Paige Lange | Contributing Writer
“Endowment” isn’t a word that’s common to most students’ vocabulary. But if you’re in college, it’s more important than you might think.
The endowment at a university is an investment fund that is set up to collect money. The dollars are then invested in different places and the interest used by the university for a variety of purposes.
The APU website provides a more specific explanation of the goals of the endowment: “The endowment contains general funds and funds established for scholarships, professorships (endowed chairs), special programs, university departments and outreach ministries.”
The money for the endowment is collected through donations and the interest from the investments in the fund. This total is broken up and allotted to different school needs as decided by the board of trustees. The school spends less than 5 percent of the interest and reinvests the rest of it into the endowment.
We, as members of the APU community, must work to increase our endowment and establish a renewed focus on building this fund. When this endowment gains strength, it supplies a steady revenue stream.
“The vast majority of endowed programs at APU are scholarships,” said David Bixby, executive vice president.
This means that the larger the fund gets, the more money the school has to spend. With this money, departments are able to hire better professors, improve and maintain buildings and even put more money toward scholarships for students.
“We know to make APU affordable and sustainable and accessible. We’ve got to continue to move towards endowment and finding other alternative revenue streams so we can keep tuition costs down,” Bixby added.
So how much money do universities really have in their endowment funds? What is a reasonable amount of money to target?
According to Forbes, Harvard is sitting pretty with the largest endowment in the U.S. At $32.3 billion in 2013, this endowment seems to explain the stunning campus buildings and renowned teaching staff.
According to APU’s website, the university’s endowment was at $52.7 million as of 2013 and according to Bixby, it is closer to $60 million now.
“Since 2011, we’ve raised about $15 million towards endowment in estate planning gifts, current gifts and pledges,” said Bixby. “I would guess that in the next five or six years, we would be at $100 million.”
Of course, that number is significantly lower than Harvard’s since APU is not a well-known Ivy League school. The top 22 schools with the highest funds hold half the U.S. endowment wealth, according to Forbes. So where does that put Azusa Pacific in the ranking when it comes to the schools to which it is most comparable?
Biola University is a great school to compare with APU. Biola and Azusa Pacific are both part of the Council for Christian Colleges & Universities. But the main differences between the two schools are that Biola’s student population is lower than APU’s but its endowment is larger.
Biola’s endowment has spiked in the last couple of years, and now has over $100 million. The fund is almost double APU’s, despite Biola having an undergrad enrollment of a little more than 4,300 students and the Cougars having an undergrad enrollment of about 5,800.
By creating an endowment growth policy to expand the budget, Biola increased its donations. Officials created different trust funds and also have been investing 50 percent of extra dollars into the endowment every year.
“We have to continue to think about growing our endowment and finding different revenue streams,” said Bixby.
These different revenue streams come from Charitable Remainder Trusts or buying and leasing property. Bixby said the only way to get donors was to make them believe in the school.
“They must really believe in the university; they must believe in the university’s leadership,” said Bixby.
Just like these donors, we must believe in the university as well. Despite a desire for current funds, we need to continue to work to invest in the future of the university and put money into the endowment fund.
“There’s the tyranny of the urgent,” said Bixby.
When it comes to APU’s endowment, we need to act responsibly in addressing our current needs while still preparing for the future of the university. Raising the endowment fund and continuing to increase revenue through Charitable Remainder Trusts and other investments will help to increase money for future scholarships. By investing in the school, the school can similarly better invest in its students.