Total assets in Boston University’s endowment jumped 7.2 percent during the 2002-2003 fiscal year after several years of precipitous drops, according to an annual report by the National Association of College and University Business Officers released this week.
BU’s endowment, which NACUBO ranked 73rd in the nation at $620 million, is an investment portfolio that generates revenue to help fund grants, academic chairs and scholarships.
“We are very pleased that the economy is turning around and showing positive returns on our investments,” BU spokesman Colin Riley said. “It puts us back on track where we were prior to the downturn of the economy in 2001.”
Riley said the university is always aiming to increase its endowment.
“An endowment is an investment fund held in perpetuity,” Riley said.
Riley also said the endowment’s long-term track record has been positive. Although a lagging economy caused three years of negative returns, BU’s endowment has grown from $18.8 million in 1971 to more than $620 million in 2003, he said.
“You don’t look at a snapshot of a single year,” he said.
In a NACUBO press release, president James Morley, Jr. said, “Interest earned from endowment investments is a critical source of funds for both independent and public institutions.”
Unlike many other universities, BU only depends on a small portion of its endowment for the school’s operating budget because the majority of money BU spends comes from both tuition and revenue-producing programs, such as Campus Convenience and other BU-owned businesses, Riley said.
“The contribution to the operational budget from the endowment return has only been three to four million dollars per year in recent years, which is a fraction of the overall $1.3 billion budget,” Riley said. “We are not an endowment-dependant university. And because of that, the struggling economy has had less impact on us than it has had on other universities.”
Like many other universities, Riley said BU “limits its use of endowment funds to 5 percent of the average endowment returns per year.” That figure is less than 1 percent of the university’s operating budget.
Riley said BU generally performs better than other universities and that BU has not had a deficit in more than 33 years.
“Boston University is very well managed,” he said. “It is something we take great pride in.”
The NACUBO report said while endowments at schools such as Stanford University and the University of Virginia increased 13.1 percent and 6.8 percent, respectively, numerous schools had below average returns. The average nationwide return was only 3 percent.
Schools with shrinking endowments included the Massachusetts Institute of Technology, with an endowment return of -4.2 percent, and Purdue University with a reported 3.8 percent decline, according to the report.
The nation’s largest endowment belongs to the school accross the river, Harvard University, which has a fund that exceeds $18 billion according to the report.
A significant proportion of endowments come from alumni donations. School of Management sophomore Greg Capasso said he would consider donating to BU and helping build the endowment depending on the future BU provides him.
“It depends on if the job I get from my degree from this school provides me with enough money that I want to donate,” he said. “If I have a good job and I feel like this school helped me get it, I will.”