Forever Valpo Fundraising Campaign

[valpo95]

 

The true colors of the Indiana AG, Todd Rokita, are showing up with a very ugly head.

This related to Forever Valpo Fundraising? Or is it because Rokita was critical of VU's Confucius Institute in 2021, when Valpo was one of the last remaining Confucius Institutes that had not been closed by their host institutions? (VU closed it on March 1, 2022.)

[historyman]

The true colors of the Indiana AG, Todd Rokita, are showing up with a very ugly head.

This related to Forever Valpo Fundraising? Or is it because Rokita was critical of VU's Confucius Institute in 2021, when Valpo was one of the last remaining Confucius Institutes that had not been closed by their host institutions? (VU closed it on March 1, 2022.)

Well, at least once it was mentioned but for the life of me I can't find it anymore. This thread has wandered around to so many different topics that Hansel and Gretl would have been lost even if they had dropped warehouses of food while trying to find their way. Lawyer Rokita has errored greatly in thinking the trend of the people towards a conservative agenda outweighed the actual law. He should have been much more careful and saw it as a political opportunity. 

[valpo95]

The FY 2022 NABUCO results are out, and it shows the VU endowment was at $326.7M. This is good for #276 in total amount. This places VU just a bit behind Bradley, and just ahead of Butler, Drake and Gustavus Adolphus for example. You can see the entire list here:

https://www.nacubo.org/-/media/Nacubo/Documents/research/2022-NTSE-Public-Tables--Endowment-Market-Values--FINAL.ashx?la=en&hash=362DC3F9BDEB1DF0C22B05D544AD24D1C44E318D

Note that the endowment for VU shows a change of -6.81%: This is the net change (additions - withdrawals + investments gains/losses).

[David81]

The FY 2022 NABUCO results are out, and it shows the VU endowment was at $326.7M. This is good for #276 in total amount. This places VU just a bit behind Bradley, and just ahead of Butler, Drake and Gustavus Adolphus for example. You can see the entire list here:

https://www.nacubo.org/-/media/Nacubo/Documents/research/2022-NTSE-Public-Tables--Endowment-Market-Values--FINAL.ashx?la=en&hash=362DC3F9BDEB1DF0C22B05D544AD24D1C44E318D

Note that the endowment for VU shows a change of -6.81%: This is the net change (additions - withdrawals + investments gains/losses).

That % loss is mild compared to what many other universities experienced. Those losses generally didn't wipe out the huge gains from a year or two ago, but they stung.

Not unlike the experience of tracking one's retirement account over the past year..... 🤣🤣🤣

[vu72]

The FY 2022 NABUCO results are out, and it shows the VU endowment was at $326.7M. This is good for #276 in total amount. This places VU just a bit behind Bradley, and just ahead of Butler, Drake and Gustavus Adolphus for example. You can see the entire list here:

https://www.nacubo.org/-/media/Nacubo/Documents/research/2022-NTSE-Public-Tables--Endowment-Market-Values--FINAL.ashx?la=en&hash=362DC3F9BDEB1DF0C22B05D544AD24D1C44E318D

Note that the endowment for VU shows a change of -6.81%: This is the net change (additions - withdrawals + investments gains/losses).

That % loss is mild compared to what many other universities experienced. Those losses generally didn't wipe out the huge gains from a year or two ago, but they stung.

Not unlike the experience of tracking one's retirement account over the past year..... 🤣🤣🤣

So I looked at our conference peers and found the following:

Bradley         $341 Million
Valpo              327
Belmont          302
Drake              245
IL State           180
So. IL              172
N. Iowa           163
Murray St.       100
Evansville         99
Missouri St.       98
Indiana St.        80

UIC doesn't have their own but is supported by the Illinois University endowment.
Butler would rank fourth at $253.

So, on a per student basis, Valpo is ranked No. 1.  in our conference.

[usc4valpo]

That's nice but nothing something we can feel overly outstanding about. Valpo is in a funk and ee still cannot get project funding and we are in the situation to sell artworks for an important need to update residential facilities.

[vu72]

That's nice but nothing something we can feel overly outstanding about. Valpo is in a funk and ee still cannot get project funding and we are in the situation to sell artworks for an important need to update residential facilities.

It isn't the answer in and of itself but it's part of the answer.  The answer in a larger enrollment.  But, without the endowment everything would be much worse.

[crusadermoe]

Sorry, but there is a yellow light ahead for endowment funds.  They are awesome tools when the market is rising, especially when it rises well beyond your annual spending rate.

My understanding is that those funds cannot pay out if their value is lower than the original gifts total. So with the market's recent declines do we have yet another iceberg on the budgeting horizon? 

David81 or someone else could probably confirm the way that  endowment funds work in down markets.

[vu72]

David81 or someone else could probably confirm the way that  endowment funds work in down markets.

This may be helpful:

From the NACUBO website:

Endowments are not rainy-day funds. Endowments are managed to provide colleges and universities with a steady and reliable source of funding over the long term. Investment strategies and spending policies are designed to soften the impact of volatile markets. The 2019 NTSE found that 74 percent of institutions spend a percentage of the moving average of the endowment's market value. A moving average approach softens the impact of market fluctuations by applying spending rates to an average of prior-year endowment balances, such as the past three years, five years, 12 quarters, or even 20 quarters.

Spending policies vary, but as an example, in FY20, a college with a 5-percent payout rate that uses a three-year moving average will withdraw 5 percent of the average value of the endowment over the past three years (not simply 5 percent of the current value).

[crusadermoe]

Ok, good.  That makes sense.

Maybe a trailing average will be fine for now if that is what they use.

[crusadermoe]

The market has come roaring back in 2023. The S&P is up 20% YTD.  It has nearly gained back all the 2022 losses. I sure didn't see that coming in the face of high interest rates on fixed investments. 

Perhaps an extra distribution in 2024 can help bridge us to a better enrollment.

[historyman]

The market has come roaring back in 2023. The S&P is up 20% YTD.  It has nearly gained back all the 2022 losses. I sure didn't see that coming in the face of high interest rates on fixed investments. 

Perhaps an extra distribution in 2024 can help bridge us to a better enrollment.

So this coming presidential election will have a great impact on VU too.

[valpo95]

The market has come roaring back in 2023. The S&P is up 20% YTD.  It has nearly gained back all the 2022 losses. I sure didn't see that coming in the face of high interest rates on fixed investments. 

Perhaps an extra distribution in 2024 can help bridge us to a better enrollment.

I think it helps, yet let's not get too excited.

In round numbers, if VU's endowment was at $350M and it went up 20%, it would be an increase of $70M (to $420M). Assuming a 5% payout rate on the endowment, that would translate into $3.5M of additional spending from the endowment for the year. VU has an annual budget in the range of $120M of spending, so an additional $3.5M of revenue is helpful yet not a game-changer. Note however that the endowment is not all invested in the stock market, so probably the growth in the endowment is less than the 20% of the S&P 500.

The downside is that VU has about $150M of structural debt. Much of that is long-term construction debt which stays at a fixed rate. Yet there was about $21M borrowed on a line of credit - the terms of which went from approximately 2% interest rate in 2022 to I'm guessing about 5.7% for 2023. So, that would result in additional interest costs of about $800K assuming the line of credit borrowings stayed the same.

Net-net, nice to see the endowment grow which helps secure the future of VU.  In the short run, the additional revenues are more than the additional spending, yet probably not enough to make a huge difference in one year.

(Most of my numbers come from the 2022 audit report, so perhaps things have changed.)

[valpopal]

The market has come roaring back in 2023. The S&P is up 20% YTD.  It has nearly gained back all the 2022 losses. I sure didn't see that coming in the face of high interest rates on fixed investments. 

Perhaps an extra distribution in 2024 can help bridge us to a better enrollment.

Yes, I have enjoyed seeing investments start a return to respectable levels, and I am hoping the predicted cuts to the Fed rate in 2024 will keep the momentum going. Plus, I have heard some good news that early enrollment numbers at VU are especially encouraging, though the application landscape and the university's acceptance schedule have changed a bit this year, so comparisons to the past are difficult thus far. However, contrarian economist Harry Dent is bucking the trend of optimistic outlooks and predicting a depression-like crash in 2024, and numerous media observers are warning that the next year could match or surpass 1968 in political or social disorder, which I remember well even as a high school kid. So, who knows? I am hoping for the best, but my guess is that everyone should fasten their seatbelts as the new year approaches because the next 12 months are guaranteed to offer a bumpy ride.

[vu84v2]

While I certainly hope that enrollment is going well, I suggest being cautious when any general comments about enrollment that are not accompanied by data. Further, there are really only three measures that are good indicators: # of visits, prospective students who have stated that they will enroll, and deposits. Given that applying to more universities is easy once someone has applied to one, the number of applications is essentially meaningless.

[valpopal]

While I certainly hope that enrollment is going well, I suggest being cautious when any general comments about enrollment that are not accompanied by data. Further, there are really only three measures that are good indicators: # of visits, prospective students who have stated that they will enroll, and deposits. Given that applying to more universities is easy once someone has applied to one, the number of applications is essentially meaningless.

My comment was made after seeing all the data, including the three categories you mention. I don't rely only upon others' reports. However, my continued caution is based upon a later than usual federal funding schedule and a new earlier VU acceptance schedule.

[vu84v2]

valpopal - Thanks...and I should have said thanks previously when you posted the update.

[crusadermoe]

Valpo1995 points out well the structural deficit issue vs. the endowment bump I mentioned.  The board should address those before giving itself an "out: through an extra chunk of spending.

He also says the 2023 market growth is mitigated by some VU fixed investments. And maybe they use a  trailing average that also mitigates the effect.  But the good market year does help in any case.

[crusadermoe]

We raised a ton of money ($250 million) in our big ENDOWMENT campaign that ended in 2021 of 2022 and it was widely heralded as a Heckler legacy.   

So:

With the strong market rebound in 2023 (well over 25%), how much endowment income is forecast for the 2024-2025 academic year? How will that compare to 2023-2024 and prior years?

And of course that "Forever" money from Heckler was alleged to raise spendable money too.  Where did that money go?

[KreitzerSTL]

of course that "Forever" money from Heckler was alleged to raise spendable money too.  Where did that money go?

https://www.valpo.edu/valpomag/2022/01/14/forever-more/

Found this article from '22. Around $30M went into annual giving for immediate-use spending on student scholarships.

[David81]

An easy peasy, back-of-the-envelope answer to "how much endowment income is available for immediate spending?" is to multiply the current endowment by 4 percent, which is the standard draw to ensure that the principle continues to grow.

Bigger percentage draws because the endowment just had a fabulous year are a possibility, but it may be much wiser to hold onto the money to ensure that you can draw more than 4 percent during down years for the market.

[vu84v2]

An easy peasy, back-of-the-envelope answer to "how much endowment income is available for immediate spending?" is to multiply the current endowment by 4 percent, which is the standard draw to ensure that the principle continues to grow.

Bigger percentage draws because the endowment just had a fabulous year are a possibility, but it may be much wiser to hold onto the money to ensure that you can draw more than 4 percent during down years for the market.

Agree with the philosophy presented by David81, but from my experience talking with advancement and finance people within universities the annual draw is usually 5 percent unless, for individual items, doing so draws the item under the original donation amount.

[David81]

An easy peasy, back-of-the-envelope answer to "how much endowment income is available for immediate spending?" is to multiply the current endowment by 4 percent, which is the standard draw to ensure that the principle continues to grow.

Bigger percentage draws because the endowment just had a fabulous year are a possibility, but it may be much wiser to hold onto the money to ensure that you can draw more than 4 percent during down years for the market.

Agree with the philosophy presented by David81, but from my experience talking with advancement and finance people within universities the annual draw is usually 5 percent unless, for individual items, doing so draws the item under the original donation amount.

vu84v2 is right...around 5 percent is often the presumptive draw...sorry, I keep mixing up with retirement funding standard draw of 4 percent. (Not that I'm thinking about that any time soon......😆)

[valpo95]

The 2023 NACUBO study is out - a full version is available here https://www.nacubo.org/Research/2023/Public-NCSE-Tables.

This is for fiscal year 2023, which runs from July 2022 to June 2023.

It shows that VU is #287, with a total endowment market value of $315M. This is down from $326M in FY2022. This is a decline of 3.4. Note that this is not the investment return; this is the net impact of additions to the endowment, withdrawals from the endowment, and investment gain or losses. (For reference, Harvard had the highest endowment value of 49.5B, a 0.1% increase from 2022).

Compared to some of our similarly-sized private peers, VU had a larger decline. Bradley was up 1.6, Belmont up 6.7, Gustavus Adolphus up 4.8, Butler up 5.6, Drake up 8.8. Of course, if they had large contributions to their endowments, that would be reflected in their increases.

[vu72]

The 2023 NACUBO study is out - a full version is available here https://www.nacubo.org/Research/2023/Public-NCSE-Tables.

This is for fiscal year 2023, which runs from July 2022 to June 2023.

It shows that VU is #287, with a total endowment market value of $315M. This is down from $326M in FY2022. This is a decline of 3.4. Note that this is not the investment return; this is the net impact of additions to the endowment, withdrawals from the endowment, and investment gain or losses. (For reference, Harvard had the highest endowment value of 49.5B, a 0.1% increase from 2022).

Compared to some of our similarly-sized private peers, VU had a larger decline. Bradley was up 1.6, Belmont up 6.7, Gustavus Adolphus up 4.8, Butler up 5.6, Drake up 8.8. Of course, if they had large contributions to their endowments, that would be reflected in their increases.

This is significant.  The S and P 500 index advanced roughly 16% during this period, which means there must have been a net withdrawal of some size to equate to the net result stated.