If someone says the word “endowment,” many people would probably just scratch their heads in confusion as to what exactly that refers. But the endowment is a crucial element of the university; Transylvania University provides thousands of scholarships to students every year, and this, along with other things, is made possible by the investment of Transy’s endowment into common stocks.
An endowment is basically an investment of money that can never actually be spent — but the earnings made from the investment can be. Vice President for Finance and Business Marc Mathews explained that the endowment is the university’s “largest single asset.” It is comprised of 280 individual, underlying endowment agreements, instead of being just one large clump of money. The endowments are accumulated over the years from “persons, families, and companies” and have compiled a $170 million principle amount.
One thing that makes Transy’s endowment unique when compared to other schools is the fact that it is “managed by the investment committee of the Board of Trustees,” according to Mathews. This committee is constantly evaluating the performance of the endowment and doing its best to keep a low cost by conservatively investing the endowment.
As far as how the money from the endowment is invested, the committee utilizes a “buy and hold strategy,” meaning that it does not trade a lot. Instead, the members of the committee invest in common stocks that are household names; for example, Johnson and Johnson is Transy’s largest investment at this time.
The committee only spends five percent of the value of the endowment in order to ensure that the money that donors have given has the same value years from now as it does currently.
“It’s all about stability,” Mathews said. “We also have good control measures in place to get to the money and lots of supervision.”
That five percent of the earnings that is spent is equal to approximately $9.2 million, and out of that money, about two-thirds went to scholarships for Transy students. Scholarships are easily the biggest asset from the endowment.
“We are really fortunate to put out what we do in merit-based aid, ” said Mathews. “It is a real gift to the students.”
The earnings from the endowment are also used in other places across campus, such as the upkeep of certain buildings, the Bingham Fund, which gives stipends to faculty members, scholarships for various programs across campus, such as the theater program, and to fund different lectures and presenters that come to campus.
Overall, Transy’s endowment is like any other school’s endowment, except for who controls it. The endowment is what allows Transy to take measures to make sure that as many students as possible can receive merit scholarships and to create a campus environment that is enriching and thought-provoking.
