More than a numbers game

At the fall Board of Trustees meeting two Saturdays ago, Duke released its long-awaited endowment figures for the preceding fiscal cycle. As reported by DUMAC, the organization in charge of overseeing the university’s investments, Duke University’s total endowment now stands at $7.9 billion after having experienced 12.7 percent growth for fiscal 2017. Peer institutions have also reported similarly impressive endowment figures, with universities like Brown reporting a 13.4 percent annual return on its $3.5 billion endowment and Stanford reporting a 13.1 percent net investment return for its $24.8 billion endowment. 

All in all, Duke’s strong endowment figures for this year bode well for the University as a whole. After all, a significant portion of Duke’s annual multi-billion dollar budget originates specifically from the endowment. A stronger endowment results in more funds being made available for concrete improvements in the overall university, such as financial aid, construction and research. Nonetheless, much of the attention concerning the endowment is often directed towards its surface-level numbers than what such fiscal improvements can actually represent. More than just congratulating ourselves on a successful fiscal cycle, students and community members should seek to understand the tangible improvements that can be made to the university setting with such funds. 

Similar to our obsession with college rankings, our collective attention to such news surrounding university endowments often coalesces around comparing the “winners” and “losers” in each numbers-driven rat race for collegiate supremacy. Harvard’s relatively laggard 8.1 percent return on its $37 billion endowment was even criticized as “disappointing” and “not where it needs to be” by the CEO of its endowment. Similarly, the New York Times described Yale’s 11.3 percent return on its $27 billion endowment as “disappointing” and “laggard” for the Ivy League school. At 12.7 percent, on par with Cambridge Associates’ preliminary mean one-year return for 450 institutions in fiscal 2017, Duke’s annual rate of return for 2017 seems to signify for prestige-minded Dukies that we currently remain abreast of our elite peers.

Such a purely prestige oriented approach to understanding the endowment, however, often ignores the real, tangible and diverse improvements to Duke, such as improving financial aid, that can be made using such funds. As of late, certain Congress members have pressured heavily endowed universities to spend more on financial aid or risk losing their tax-exempt status as not-for-profit institutions; Duke should heed the call and make its own financial aid overhaul through our improved finances. Despite at the time possessing an endowment over two and six times that of Johns Hopkins and Georgetown respectively, Duke in 2015 reported a higher average annual tuition cost than both lesser-endowed peers. Duke also remains one of the few elite institutions in the country to still maintain loans within its financial aid despite universal moves by peer institutions towards a no-loan policy. Certainly, it is quite feasible for some portion of the improved university endowment to be devoted towards revamping financial aid at Duke. 

The improved financial state of the endowment represents an important opportunity to fund key changes to our university, especially in areas in which we remain laggard. Instead of merely congratulating ourselves on growing our endowment at similar rates to peer institutions, we as a university should aim to make physical, tangible changes—such as better financial aid—to Duke using our much improved finances. More than just representing a giant hedge fund dedicated to outperforming Harvard or Brown, the mission of Duke’s endowment is “to support the people, programs and activities of the university in perpetuity.” As a university with an $8 billion endowment, we should strive to do exactly that.