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Articles: Asset & Investments

The latest NACUBO-Commonfund Study of Endowments shows college increasing spending from their endowments. (Click to enlarge)

U.S. colleges and universities last year paid for operations with bigger chunks of their endowments to compensate for declines in key sources of revenue, particularly tuition and public funding.

The good news is that the average rate of return rose for the second straight year, from 11.7 percent in FY2013 to 15.5 percent in 2014, according to the “NACUBO-Commonfund Study of Endowments,” released in January.

Student success and retention, along with recruitment and enrollment, lead the way among the many areas that will see a fresh commitment of funding and other resources over the next 18 months.

Colleges and universities of all types and sizes are planning new investments in virtually all areas of operations as economic recovery entrenches itself in higher education, according to a University Business survey of campus leaders.

William M. Courson is president of Lancaster Pollard Investment Advisory Group.

Monetary policy in the United States took a dramatic turn with the introduction of quantitative easing after the financial crisis of 2008.

Although it achieved its primary objective by forcing down long-term interest rates, it also increased the supply of money in the economy, which has contributed to inflationary pressures in the past.

While we are fortunate to have witnessed a lengthy and very low inflationary environment, as money supply increases, the probability of higher inflation also increases.

Education is now one of the top five industries for reported cases of occupational fraud.

What do a private liberal arts college, a public community college and a high-ranking national university all have in common? Each recently reported six-figure occupational fraud losses.

At RIT, barcodes adorn all tech equipment, so when the internal auditing group conducts an asset audit, additional equipment beyond what is already tracked is rarely discovered by the team.

Tracking IT assets across a higher ed institution is tricky business. Depending on the college or university, it may be done by an internal audit group or IT, or a combination of both.

IT asset audits are important from a risk management perspective because they help schools track compliance with software licensing agreements, as well as state and federal requirements, and help them be more efficient.

In the life of an institution, the chief financial officer helps drive the big narrative, but also digs down into the day-to-day. A CFO is strategist and analyst, decision-maker and inspirer, and protector and possibility-seeker all in one.

Education is an industry undergoing exciting and dramatic transformation. Some recent trends and developments in the space include: Common Core Standards, MOOCs (massive open online course), game-based learning, blended learning, marketing, recruitment, and a host of ancillary specialized services. These industry changes, along with advances in technology, have stimulated the growth of educational companies and have spurred the interest of private equity investors.

The prospect of employees with more money to invest, easier-to-understand investment options, more personalized customer service, and lower fees has colleges and universities rethinking their retirement plans and moving toward a single retirement services vendor.

When a group of venerable, high-profile universities that includes Georgetown and Villanova announced late last year that they were leaving the Big East, it may have seemed like just the latest reshuffling of collegiate athletic conferences in what has come to feel like an endless game of musical chairs. All of this recent turmoil in collegiate athletics is just a symptom, however. The larger problem is money—or, to be more specific—a lack of money.

Student groups at more than 60 college and universities hosted events to raise awareness and push for fossil fuel divestment as part of 350.org’s #FossilFreedom Day of Action.

Disputes over intellectual property (IP) rights have been around as long as faculty members have been producing ideas. Whether it’s a cure for a disease, a textbook, or even a syllabus, ownership and IP rights are dictated by a policy at every college and university in the United States.

There are seven areas of oversight that trustees of higher education institutions should consider as fiduciaries. Mistakes in any of these areas can negatively impact the expected growth and risk profile of the portfolio, and in turn, the institution’s financial well-being.

Mistake #1: Not Tracking Total Investment Portfolio Performance

The pace of change in the business offices of universities has never been faster. All eyes are on how institutions will manage the challenges of cost containment pressures, lower federal and state support, and the changing marketplace for higher education. With more demands on your resources—including personnel, capital and time—you have to ensure you are getting the most out of your business partnerships.

The Rutgers (N.J.) spying case and the Penn State abuse scandal, among others, highlight the liability risks of all types facing colleges and universities. From the other end of the risk spectrum, Tulane University’s (La.) long struggle to rebuild and recoup losses stemming from Hurricane Katrina illustrates the complexity of property damage risk management.

California Gov. Jerry Brown, with students and teachers behind him, gestures during a news conference after voting Tuesday, Nov. 6, 2012 in Oakland, Calif. The governor talked about his support for Proposition 30 that will increase funding for schools and public safety. (AP Photo/Eric Risberg)

While voters across the nation were glued to their screens last night counting electoral votes, the higher education community was holding its breath awaiting the answers on a number of important ballot initiatives, proving this year’s election was truly about more than blue and red for higher ed.

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