$1,152,138,000
- Thread starter Big Frog II
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Deep Purple
Full Member
An endowment is an institutional trust fund that is invested to yield a spendable return. The return is applied to the institutional budget, which keeps tuition rates lower than they would otherwise be. That's one way an endowment is used.
An endowment can also be reserved for a specific program, position, or purpose. In that case, the endowment earnings underwrite the expenses or operating costs associated with the entity. TCU's Campus Beautification Endowment pays for maintaining and replanting all the colorful flowering beds on campus. The endowment for a faculty chair pays for the enhanced salary that comes with the chair. At many institutions, you can even endow football team positions, which pays for the scholarship cost of that position. (The Frogs have a couple of endowed positions.)
Endowments are valuable because they free an institution from the need to commit earned revenue to a particular area, allowing them to shift that revenue to other uses. In short, endowments are an institutional wealth-enhancer, which is why they become a bragging point.
UT-Austin's investment of $1 billion of its endowment in gold bullion is an attention-grabber, but not a huge deal. Institutions are always mixing the assets in their endowment portfolios to achieve the best return, just as individuals do with their personal portfolios. UT has decided that the world's governments are printing too much money, so the value of currency could decline. Since they believe gold will hold its value, they're investing in gold as a hedge against currency devaluation.
This is meaningful if you're an investor, you trust UT's judgment, and you want to follow (or at least consider) their lead. Otherwise, it grabs attention simply because its gold. It could just as easily be some other commodity like coffee or crude oil or copper.
FeistyFrog
Sir FeistyFrog
Wow, you probably think the Hoover years were great!
TCUdirtbag
Active Member
The benefit of being a private school is you don't have to tell anyone what you're invested in. TCU has a chief investment officer who runs the investments/endowment. Lord knows what crazy stuff we're invested in.
jake102
Active Member
It's not that crazy... I've seen the Board of Director's year end report.
FeistyFrog
Sir FeistyFrog
Hey Deep, kind of on topic, can you explain the 6666 Ranch gift, not just how it is valued but how it evolved to its current state.
Never understood what actually transpired and what is the remainder now. Assume it is royalty interests but thought at one time TCU had an interest in the operations, etc.
Thanks for all the explanations.
Deep Purple
Full Member
No, the responsibility is not nearly that concentrated nor is the decision-making that arbitrary. TCU's CIO doesn't run the investments/endowment by himself, nor can he invest in whatever he wants to. If he did, he wouldn't keep his job long. The CIO is governed by investment policies issued by the Board as recommended by the committee on Finance & Investments. He's required to operate within those boundaries.
Both the Board and the Finance & Investments committee contain some very knowledgeable investment managers who have a long track record of success, so TCU does pretty well -- better than most, in fact. Our financial and investment policies are conservative enough to be prudently risk-averse, but not so conservative as to miss sensible opportunities.
Endless Purple
Full Member
Sounds like TCU is very fortunate to have many skilled leaders throughout the university.
Deep Purple
Full Member
I'm not up on the details, since it isn't my area of fundraising. From what I understand, when she died in 1924, Mary Couts Burnett left almost her entire estate -- including a half-interest in the Four Sixes -- to TCU. The value at the time was about $4 million, which in inflation-adjusted 2011 dollars is about $52 million. But that doesn't account for the subsequent gains in market value on the estate, which (last I heard) had translated to around $400 million. I don't how it all played out, but today the Four Sixes interests are more divided. Anne Burnett Windfohr owns half the surface and half the mineral rights, the Tom L. & Anne Burnett Trust owns half the surface rights, and TCU owns half the mineral rights.
The Burnett estate became the foundation of TCU's endowment and is still the biggest piece of the endowment.
FeistyFrog
Sir FeistyFrog
Thanks, I was always curious how TCU lost control (or gave up control) of the ranch after the gift. Never really understood the behind scenes working on that but I am sure it had to do with some battles over the estate assets.
FeistyFrog
Sir FeistyFrog
Kind of an aside and not TCU related, but dealing with endowments in general. Had a client a few years ago with an endowment that stipulated that the corpus was to remain in Dallas Power & Light stock and its predecessors. It was rolled into TEDESCO & TXU without problems but obviously the attorneys never foresaw the company eventually going into private hands (EFH). It was more than an interesting wrangling to get approval on both the election vote for the EFH bid and how to handle the proceeds.
Stiff Arm Frog
Active Member
Awesome thread. I notice there aren't many threads of this sort on ShaggyBevo. Had this been posted over there the responses probably would have amounted to, "You know who's really well endowed? This guy! BOOM!"
I also imagine a thread like this posted on BaylorFans would have gone something like, "Your endowment is a fluke."
Also Deep, if you're still fielding questions, do you know what kind of deal TCU has worked out involving the Barnett Shale? I always hear people mention revenue from natural gas (Chesapeake I believe is the company we have the deal with) as a boon to our finances. What kind of royalties do we get off those mineral rights, and how far does our reach extend? Are we just pulling in revenue off the campus, or does TCU own other real estate in this area that would supplement that?
Just curious.
I also imagine a thread like this posted on BaylorFans would have gone something like, "Your endowment is a fluke."
Also Deep, if you're still fielding questions, do you know what kind of deal TCU has worked out involving the Barnett Shale? I always hear people mention revenue from natural gas (Chesapeake I believe is the company we have the deal with) as a boon to our finances. What kind of royalties do we get off those mineral rights, and how far does our reach extend? Are we just pulling in revenue off the campus, or does TCU own other real estate in this area that would supplement that?
Just curious.
TCUdirtbag
Active Member
1. You completely missed the point.
2. I nor most of the posters here are idiots. No one is dumb enough to think the CIO pulls investment decisions out of thin air for the hell of it. Every administrator at TCU is governed by policies set by the Board and its committees.
The point is that TCU's investments aren't subject to public scrutiny in the ways public university endowments are. For example, if UT had interests in BP circa summer 2010, the hippy Austinites would've flipped [Craig James] over environmental "concerns" / "ethics" about investing in a company like BP. TCU doesn't have to worry about stuff like that, as the only people who know what our portfolio consists of are high-level administrators and the Board, which meets in confidentiality and does not disclose minutes of meetings, much less any substantial info on our endowment. This is of great benefit to TCU because it allows the school, through the office of the CIO, to make investments based on the market and not public-politics. This gives TCU the ability to be a little less conservative, make some growth-motivated investments even if they might be publicly a little controversial, and in turn provides potential for faster growth.
Power of Purple
Ticket Exchange Pass
Completely agree. TCU is one of the best run schools in the country. I know they used to have a policy of no debt and not building anything until the entire project was paid for, is that still the case? I think that may have changed in the late 1990's when they decided to start building a lot more. Anyone know?
Deep Purple
Full Member
I can't answer most of your questions as far as numbers , percentages, etc. I do know that in 2007 TCU was negotiating an on-campus drilling lease with Chesapeake, but backed off due to strenuous objections from the local neighborhoods. (I don't blame the neighbors one bit. I'd have objected too.)
After haggling throughout 2008, in 2009 Chespeake proposed four alternative sites. From my understanding, those sites are: 1) the railyard on 8th Ave near the intersection with Elizabeth Blvd, 2) Merrimac Circle off University Drive, near I-30, 3) the north side of the Trinity opposite Colonial, between the river and the W Vickery railyard, 4) off Granbury Road. Chesapeake will use those four sites to develop the mineral rights in most of near-southwest Fort Worth, including TCU. Work on some of these sites is proceeding, on others it's still being negotiated.
TCU was key in making this deal work when we walked away from the idea of on-campus drilling. We lost a lot of leasing fees by doing that, though we will still collect royalties. As one West-side blogger put it:
...TCU left a lot of money on the table [in] doing [this]. However, the money it would have made by having a surface drilling site on the campus would have been more than offset by the bad will generated by having more than 40 homes that would have been considered high impact, including some as close as 220 feet to the proposed site.
I can't tell you the royalty amounts because I don't know. I do know that TCU's developed campus covers about 274 acres, and the university owns another 25-27 acres of residential lots that haven't been redeveloped for campus use.
cdsfrog
Active Member
Here is an allocation as of end of 2009. Thought you guys might like it.
Link listed Below figures
Domestic Equities: 18%
Marketable Alternatives: 16%
Energy: 15%
International Equities: 12%
Private Equities: 11%
Fixed Income: 11%
Real Estate: 7%
Global Equities: 5%
Balanced Funds: 5%
Balanced Funds: 60% Stock/ 40% Bonds allocation
Private Equities: Stocks not publicly traded (Facebook, Twitter, LinkedIn etc)
Marketable Alternatives: Cute way of saying Hedge Funds
http://view.vcab.com/?vcabid=egeSreehSchenpj
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Link listed Below figures
Domestic Equities: 18%
Marketable Alternatives: 16%
Energy: 15%
International Equities: 12%
Private Equities: 11%
Fixed Income: 11%
Real Estate: 7%
Global Equities: 5%
Balanced Funds: 5%
Balanced Funds: 60% Stock/ 40% Bonds allocation
Private Equities: Stocks not publicly traded (Facebook, Twitter, LinkedIn etc)
Marketable Alternatives: Cute way of saying Hedge Funds
http://view.vcab.com/?vcabid=egeSreehSchenpj
Page 3. Slow Loading
Deep Purple
Full Member
I didn't suggest or even imply that anybody is an idiot, so please don't put words in my mouth. And I believe it's you who missed the point. See below.
In the first place, TCU's investments are subject to public scrutiny. More on this below. In the second place, they're subject to even more demanding scrutiny than that. Between the Investments office, the Board, and the auditors, our investments are scrutinized more thoroughly than any public body would do. So when you make statements like this...
TCU has a chief investment officer who runs the investments/endowment. Lord knows what crazy stuff we're invested in.
...it sounds precisely like you're saying, "The CIO pulls investment decisions out of thin air for the hell of it."
Very convincing-sounding speculation, but in fact TCU does have to make its investments public. Like all non-profits, public and private, TCU files an annual disclosure statement with the IRS in order to maintain its non-profit status. The disclosure is supposed to ensure that non-profits operate transparently so that donors know what they're supporting. It requires a non-profit to list all sources of revenue, including investments, in detail. This is a public document containing publicly available information.
Also, public institutions do not necessarily invest more conservatively than TCU. Many of them (I could name names) took a total bath during 2007-2009 because they were positioned in high-risk/high-yield ventures that failed when the financial and real estate markets collapsed. TCU also took a major hit (literally everybody did), but far less than most.
In 2009, the National Association of College & University Business Officers (NACUBO) released a survey showing that TCU had the 27th best-performing endowment in terms of yield out of 791 colleges and universities reporting. That's among the top 3% in endowment performance. Other key takeaways from the NACUBO report:
- TCU's endowment assets rank as the 57th largest of the 791 colleges and universities surveyed.
- The endowment is the 38th largest of the 522 private schools.
- TCU ranks 109th in endowment assets per student.
TCUdirtbag
Active Member
TCU's IRS disclosure forms are (1) not all-inclusive, and (2) their release is delayed. By the time annual disclosure forms are released to the public the past investment decisions are long "past." In the world of investment, IRS disclosure data is useless by the time it's released--not to mention summary in nature.
And also, I did not miss my own point. Nor do I appreciate the condescension. I am not a fool.
The idea that a private non-profit's investments are subject to more strict scrutiny than a government-owned institution is just hilarious--because it's so wrong.
And also, I did not miss my own point. Nor do I appreciate the condescension. I am not a fool.
The idea that a private non-profit's investments are subject to more strict scrutiny than a government-owned institution is just hilarious--because it's so wrong.
Goo
Active Member
Who is "we"....I don't think TCU Endowment appreciated 26% last year.
In fact, I believe TCU has underperformed over the last few years
Even Goo is proud of this statistical manipulation. GW took office after market had just grown more than 150% on the back or 90's Bull market and internet boom. By comparison, Obama took office within a month of the nadir of worst Bear market since Great Depresion. Stocks were down 47% in the months prior to Obama taking office.
Obviously neither President can take any credit for stock market moves. Heck, more than half of the run-up occurred in the first few months of Obama when had done nothing. What Obama can take credit for is increasing national debt from $10.6 trillion when he took office to more than $12.4 trillion this year.....and growing...and growing
