Endowment to fund Baylor 2012March 27, 2003
By Brandi Dean
The first 11 initiatives of Baylor 2012 will require some funding -- the 12th is to help provide it.
The final imperative of Baylor's 10-year vision is to build a $2 billion endowment for various uses such as sustaining a strong student scholarship program, creating excellence in academic and student life programming and providing support for key academic chairpersons and professorships, as well as simply enabling the other goals established in Baylor 2012. But that goal was set a bit before the economy soured, and now those responsible for expanding the endowment are scrambling.
By definition, the funds of the actual endowment never can be spent; rather, a profit is made from investing gifts made to the university. Tom Lindsey, the director of gifts and investment, said that at the end of February, the endowment was worth slightly less than $500 million -- down from slightly more than $584 million at the end of May. The endowment has decreased in size for the past two years.
Jonathan Hook, the chief investment officer and associate vice president of the office of investments, said there are two sides to the endowment -- the book value and the market value. When a donor gives When a donor gives a gift to the university, the actual worth of the gift on the day it's given is the historic dollar value, but its market value is what it is actually worth to the university at any given time.
'If the gift is in, say, stocks that are traded on the Dow Jones, you may have a gift of $100,' Hook said.
'But if the market goes down, and a week from now the stocks are only worth $80, that would be the market value versus the book value of $100. When the gift is underwater like that, then we can't distribute funds from the endowment on that portion. It does create some individual endowment accounts [that] you can't do anything with until the market value rises again. Every school is faced with that issue right now, and we deal with it the best we can.'
But Hook said that Baylor has actually done much better than the average market performance, and outside of the effects of the market, the endowment has been doing fairly well. Lindsey said the book value has been continually increasing.
'Our donors continue to be faithful, and [University] Development is doing a great job of raising money,' Lindsey said.
'It's just a very difficult time in the market.'
Dr. Jonathan Lindsey, the assistant vice president for donor and information services and vice president for university development, said that has made the endowment situation somewhat uncertain.
'That goal was set prior to the downturn in the stock market over the past several years,' he said.
'It was assumed to the natural growth of the endowment, plus gifts, could move it to that point. We'll have to wait and see.  is now nine years out, and you don't predict that far out.'
Hook said the original idea was to have the university's fund-raiser raise about half of the goal.
From that point the market would be able to make up for the other half. Now that may or may not happen. Still, those involved say it's not necessarily time to worry yet.
'Worry is probably not a good word to describe it,' Tom Lindsey said. 'We all understand the importance of the endowment goals being reached. The more operations and scholarships can be funded by endowment income, the less pressure there is on the other revenue sources -- tuition, fees, that kind of thing. So worry is probably not a good way to describe it. It just puts that much more pressure on the fund raising aspect of things. It puts that much more effort on making sound investment choices -- to be positioned in such a way that we really can take advantage of the market recovery when it does occur. And I believe we are.'