THE ENDOWMENT GOES LONG
“I don’t think it’s a huge problem at public schools,”Vedder said. Paying out more “is
not going to make the difference between
UNC being a high-cost university and a
low-cost university.” But, he says, “it could
be the difference between a tuition increase
and no tuition increase for the year.”
It also is worth noting that only a small
percentage of UNC’s endowment assets are
unrestricted — meaning that they aren’t
already directed by donors to some specific
end uses. The endowment is anything but a
monolithic lump sum; rather, it is a collection
of independent pools of money representing
more than two dozen campus sources, ranging from the Arts and Sciences Foundation,
the Kenan-Flagler Business School and the
GAA, to the Botanical Garden, Golden
Fleece and Carolina for Kibera. And much of
that money already is earmarked.
According to 2007 figures from the
Investment Fund, about half of the endowment is reserved to fund professorships;
other slices of the pie are set aside to fund
the library, scholarships and fellowships.
Only about 13 percent of the endowment
is unrestricted, meaning it can be used for
any purpose. Given these restrictions,
Schwab says the investment fund spends
more time worrying about smoothing out
performance troughs to ensure payouts of a
dependable size from year to year. “The big
issue is predictability, so that the University
can count on a certain number of dollars
coming in every year,” he said.
The board of directors of The University of North Carolina
at Chapel Hill Foundation Investment Fund Inc.
The primary responsibility of the board is to oversee the allocation of the fund
among asset classes, investment vehicles and investment managers. It is responsible
for adopting investment objectives and policies, for overseeing the manager selection process, and for monitoring policy implementation and investment performance. The chancellor, the vice chancellor for finance and administration, the
trustees chair and the vice chancellor for advancement are ex officio members.
Max C. Chapman Jr. ’ 66, chair
Gardner Capital Management
Holden Thorp ’ 86
Sallie Shuping-Russell ’ 77, vice president
Blackrock Private Capital Markets
W. Clay Hamner Jr.
CEO and managing partner
Montrose Capital Corp.
Richard L. Mann, treasurer
Vice chancellor for finance and administration
Peter Grauer ’ 68
Chair and president
Matthew Kupec ’ 80, secretary
Vice chancellor for advancement
Sallie Krawcheck ’ 87
Former chair and CEO
Citi’s Global Wealth Management Division
Nelson Schwab III ’ 67
Paul Fulton Jr. ’ 57
Bassett Furniture Industries Inc.
Allen B. Morgan ’ 65
Chair and CEO
Morgan Keegan Inc.
Roger Perry ’ 71
East West Partners Management Co. Inc.
Chair, Board of Trustees
Willard J. Overlock Jr. ’ 68
Hard times are here
Goldman Sachs Group Inc.
Tumultuous market years like 2008, of
course, can make maintaining that sort of
predictability a lot more difficult. If the
current commotion isn’t enough of a
reminder, history shows that the market
hasn’t always been as kind to endowment
funds as it was over the past decade or so.
The CCAP’s Vedder notes that, from the
mid-1960s to the early 1980s, the typical
university endowment saw no increase in
size if adjusted for inflation.
The economic downturn certainly is
being felt here.
Moody’s, a financial research service,
reported that nationwide, endowments
were down 5 to 7 percent in 2008. And at
the November meeting of the UNC Board
of Trustees, UNC Management Co.’s King
reported that the fund was down more
than 13 percent in what he called “a diffi-
William B. Harrison Jr. ’ 66
Chair of the board
JPMorgan Chase & Co.
John L. Townsend III ’ 77
Private investor, retired general partner
Goldman Sachs Group Inc.
cult and challenging” fiscal year 2009.
“Right now, nothing is working,” King
told the trustees. The fund’s five-year success rate, he said, “had built a really nice
cushion to get us through this tough time.”
So perhaps the odds are against the
UNC endowment having quite so hot an
investment hand in the years to come. The
chances are very good, however, that it will
do a lot better than you.
DARV JOHNSON ’ 93 is a freelance writer
based in Chapel Hill. Most recently he covered faculty retirement in the November-December 2008 issue of the Review.
‘The big issue
so that the
count on a
of dollars coming
in every year.’
Nelson Schwab ’ 67
trustee, investment fund