FAYETTEVILLE -- The endowment supporting the University of Arkansas at Fayetteville has grown to $948.7 million, according to UA, a total representing the value of endowed funds as of June 30 and reflecting a one-year investment return of 3.9 percent.
Endowed funds may be devoted to establishing faculty positions or student scholarships, with donors stepping up to provide gifts that are then invested by the University of Arkansas Foundation.
The idea is that endowed funds "allow these gifts to continue on in perpetuity," said Mark Power, UA's associate vice chancellor for development. Like at other universities, the payout on UA's endowed funds for various expenses is a small percentage of the total. At the UA foundation, it is approximately 5 percent, according to the foundation's website.
This year's investment return fell short of last year's return, taking place "during a fairly turbulent period for the financial markets," Clay Davis, executive director and treasurer for the foundation, wrote in an email.
The foundation's primary responsibility is to provide investment management for endowed funds. Despite the dip in the investment return, "it keeps our longer term annualized average returns well above 10 percent," Davis wrote.
For the past five years, the annualized average for returns has been 10.8 percent, according to Davis.
Power said endowed faculty positions can be a recruitment tool, and universities sometimes boast of the size of their endowments. The job advertisement for UA's chancellor position noted that a previous $1.05 billion fundraising campaign led to 1,700 endowed scholarships and 130 faculty chairs and professorships, also stating that the school's endowment exceeded $920 million.
Last year, UA announced a record-breaking total of $920.6 million, then submitted a revised amount of $929.7 million in a voluntary survey to the National Association of College and University Business Officers.
The latter figure placed UA at 99th among all university endowments, though the list included some funds that benefit multiple campuses. In 2014, Harvard University had the largest endowment, at $35.9 billion, according to the association's survey.
An updated list with fiscal 2015 totals will not be available until late January.
Jennifer Holland, a spokesman for UA, in an email wrote that the total included in the survey reflected an updated valuation on certain parts of UA's endowment portfolio.
Power said the university is always looking to increase the number of endowed gifts. For the 12-month period that ended June 30, about $20.8 million, or roughly 18 percent, of the $116.5 million in private gifts were allocated for endowed funds, according to the university.
Endowments for faculty members "allow that faculty member to know year in and year out, they're going to have a certain base of support to help grow that program," Power said.
As far as scholarships, "probably most of the scholarship funds are provided off of endowments," Power said.
Sometimes donors specify that an award is to go to a student from a specific geographical area or enrolled in a particular academic program.
But "if a donor restricts a scholarship too much, it may be that there are particular years where a candidate or candidates or a pool of students, it just may not be there," Power said. The university often talks with donors about setting preferences for endowed scholarship awards to allow the funds to benefit a student who may not fit strict criteria, Power said.
As far as talking to donors about setting up endowed scholarships based on merit such as test scores or instead based on a student's financial need, "we just want to make sure we have a good discussion about both and how important both of them are," Power said.
Metro on 10/12/2015