The management of the University of Colorado Foundation’s financial assets is a complex, intricate and exacting process involving accounting, finance, stewardship and legal expertise. In each of these areas, new standards are continually being forged as the complex issues in the commercial world increasingly affect the way affairs are managed in the non-profit sector. Staying abreast of these issues and holding true to traditional fiduciary values allows the Foundation staff to most effectively serve the interests of our donors and to execute our mission, to support and further the partnership with the University of Colorado.
Private Gifts – the lifeblood of the University
Across the United States, the formula for state funding of flagship educational institutions is under pressure. Over the past five years, state funding to the University of Colorado has decreased from 15.6 percent of the University budget to 9.9 percent in FY 2004. This trend continues to bring into sharpened profile the ever increasing need for private gifts to support University strategic goals such as building infrastructure and increasing diversity as well as the more traditional and pressing need to support academic programs, student scholarships and faculty chairs. Gifts from private individuals, foundations and corporations are received every year with the proportion to fund endowments making up about one-third of all gifts.
What it’s all about – the Endowment
An endowment may be created with a gift of $25,000 or more to the Foundation for the benefit of the University. Earnings from the investment of these monies are distributed to designated University programs according to donor wishes, whether that is to further the broad goals of the University or to be used by a specific faculty department or by college program such as business, engineering or arts and sciences. Gifts may also be designated by campus or left to the areas of greatest need as set by the University president or campus chancellor.
Investment Performance – Enabling University growth and progress
Endowments are held primarily in the Long Term Investment Pool, a unitized investment account operated much like a mutual fund. A seven-member volunteer investment committee made up of experts in several investment areas and reporting to the Board of Directors makes all investment decisions. The committee is supported by an independent investment consultant and the Foundation staff. The prudent management and investment of this fund ensures that the intended endowment benefits are delivered to programs specified by donors over the long term.
The Foundation’s portfolio is diversified across a broad range of asset categories including equities, both international and domestic, fixed income and the alternative asset category as detailed in the pie chart.
Over the past ten years, investment return on the fund has been 9.5%, slightly ahead of most peer group foundations in the $300 million to $1 billion asset class. The total assets in the Foundation’s managed endowment accounts as of June 30, 2003 totaled $390 million.
Leveraging Financial Strength – Unique financial solutions to broaden University support
In the early part of 2002, the University asked the Foundation to assist in partnering to raise $69 million in tax-exempt revenue bonds to construct the first new student residences on campus since 1968. The Foundation’s investment grade credit rating was used to raise the monies in late June 2002 and students moved into the apartment style residences 14 months later, in time for the 2003 fall semester. The second phase is now complete and is being offered for fall 2004. In all, a total of 994 beds are included in the project.
Another request, also created by cutbacks in state capital funding, led the Foundation to purchase and renovate an 85,000 square foot building on a seven-acre lot, which has become the new home of the Beth-El College of Nursing. Using its credit strength, the Foundation acquired and renovated the building, making it available six months from the purchase date. Within the year, the University was able to purchase the building from the Foundation and it is now a core part of the Colorado Springs campus.
Several years ago, the University approached the Foundation asking for solutions to the high cost of residential real estate in the state, a significant deterrent in recruiting new faculty. After making $2,000,000 available to a number of faculty applicants in an early test market phase, the Foundation moved to expand the program, involving a local federal credit union as a partner with a unique backup guarantee structure. The new phase of this program will allow University recommended faculty members to receive an additional $5,000,000 in mortgage assistance using credit union systems and support, giving the University a unique marketing tool to recruit faculty to the four campus system.
Partners in Funding – University contract support provides return on investment
The Foundation receives a fee from the Long Term Investment Pool that provides funding for money management activities, stewardship, operating support and other fiduciary activities. Campus based development activities are funded primarily by the four University campuses under a fee for service contract. This funding from the University generates a return on investment that exceeds 7:1 when compared to the current gifts raised by the Foundation for the benefit of the University, earnings on endowments and other monies that are distributed to the University annually by the Foundation.
