UH fund returns to positive footing
By Beverly Creamer
Advertiser Education Writer
The University of Hawai'i endowment that finances such things as scholarships and endowed chairs has regained approximately $22 million of the $25.9 million it lost in the stock market downturn after the Sept. 11 terrorist attacks — pushing the total fund up to $105.1 million.
The gains — the result of recent stock market strength and new investment directions — have brought the UH endowment back up from $82.7 million a year ago, according to UH Foundation chief financial officer Bill King. At its highest point in September 2000, the endowment stood at $113.1 million.
"A large part of it was we were able to take advantage of two strong quarters in the overall market and we did have some excellent results in our international stocks," said King. The international stocks rose 32 percent in the last quarter, he said, while domestic stocks were a percentage point ahead of the S&P 500.
The foundation's board got the good news yesterday, along with the first concrete plans for the coming five-year "Centennial Campaign," which will culminate in 2007 and hopes to as much as triple the current endowment, although no firm campaign goal has been set.
The UH Foundation, which manages the endowment for the university much like a banker does for an individual, changed both strategies and fund management in the wake of losses after Sept. 11. As a result, there's great enthusiasm for the upswing and the coming fund-raising campaign.
"We're coming back," said UH Foundation President Betsy Sloane, "and there are a whole slew of people who want to see the university rise. The support is there, and it's tangible."
The foundation switched consultants from Merrill Lynch to Cambridge Associates, a Boston-based firm that specializes in investing for colleges and has 182 universities in its client base, including Princeton, Harvard, Yale, Cornell, Duke, Stanford, Rice and the University of Chicago.
"This is not to say that anybody else doesn't have expertise," said King. "We were just looking for somebody that this (investing for institutions of higher education) was their focus. It's what they do and all they do."
Along with more focus on international stocks, King said "in these volatile times" the foundation is looking at developing a more diversified portfolio with part of the fund also invested in small- and mid-capitalized companies instead of just mid- and large-cap companies. As well, alternative assets are being looked at, along with real assets, commodities such as energy and industrial metals, and global real estate and inflation-linked bonds.
"This is the portfolio for the long haul," said King. "You have a very diversified portfolio to cover you in any market condition."
In looking forward to the coming fund-raising campaign that will be completed in the university's 2007 centennial year, foundation managers expect to launch the two-year "quiet" portion of the drive in January 2004, hoping to raise 35 percent to 45 percent of the total from 500 of the potentially biggest donors.
"We're talking about multimillion-dollar gifts," said Sloane, "not just $2 million but $5 million and $7 million gifts."
During the past 18 months the foundation has culled more than 300 proposals from the university community for priority projects, including a new Cancer Center of Hawai'i. With Hawai'i's congressional delegation hoping to raise $50 million to $80 million from federal sources for the center, that leaves about $70 million to $80 million to be raised from private sources, said Sloane.
"People would be able to name something (such as a laboratory at the biomedical center in Kaka'ako) as recognition of their gift," said Sloane.
The foundation also sponsored a feasibility study to gauge support for a fund drive. What they found, said Sloane, is broad-based support and excitement, especially around such areas as the medical, business and law schools and the university's growing biotech capability.
"People who are new to Hawai'i want to link in and connect and they look to the university to do that," said Sloane.
The foundation also has put new emphasis on increasing the database of alumni. In the past 18 months or so, that base has been bumped up by 50,000 graduates who are now being asked to contribute to their alma mater. A selected group are prospective donors of "major" gifts over $10,000.
According to UH records, since the school opened in 1907, there have been about 66,000 Associate of Arts degrees and 124,000 Bachelor's of Arts degrees awarded.
But even bulking up the endowment to give additional money to university programs and projects will not replace solid state support, Sloane said.
"It's funding the future," she said.
According to UH financial managers, the university is supported now at about the same dollar level it was 11 years ago. That translates to a support base from the state that has eroded from a high of about 80 percent of total university revenues in the 1980s down to 46 percent today.
While the endowment can make up some of that, federal research grants are increasingly being looked to to make up the difference.
Reach Beverly Creamer at bcreamer@honoluluadvertiser.com or 525-8013.
