the last decade or more, giving schools with the largest funds a major boost for areas including financial aid. Some saw major drops during the Great Recession, however, leading to questions of how endowments may fare if an economic slowdown or contraction is on the horizon. staffs and a greater ability to make longer-term investments in areas like private equity and hedge funds, said Ken Redd, a senior director for research and policy analysis at the National Associa- tion of College and University Business Officers. In Worcester, ambitious fundraising campaigns have exceeded expectations. Holy Cross is nearing a goal of $400 million in a campaign in which major gis have included $40 million from alumnus John Luth and his wife, Joanne Chouinard-Luth, for an athletics and recreation center now under con- struction. A $25-million donation in 2013 from Cornelius Prior Jr., a 1956 graduate, started the college's plans for a $92-million arts and performance building. WPI launched a $200-million fund- raising campaign in 2012, and ended up with $248 million, or nearly 25% above the school's goal, with 45 gis of $1 mil- lion or more. at included a $40-mil- lion gi for scholarships from Robert Foisie in 2014. Foisie, a deceased 1956 graduate, gave more than $63 million in total to WPI. UMass Medical School had a success- ful $250-million fundraising campaign started in 2016 and has 20 new endowed faculty chairs since Chancellor Michael Collins was appointed in 2008. Clark launched a $125-million fundraising campaign in 2017, and hit that target al- most two years earlier than anticipated. Mixed results, and potential danger ahead e smallest endowments in Central Massachusetts have benefited from in- vestment returns and donor giving, too. Anna Maria and Becker have two of the region's smallest endowments at each just over $5 million. But both were well under $1 million 15 years ago. Becker has made it clear to potential donors how far their money can go for the 1,800-student school, said David Ellis, Becker's executive vice president and CFO. Much of the contributions it receives go directly to financial aid, not to the endowment, he said. "ey want it put to use now," Ellis said of aid benefiting students. Despite the significantly larger endowments at those and virtually all colleges, investment returns have generally not met expectations, according to the National Association of College and University Business Officers study. In the last decade, colleges have averaged a 5.8% return, short of a 7.2% target set to keep up with inflation and costs. "ey got very gun-shy in the wake of the Great Recession," Latham said. "Understandably so, but it caused them to miss out on the market." Public colleges in Central Massachusetts have generally played it safer. Framingham State reviewed its investment and spending policies a decade ago, and generally spends 5% of its endowment while seeing returns averaging 8.5%, said Dale Hamel, Framingham's executive vice president. Worcester State saw its endowment rise by 13% during the Great Recession, and has taken a low-risk approach even during a bull market, McNamara said. "We're prudent in looking at our long-term growth," he said. Becker has put its entire endowment in companies it says are socially respon- sible, such as those prioritizing public health or the environment – a move Ellis said was done largely with the college's mission and its students in mind. "e students coming to us now are very different than 20 years ago," he said. e move has also sheltered Becker's endowment from market volatility. "We transformed it to cushion it against the high highs and the low lows," Ellis said. Conservative management may be necessary in the coming years if endowments fall sharply in a recession. Economists still generally do not pre- dict a downturn this year but potential- ly in 2020. WPI, for example, saw its endow- ment shrink by roughly $113 million, or 28%, during the Great Recession, according to the National Center for Education Statistics. Endowments at Clark and Holy Cross each fell by 25%. Another sharp drop in endowment could particularly harm smaller schools that already rely more on tuition reve- nue to give financial aid to those who need it, said Redd, the policy analyst. "ey just don't have the resources to make up for financial aid," he said. College of the Holy Cross $419,221,844 $783,207,000 87% 0% Worcester Polytechnic Institute $314,066,242 $521,500,000 66% 9% Clark University $183,304,418 $424,000,000 131% -21% UMass Medical School $38,697,000 $222,396,398 475% 21% Assumption College $43,315,872 $109,686,956 153% 16% Dean College $16,483,266 $47,000,000 185% 13% Framingham State University $1,725,645 $41,800,000 2322% -14% Worcester State University $6,235,447 $31,353,905 403% 2% Fitchburg State University $9,107,327 $19,886,936 118% -9% Nichols College $10,250,704 $15,400,000 50% -25% Mount Wachusett Community College $1,035,965 $10,029,525 868% -38% Anna Maria College $345,736 $5,152,861 1390% -25% Becker College $746,731 $5,100,000 583% -28% Quinsigamond Community College $1,431,806 $3,900,000 172% -16% Great Recession 2004 2018 Increase change Institution Endowment Endowment since 2004 (2007 to 2009) Note: Figures represent total endowment, not return on investment. Source: U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data System (2004-2017), Worcester Business Journal survey (2018). Worcester Polytechnic Institute $35,952,739 College of the Holy Cross $34,358,234 Clark University $24,605,604 Assumption College $12,328,183 Dean College $7,760,799 Institution 2012-2016 Financial aid from endowments College of the Holy Cross and Worcester Polytechnic Institute have each given more than $30 million in financial aid from their endowments in the five most recent years. Note: Most recent years available. Information on public colleges was not available. Anna Maria College, Becker College and Nichols College did not report any grants or scholarships from their endowments. Source: Guidestar.org Worcester Polytechnic Institute $91,397,816 College of the Holy Cross $62,420,545 Clark University $27,104,050 Dean College $11,947,150 Nichols College $4,173,441 Assumption College $3,170,581 Anna Maria College $1,795,546 Becker College $840,686 Institution 2012-2016 Donations to endowments Note: Most recent years available. Information on public colleges was not available. Source: Guidestar.org College of the Holy Cross $237,072,595 Clark University $163,194,601 Worcester Polytechnic Institute $147,821,732 Assumption College $32,842,686 Dean College $10,795,590 Nichols College $4,256,790 Anna Maria College $1,409,070 Becker College $1,345,762 Institution 2012-2016 Returns on endowment investments Note: Most recent years available. Information on public colleges was not available. Source: Guidestar.org W H I G H E R E D U C A T I O N F O C U S

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