The hundreds of pages of publicly available (and sometimes not so publicly available) reports on various aspects of Duke's finances offer a unique and detailed picture of the inner-workings of our university. As an organization run by academics, statements about Duke's priorities, intentions and actions are often sweeping, vague and flowery-but the application of Deep Throat's famous command in "All the President's Men" lets us see what's really going on:
"Follow the money."
So, what does following the money show us? What is the big picture?
The image that is overwhelmingly clear from both statements from Duke officials and from Duke's financial statements is that the University is growing, at an astonishing rate and with no end in sight. What the financial reports specifically show is what "growing" means, how fast we're growing and what tangible benefit that growth brings to the students, the community and the institution.
First, let's consider how fast we're growing. In the last four years alone, the total value of Duke's net assets has increased 54 percent, from $4.437 billion to $6.826 billion. In 1991, the University's total assets were listed as a mere $1.814 billion. Although these figures are not adjusted for inflation, it's still clear just how far we've come in the last 15 years. We are also not merely increasing the dollar value of our assets but also gaining ground on some of our peers.
But "growth" can mean other things. In the last four years alone, $835 million worth of new buildings have been constructed or our currently under construction. The quality of each new incoming class has risen every year; increasingly recognized names are joining the faculty. While our $3.292 billion endowment doesn't come close to Harvard's $22 billion, our number-five overall ranking in U.S. News & World Report isn't that far behind them at number-two. As an institution, we are on our way up.
Given our already high standing, at what point do we stop growing? What's the ultimate result of this constant fundraising and building and rebuilding? Are we growing to ultimately have the best students, free tuition, free cable TV, single dorm rooms, better research funding, more faculty, nicer buildings, better athletics, or what?
No one knows the true answer to that question, but based on other institutions, our own past and statements about the future, we can glean some idea as to what these billions of dollars will mean in the immediate and distant future.
The biggest beneficiary in this monetary explosion has been and will continue to be the endowment itself, which has absorbed most of the growth over the past 15 years. Duke's endowment has increased six-fold since 1991, and the money it generates will ultimately be spent in a number of ways.
Endowments generate annual returns from a principal investment-the bigger the principal, the bigger the return. Duke spends a portion of the endowment every year (generally around five percent) and Duke's current spending rate is designed to grow the endowment, meaning that (for the most part) more and more return will be generated by an ever-increasing principal investment. How much endowment is enough? Nobody knows-Harvard's endowment is almost seven times our own and they are still actively growing it. The answer to the question of how the returns will be used is both complicated and far from certain.
Unfortunately, there is no (immediate) end in sight for continual increases in tuition and continually lackluster financial aid that leaves many students with five-or six-figures of debt after graduation. Although we are undertaking a major campaign to increase the portion of the endowment that supports financial aid, that campaign will only serve to free up operating money currently spent on financial aid for other uses that have not yet been articulated.
And although community is such an integral part of the college experience, Duke's growth will not serve to significantly improve student life in non-academic respects. Duke lavishes money on research and other academic pursuits, but all non-academic divisions (auxiliaries) of the University are required to be, in aggregate, self-sustaining-requiring as a whole no help from the endowment or the operating budget. Except for a few instances, the generosity of private donors and the increase in the endowment has not and will not translate into significant tangible improvements in undergraduate life. An extra $2 billion for Duke probably won't mean free phone service, better parking or C1's on the weekends.
What will benefit are the academics and reputation of Duke, which have been bolstered by the construction of CIEMAS, Bostock, the Rubenstein addition and other projects. Our increased endowment will mean that we will be able to do more and better research, construct more academic buildings (the University's "Master Plan" includes 21 separate projects which are currently under construction, recently completed or slated to begin construction) and attract more and increasingly renowned professors. Maybe in the distant future, we will even be able to decrease tuition or endow auxiliaries.
But for now, the "big picture" is that we are sapping every source of money we possibly can to grow as quickly as possible. While it's unclear exactly what Duke's future holds, money is certainly an integral part of it. We do have to ask ourselves, however, are we growing to ultimately serve the public good or solely to further our own institutional ambitions?
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