Duke Endowment

September 16, 2022
By AdmissionSight

Duke Endowment

What is the current Duke Endowment? One of the wealthiest private colleges in the United States and a leading producer of academics from other countries is Duke University, which can be found in the state of North Carolina in the United States.

Unusually, the university mandates that first-year students must reside on campus during all three years of their education. More than seventy-five percent of students participate in volunteer work in some capacity, demonstrating their commitment to the university’s objective of “knowledge in service to society.”

Richard Nixon, who served as the 37th President of the United States, is the most famous graduate of the school. In 1937, he received his law degree from Duke University, where he had previously studied. Apple, Cisco Systems, JPMorgan Chase, and PepsiCo are just a few of the Fortune 500 corporations that are led by alumni of Duke University.

In addition, the alumni community is comprised of well-known novelists such as William Styron and Anne Tyler, both of whom have won the Pulitzer Prize for their work. William Styron was awarded the Pulitzer Prize for Fiction for his novel The Confessions of Nat Turner, and Anne Tyler won the award for her novel Breathing Lessons.

The Duke endowment fund is a permanent source of funding that can maintain its own existence. The assets of the Duke Endowment have been regularly invested. Each year, a portion of the value of the fund is distributed in order to support the purpose of the fund, and any earnings that are in excess of this distribution are utilized in order to grow the market value of the fund.

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An endowment fund can continue to develop and offer support for its chosen purpose indefinitely if it is managed in this manner. By contributing to an endowment fund, you are leaving a lasting legacy of financial support for Duke University.

How much is the Duke Endowment?

How much is the Duke Endowment? The endowment at Duke University posted a return of 56% for the fiscal year 2021, making it the most recent endowment at a college in the United States to report eye-catching returns attributable to rising public markets and investments in private assets.

According to a statement released by the Durham, North Carolina-based university, the endowment reached a new high of $12.7 billion for the fiscal year that concluded on June 30, an increase of $4.2 billion from the previous year.

The rebound experienced by the endowment represented the highest one-year return it has seen since the 2016–2017 fiscal year when it achieved a return of 12.9%. In comparison, the endowment in 2010-2011 was approximately $5.7 billion, which is less than half of the fund that is currently available.

Every year, Duke allocates a specific amount of its endowment funds to meet its many financial obligations and priorities. The “spending rate” for any given year is always 5.5% of the endowment’s average value over the three years prior to the current year.

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According to the snapshot of the Duke endowment, this year 22% was allocated for the purpose of enhancing financial aid, and 20% was allocated for the purpose of supporting certain faculty jobs. The “unrestricted” support of the university receives close to one-third of endowed funds and accounts for the greatest amount of spending from these sources.

What is an Endowment?

What is an Endowment? The Duke Endowment was established with the intention of providing ongoing financial assistance to the faculty, staff, and students of the institution. The growth of the endowment over the years, which was accomplished through investment return and charitable giving, has made it possible for the university to provide scholarships and fellowships to students, build an excellent faculty, launch new programs and research efforts, and support a wide range of important needs.

As of the 30th of June in the year 2021, the Duke endowment consisted of more than 5,600 separate funds with a combined value of nearly $12.7 billion.

The university implements expenditure and investment plans that are intended to guarantee a consistent flow of support for the university’s annual operations while also protecting the endowment’s ability to make future purchases in the future.

The board of trustees at the institution is responsible for establishing and approving annual spending rates for the endowment’s individual units. This rate is intended to maintain intergenerational equity while also achieving the goal of balancing an inflation-adjusted level of spending with the growth in the value of investment assets to fund future spending.

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The market value of the endowment will increase to the extent that the overall investment returns will be more than the sums that will be distributed in accordance with the approved spending rate.

As of the 30th of June in the year 2021, around 20% of the endowment was earmarked to fund specific teaching posts, while approximately 22% was assigned to support financial aid. A sizeable portion of the endowment—nearly one-third—was set aside to provide unlimited financial assistance to the university, one of its schools, or one of its budget centers.

What Investment Firm handles Duke Endowment?

What Investment Firm handles Duke Endowment? The assets that make up Duke’s endowment are managed collaboratively. Each of the many funds that make up the university’s endowment owns units in Duke’s Long Term Pool, in a manner very similar to the way that individual investors pool their assets in a mutual fund (LTP).

DUMAC Inc., an investment organization with highly trained professionals and under the direction of Duke University, is in charge of managing the LTP. DUMAC is overseen by a board of directors consisting of 11 individuals, and the majority of the organization’s endowment assets are invested through financial advice firms and partnerships.

DUMAC is responsible for the management of the retirement pool for Duke employees, the investments made by the Duke University Health System, and the majority of the university’s operating capital. In addition, DUMAC is responsible for the management of the endowment for the university. DUMAC is also responsible for the management of the assets of The Duke Endowment, which is a private charitable trust created by James B. Duke, the founder of Duke University.

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DUMAC’s goal is to attain a yearly real rate of return of at least 5.0 percent, net of fees, in order to provide financial support for the university’s operating expenses and to enable the endowment to expand over time, taking into account the impact of inflation. Because of the inherent volatility in shorter time periods, this standard is evaluated throughout the course of an entire investment horizon.

The composite of 70% of the MSCI All Country World Index and 30% of the Bloomberg Barclays Aggregate Index (70/30) is yet another standard to be measured against over the long term. While the Bloomberg Barclays Aggregate Index is representative of the domestic bond market, the MSCI All Country World Index is representative of the whole global equity market.

This particular allocation of funds between equities and bonds was decided upon due to the fact that, historically, a 70% exposure to equity investments has been successful in achieving the university’s long-term goal of a real annual return of 5%. The LTP had a return of 55.9% for the year that ended on June 30, 2021, making it a successful investment. The MSCI All Country World Index got a return of 39.3% during that time frame, while the Bloomberg Barclays Aggregate Bond Index earned a return of -0.3%.

When it comes to delivering great investment returns while reducing portfolio risk and volatility, diversification across investment exposures is one of the most important factors. When it comes to managing investment exposures, DUMAC relies on a strategy that places an emphasis on the fundamental drivers of return. Although each exposure is responsible for its own unique function, together they contribute to the accomplishment of the portfolio’s overarching goals. DUMAC is responsible for risk management within the portfolio, including the control of excessive volatility.

This is accomplished via diversification not just across exposures, but also among the asset and sub-asset classes through which such exposures are gained. The long-term goals that DUMAC’s framework has set for each exposure are outlined in the table to the right.

Where is Duke Endowment Invested?

Where is Duke Endowment Invested? The endowment of the university consisted of more than 5,100 separate funds with a combined value of around $7.9 billion as of the 30th day of June 2017. The university implements expenditure and investment plans that are intended to guarantee a consistent flow of support for the university’s annual operations while also protecting the endowment’s ability to make future purchases in the future.

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The policy on the spending rate has been sanctioned by the Board of Trustees. In accordance with this policy, the rate is 5.5% of the average value of Long Term Pool units during the course of the three calendar years that have ended in the immediately preceding year. The funds that provide financial help are subject to a charge of 5.75 percent. These rates are regulated to maximum annual growth of 10% in order to assist smooth out the effect of volatility in the market while still allowing Duke to build up its endowment over the course of time.

As of the 30th of June in 2017, around 21% of the endowment was dedicated to funding financial aid, while approximately 18% of the endowment was designated to support specific faculty posts. A sizeable portion of the Duke endowment—nearly one-third—was set aside to provide unlimited financial assistance to the university, one of its schools, or one of its budget centers.

The purpose of the endowment at Duke University is to provide unending financial support for the university’s various people, programs, and activities. The growth of the endowment over the years, which was accomplished through investment return and charitable giving, has made it possible for the university to provide scholarships and fellowships to students, build an excellent faculty, launch new programs and research efforts, and support a wide range of important needs.

How much does it take to start an Endowment for Duke?

How much does it take to start an endowment for Duke? The Duke Board of Trustees has established varying levels of required minimum funding for the following categories of endowments:

  • With a donation of one hundred thousand dollars, a particular school or division, such as the Pratt School of Engineering or the University Libraries, will be able to establish an endowment that does not have any restrictions placed on it.
  • An endowment with a specified purpose, such as providing financial assistance to teachers working in the Arts and Sciences department, will be established with a contribution of $300,000.

Financial Aid

  • An endowed chair with a support budget of $1,500,000 will be created as a result of this donation.
  • An endowed chair supporting a professor of the practice will be established with a donation of $1,500,000.
  • An endowed chair with a value of $2,000,000 will be created in order to provide financial support for an assistant or associate professor.
  • An endowed chair with a salary of $3,500,000 per year will be created for a full professor.
  • An endowed chair with a value of $10,000,000 will be established in order to provide financial support to a member of the faculty who holds the prestigious title of dean.

Athletics

  • An endowment that will fund an associate or assistant coach can be established for one million dollars.
  • An endowment in the amount of $2,000,000 will be established in order to assist a head coach in a sport other than basketball or football.
  • An endowment in the amount of $5,000,000 will be established to provide financial support to the head coach of either the football, men’s basketball, or women’s basketball team.
  • An endowment in the amount of $5,000,000 will be established in order to assist the athletic director.

In addition, you have the option of naming an endowment after yourself, your family, a friend, a beloved former teacher, or even your business; the decision is entirely up to you. Your gift will be memorialized in the books as “The [Name of Your Choice] Endowment Fund.”

You also have the option of creating an endowment arrangement. Because of this agreement between the donor and the university, the function of the fund will always be known and understood. Additionally, the agreement details Duke’s normal operating procedures for the management of endowment money.

In order to guarantee uniformity in the administration of the endowment funds, Duke adopts standard wording for its endowment agreements. As we collaborate with you to build the endowment, we will engage in conversation with you about your preferences and suggestions throughout the process.

A contribution made by you through your estate plan can also be used to establish an endowment fund. In point of fact, a significant number of former students and friends have set up endowment funds by employing innovative strategies for estate and retirement planning. You and your advisors can get assistance from the Office of Gift Planning at Duke University in determining which of the above alternatives would be most beneficial to you.

Please be aware that the minimum funding levels that are stated above may increase at some point in the future. If this occurs, Duke will adhere to the giving requirement that is in place at the time that your donation is received by the university.

The expenditure distribution that is made from each endowment fund is used to serve the purpose that is defined in the endowment agreement that was made between the donor and the University. The University may assess reasonable charges against the market value of the endowment and/or distributions from the endowment in order to help defray certain expenses. These expenses may include the development and indirect costs associated with administering the endowment, such as space as well as academic and administrative support.

Duke will provide you with information regarding the value of the fund and the impact of your philanthropy whenever an endowment reaches the necessary funding level and starts generating spendable income. This will happen once the endowment has reached the requisite funding level. Donors who contribute to an endowment for financial aid will also be informed about the students who benefit from their scholarships and fellowships.

In the majority of instances, you will have the opportunity to get together with the students who benefited from your fellowship or scholarship. A scholarship and fellowship celebration is held at the university on an annual basis. The purpose of the event is to bring together scholarship and fellowship donors, recipients, and honors.

Furthermore, Duke Athletics hosts an event specifically for givers of athletic scholarships, and some of Duke University’s schools also host yearly scholarship celebrations of their own. In the event that you are unable to see your student at a campus event, the Office of Donor Relations at Duke University is able to set up a visit for you at another time while you are in Durham at a more convenient time for you.

If you need help putting the finishing touches on your college applications,  at AdmissionSight, we have over 10 years of experience guiding students through the competitive admissions process, including our athletic recruitment program.

AdmissionSight can help you put your best foot forward when applying to college this fall. Contact us today for more information on our services.

 

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