The National Association of College and University Business Officers, NACUBO, is an organization comprised of members from the various 2500 colleges and universities throughout the US and around the world that handles the daily business activities of the representative colleges, universities, and higher education institutions. The membership consists of business and financial officers, as well as other members of higher education administration from the various higher education institutions represented in the organization. Its mission is “to advance the economic viability and business practices of higher education institutions in fulfillment of their academic missions” (NACUBO).
The NACUBO, in conjunction with the Commonfund Institute, conducted a study that measured the amount of investments and returns produced by each institution. The NACUBO-Commonfund Study of Endowments (NCSE) had 850 US schools participate in the report, with 64% of those institutions being private institutions and 36% being public institutions. Within that 36%, 29% of the combined assets derived from public institutions while private institutions made up 71% of the total number of assets measured in this report. The report reviewed how the institutions allocated their asses throughout the year, as well as reported on the returned and investments made by the institutions. For example, it was reported that all 850 institutions reported an average return of 11.9% for the 2010FY, which was up from the -18.7% average return reported for the 2009FY (NCSE, 2010, p. 10). The total assets reported from the endowments were $346 billion, with 15% of the assets allocated to domestic equities (NCSE, 2010, p. 14).
Not only did the study consist of reports on the monetary assets and investments, but also on other resources, such as staff, management, and the governance of the institutions. According to the report, there was an average of 1.5 full-time equivalent (FTE) staff members employed at the institutions that participated in the report (NCSE, 2010, p 54). Per the U.S. Department of Commerce Bureau of Economic Analysis, to calculate the FTE you take “the number of employees on full-time schedules plus the number of employees on part-time schedule converted to a full-time basis” (BEA, 2007). Per the Bureau of Economic Analysis:
The number of full-time equivalent employees in each industry is the product of the total number of employees and the ratio of average weekly hours per employee for all employees to average weekly hours per employee on full-time schedules. An industry’s full-time equivalent employment will be less than the number of its employees on full- and part-time schedules, unless it has no part-time employees.
The report emphasized that there are factors, similar to non-academic industries or companies, that drive the costs of education. The report mentions that 80% of the participants used outside consultants, rather than internal staff/employees, on making decisions pertaining certain decision, such as asset allocation or hiring of staff members. A current report is being conducted for the 2011FY, and based on current economic trends, it would be interesting to see if any changes, or increase in some resources or asset allocations, were made compared to the 2010FY.
U.S. Department of Commerce Bureau of Economic Analysis (2007). Retrieved from http://www.bea.gov/index.htm.
National Association of College and University Business Officers (2011). Retrieved from http://www.nacubo.org/
The NACUBO-Commonfund Study of Endowments (2010). Retrieved from http://onlineresearch.nacubo.org/nacubo/gateway.dll?f=templates&fn=default.htm&vid=pub2:view.
Did the study compare the annual returns of 11.9% for FY 2009 with the S&P or other measure? The S&P for the calendar year 2009 was up tremendously: 23.5%! In other words, are the endowments beating the average or are they underperforming? it would be interesting to know.
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