In a challenging year that saw higher education endowments dip dramatically, the total UConn endowment defied this trend and achieved higher returns than over 90% of peer institutions.
That is one of the key findings of the 2022 NACUBO-TIAA Study of Endowments®, the preeminent analysis of the financial, investment, and governance policies and practices of the nation’s higher education endowments and affiliated foundations. This year’s study reflects the responses of 678 institutions and covers the fiscal year July 1, 2021–June 30, 2022.
For the 12 months ending June 30, 2022, the total University endowment, which is managed by the UConn Foundation, generated a 3.1% return, far surpassing the national average return of -8.0%. This level of return put UConn in the top 10% of public colleges and universities, which achieved an average -8.2% return. UConn was also in the top decile for the trailing three-year and five-year periods, and top quartile over the trailing ten years.
“The long-term investment portfolio was able to stay ahead of the market in fiscal 2022 largely due to some very prescient risk management strategies endorsed by our Investment Committee last year,” explains Dave Carney, Senior Vice President of Finance and Administration and CFO of the UConn Foundation. “Additionally, the Committee and Foundation staff have really focused over the past few years on ramping up investments with top-tier managers in private equity, private debt, and private real assets. These areas, are traditionally less correlated with the stock and bond markets, which were down concurrently for the first time since fiscal 1994.”
A Focus on University Funding
In all, the endowment distributed a record $20.8 million to the University in fiscal 2022, providing critical funding to support UConn’s mission. Nearly half of that amount was dedicated to scholarships and fellowships. Other funds supported faculty, technology, experiential learning, student research opportunities and conferences, and other priority programs.
“Even in a difficult year, colleges and universities used their endowments for student- and mission-focused support, including student financial aid,” says Lynne Schaefer, interim president and CEO of the National Association of College and University Business Officers (NACUBO), the sponsor of this study. “Endowments serve as a source of reliable and relatively steady revenue that higher education institutions and students can count on, regardless of market conditions.”
Environmentally and Socially Responsible Investing at UConn
The UConn Foundation was among the 86% of respondents in the NACUBO-TIAA study whose investment policies include a commitment to environmental, social, and governance (ESG) principles, versus just over 80% last year. The Foundation’s policies require weighing ESG risk factors alongside other material risk factors that influence investment decision making.
“In just the past year alone the Foundation has committed to several impact funds whose purposes include investing in companies and technologies to reduce CO2 emissions, remove existing CO2 stores, cool the atmosphere, and promote alternative energy sources,” reports Shahid Farooqi, the Foundation’s Director of Investments. “Our investment advisors BlackRock and StepStone are recognized market leaders in this space and have also been invaluable partners in this effort.”