$600M: USF hopes to add that in endowment

“Rainy days” have put a damper on the University’s endowment funds through the USF Foundation in the past year, but a conservative approach will help sustain funding commitments – especially to students – said Rob Fischman, chief financial officer for the USF Foundation.

USF’s Unstoppable Campaign aims to raise $600 million in endowment for students and faculty – the University’s largest campaign in its 53-year history, and the kickoff event will take place tonight at 6 in the Marshall Student Center Ballroom.

As of late June, the USF Foundation had about $360 million in endowment funds compared to about $498.2 million in June of 2008, according to a Foundation report. Last year, the Foundation’s net return for endowment was down 18.9 percent, Fischman said.

“It’s raining now. This is why now we’re conservative,” he said. “I know we aren’t a huge part of the University’s 1.5 billion budget overall … but I think that we’re an important part. We’re a difference-maker in what we do for faculty and students, and if we had an interruption to spending, that would be catastrophic to a lot of students and faculty and a lot of research that’s going on in the University.”

A majority of endowment funds go to USF Health but other areas include buildings, scholarships, research, professorships and athletics, Fischman said. The main reason behind the Foundation’s approach is the importance of sustaining students’ scholarships.

“Scholarships are the best example. You make a four-year commitment to a student,” Fischman said. “You make the commitment one year, the second year you have the money, third year you don’t have the money. What kind of expectation is that? What kind of environment does that create for students who enrolled here thinking they were going to get some money?”

The foundation takes a 10-year look on how to judge endowment investing, said Jay Wilson, director of communications for the USF Foundation.

Foundation funds are split into two money pools: operating and endowment. The operating pool contains $73,236,722 and the endowment has $286,799,580, bringing the total amount to $360,036,302 in available funds.

The endowment pool is what the Foundation uses for long-term plans. Investment decisions are based upon expected returns from equities, like fixed income and real estate, Fischman said.

Those numbers then indicate how much the Foundation should expect to have available to spend so it can better allocate money to the operation pool to provide the University with annual support, he said.

“They’re thinking long-term strategy because when a donor provides money to the endowment to create a scholarship, a fellowship or some sort of faculty chair or distinguished professorship, they’re thinking the gift is going to last for generations to come,” Wilson said.

That strategy is called an intergenerational equity, Fischman said. For example, he said if a $25,000 endowment is given today to create an annual $1,000 scholarship, it isn’t going to have the same impact for the student 10 years from now, he said.

By growing that endowment from $25,000 to $50,000 through investments, Fischman said, the Foundation could later provide a $2,000 scholarship.

“(It) helps keep the real purchasing power intact over time,” he said.

Since a “big key” in sustaining funds is the spending policy, Fischman said, the Foundation also averages its value over five years so as the market fluctuates the Foundation can provide spending that’s consistent at the average market level.

This conservative approach has helped the Foundation start to see more positive “double-digit” returns, he said.

“You always take a long-term perspective. You don’t get greedy,” Fischman said. “If you earn 20 percent in one year you don’t decide to spend half of that because you need that over time.”

A couple thousand – maybe even more – are expected to attend tonight’s invitation-only kickoff event for alumni, donors and potential donors, Wilson said.

“We’re really putting our best foot forward,” he said.

Additional reporting by Sarah Torrens