Inside Furman, Winter 2006

A bullish endowment

Last month Harvard reported that the school's endowment had crested the $30 billion mark.

That's more than the annual gross domestic product of Estonia , Yemen and Panama – combined.

While Furman's endowment is a paltry $450 million compared to Harvard's, school officials can boast that Furman's nest egg outperformed Harvard's for the 2006 fiscal year.

While Harvard's endowment earned 16.7 percent, Furman's return was 19.8 percent. That's the highest among similar clients that Cambridge Associates, the university investment consultant, serves.

So, what does this mean?

Each year about 4.5 percent of the endowment is used to fund scholarships, endowed professorships and operating expenses. So a growing endowment will help meet the growing demands in these areas.

In spite of a somewhat sluggish stock market, Furman's endowment has doubled during the past eight years. Most of this growth can be attributed to new gifts , most notably the bequest of $115 million from John D. Hollingsworth '39, through the Hollingsworth Funds established in his will .

During the past decade Furman has recorded an average annual return of 11.2 percent. According to the National Association of College and University Business Officers, the 10-year average return for university endowments valued between $200 million and $500 million was 9.3 percent. To compare, the 10-year return for the S&P 500 was 9.9 percent.

While Cambridge helps craft the university investment strategy, most of the credit for Furman's better-than-average endowment return can be attributed to the university's investment committee, a collection of investment savvy trustees and friends. The group, chaired this year by David Ellison '72, monitors returns, approves asset allocations, and specific investments.

“This strong investment growth is reassuring to our friends and donors,” says Don Lineback, vice president for development. “It illustrates that we are taking great care with their investment in Furman and encourages more to give endowed funds.”

While Furman's endowment has grown significantly during the past decade, it still lags behind peer institutions in the “endowment per student” ranking, which is an accurate gauge of the university's financial resources. For example, Furman's endowment per student is approximately $158,000 compared to Richmond 's ($426,000), Washington & Lee 's ($304,866), Davidson 's ($227,000), Wake Forest 's ($215,000) and Sewanee 's ($179,000).

But this gap could be closing soon.

During the past decade the university's financial resources have funded an unprecedented capital improvement program. In recent years, the university has constructed two new academic halls and completed extensive renovations to Furman Hall and the library. A chapel, sports arena, university center, conference center and an on-campus apartment complex were also built during this time.

With construction of the Townes Center underway, improvements to the Lay Physical Activities Center on the drawing board and a new theatre under consideration, Furman is nearing the end of an almost fifteen-year-long building program intended to bring the quality of the facilities up to the quality of the faculty and students . Looking ahead, Furman plans to devote more of its resources to enhancing programs and providing more scholarship s and financial aid. Th e focus of the university's next fundraising campaign will be on growing Furman's endowment.

“With continued support and superior investment strategy, we expect Furman to compare favorably to our peer institutions in the important category of endowment per student,” says Lineback “More importantly this will help us be even more competitive in attracting and supporting our students and faculty.”