FAYETTEVILLE -- A yearly survey of endowment market values shows the University of Arkansas, Fayetteville up two spots to rank 101st among U.S. and Canadian institutions, a rebound from a year earlier when the endowment's value decreased.
The value of UA's endowment increased to more than $996 million at the close of the 12-month period ending June 30, up 10.8 percent compared with the $898.9 million market value a year earlier, according to data from the annual National Association of College and University Business Officers-Commonfund Study of Endowments. The study gathered data from 809 U.S. colleges and universities.
"We attribute the rise in rankings to a combination of investment earnings and gifts that have been made toward our endowment," UA spokesman Mark Rushing said in an email.
The increase breaks a long string of annual ranking decreases, even in years when the endowment's market value increased. Beginning after fiscal 2010, when UA's endowment ranked 92nd, the ranking slid every year until the recent uptick.
Rushing cited a return on investments of 15.4 percent as "above average and the key reason we increased this year."
Not included in the total is the $120 million from the Walton Family Charitable Support Foundation to support UA's School of Art, which was announced in August after the time frame for the survey. Of the gift, $110 million is considered to go toward the university's endowment, UA's top fundraising official, Mark Power, said last year.
The University of Arkansas Foundation administers and invests donations to the university, as well as for most other institutions in the University of Arkansas System. Another foundation, the University of Arkansas Fayetteville Campus Foundation, also supports UA, specifically the university's Honors College and graduate school.
Endowment funds are viewed as a means for long-term support of colleges and universities. Each year, only a small percentage of an endowment is spent.
Rushing said the effective spending rate in fiscal 2017 was 4.9 percent. According to the University of Arkansas Foundation's financial statement, the spending is calculated quarterly based on the endowment's 36-month history.
"Spending from our endowment supports student scholarships, graduate fellowships, faculty chairs and professorships and academic programs," Rushing said.
The survey listed an average effective spending rate of 4.6 percent for endowments sized from $501 million to $1 billion.
Many schools saw the value of endowments increase in fiscal 2017, according to survey data.
UA's endowment value increase was higher than the average for schools with similarly-sized endowments, according to an Arkansas Democrat-Gazette analysis. On average, schools that, like UA, closed fiscal 2016 with an endowment valued between $800 million and $1 billion saw a value increase of 9.5 percent in fiscal 2017 compared with UA's 10.8 percent increase.
The survey reported that investment returns for endowments were, on average, 12.2 percent, a change from the previous year when most schools -- including UA -- reported investment losses.
"This year, the investment returns were just much greater," said Ken Redd, senior director of research and policy analysis for the National Association of College and University Business Officers.
He said the world economy improved, noting that large endowment investments "are pretty broadly diversified," commonly with about 20 percent in foreign stocks.
Other common asset categories are U.S. stocks, U.S. and international bonds, and hedge funds, Redd said.
Rushing said $3.8 million in advisory and consultant fees were paid for the entire UA System pool of endowed funds, including $2.3 million paid by the University of Arkansas Foundation.
Redd cautioned that, looking over the past 10 years, there is a "big concern" that endowments are not meeting targets for investment returns.
"Overall, this year, obviously, was very good. The last 10 years were far below average," Redd said.
Metro on 01/28/2018
Print Headline: UA endowment rebounds 10.8%; Increase to $996M total lifts school to 101st place in rankings