ByGeorge!

February 2007

GW Endowment Crosses $1-Billion Threshold

GW has announced that its endowment recently surpassed the $1-billion mark, with a market value of $1,019,222,920.92 as of Dec. 31, 2006. When President Stephen Joel Trachtenberg joined GW in 1988, the University’s endowment stood at approximately $200 million. Nineteen years and $800 million later, GW has become the first university in the nation’s capital to reach a $1-billion endowment.

“This is a significant achievement for the University and everyone who has worked so hard to build this financial foundation, including Executive Vice President and Treasurer Lou Katz, Board Chairman Charles T. Manatt, current and former Investment Committee Chairs Russ Ramsey and Mike Curzan, and a very dedicated Board of Trustees,” says Trachtenberg. “Going forward, our success will depend on our ability to provide superior educational opportunities, attract world-class faculty, and continue to provide state-of-the-art technology and a first-class living and learning environment. Historically, GW has relied heavily on tuition. But tuition won’t get us there now. We will need to rely more on endowment. We are at the point where we can applaud our success to date, while emphasizing the need to keep driving forward on all fronts. Only a firm financial foundation will allow the University to remain flexible and first rate.”

The recent surge in GW’s endowment comes predominantly from investment gains, as well as gifts. During the 2006 fiscal year (July 1, 2005-June 30, 2006) the GW endowment produced a 19.7 percent return, investment earnings of $159 million, and received more than $20 million in gifts and other transfers, bringing its total market value to $963.6 million as of June 30, 2006. GW’s endowment swelled by more than $55 million net of spending in the first six months of the 2007 fiscal year, resulting in its current $1 billion-plus market value.

“It is a source of tremendous pride that this milestone has been achieved on our watch,” says Charles T. Manatt, J.D. ’62, chairman of the GW Board of Trustees and founding partner of Manatt, Phelps & Phillips, LLP. “President Trachtenberg has worked tirelessly for two decades to help us reach this moment and the entire GW family is indebted to him. As a result, we move forward with strength and confidence to meet the formidable challenges that lie ahead.”

For all of its successes, GW still lags behind peer institutions in two important measures: endowment funds per student and the percentage of operating budget financed by endowment funds. “The management and performance of GW’s endowment has grown by leaps and bounds,” says W. Russell Ramsey, B.B.A. ’81, vice chairman of the GW Board of Trustees, chairman of the investment committee, and chairman, CEO, and CIO of Ramsey Asset Management. “It was only a decade ago that the University’s endowment crossed the half-billion dollar mark. However, we recognize that more work needs to be done to ensure we can meet the needs of this University and make GW’s endowment competitive relative to our peer institutions over the long term.”

In the past three years the market value of GW’s endowment has increased by more than $325 million. During that timeframe, nearly $110 million has been distributed from the endowment to support University activities. Endowment distributions provide support for scholarships, fellowships, academic and research programs, libraries, and other endowed programs.

The growth of the University endowment benefits current and future GW students. An annual payout from the GW endowment frees up other funds to support endeavors including academics and student life. In 2004 a 5 percent payout from the endowment provided the University budget with $34.3 million. The 5 percent payout budgeted for fiscal year 2007 will provide GW $46.3 million, a $12-million increase from just three years prior.

The investment committee of GW’s Board of Trustees managed the University’s endowment from 1996 to 2003, but it became clear that a dedicated, full-time staff was required. In April 2003 Donald Lindsey was hired as the University’s first chief investment officer. Lindsey worked with the Board of Trustees investment committee to retool the asset allocation of GW’s endowment, reducing holdings in traditional asset classes such as real estate, U.S. stocks, bonds, and cash, while diversifying into private equity, commodities, and hedge funds. In the three-year period leading up to Dec. 31, 2006, the GW endowment generated a net annual return of 17.8 percent, significantly outperforming the composite benchmark return of 11.7 percent.


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