Well-endowed has never been the first adjective that comes to mind when describing Georgetown, but that is slowly changing. Last week, the University’s endowment was ranked 61st largest in the country by the National Association of College and University Business Officers, up six spots from last year’s rankings. This climb reflects prudent fiscal management and bodes well for Georgetown’s financial future.
Much of Georgetown’s recent rise in the rankings is due to the University’s deft response to the recession. The endowment’s losses in fiscal year 2009 were smaller than the national average. The endowment turned around in fiscal year 2010, earning $114 million for a gain of 12.8 percent. Georgetown’s endowment now stands at over $1 billion again, as it did before the recession. Georgetown’s shrewd but conservative management was helped along by a great deal of luck—in the form of a $75 million gift from the McDevitt family—but the positive net change still represents an encouraging sign for the future health of the University’s endowment and overall finances.
Much of this sound guidance came from Georgetown’s recently departed Chief Investment Officer Larry Kochard. Hired in 2004 to be the University’s first CIO, Kochard vastly improved Georgetown’s fiscal situation in his six years here by professionalizing the school’s investment management and enacting defensive investment policies to combat the effects of the recession. Hopefully the replacement for Kochard, who left in early January, will follow his example of aggressive oversight and prudent investing.
While the endowment’s growth is impressive on its own, it is even more notable that Georgetown has been able to make such gains while remaining focused on its other fiscal priorities, such as financial aid and funding for essential construction projects. While the endowment was sliding back to pre-recession levels, the University also raised $17.3 million in scholarships through the 1789 Initiative and finally found a way to finance the construction of the new science center, a project that was put on hold by the recession. In an age when universities often come under fire for hoarding funds in their endowments, it is reassuring that the success of our endowment has not been accompanied by scrimping on other necessary projects.
Despite its progress, Georgetown’s endowment still has much room for growth. Georgetown is still one of only two schools ranked in the U.S. News and World Report top 25 national universities whose endowment is not in the NACUBO’s top 40. Furthermore, the endowment still only covers a very small portion of the University’s operating budget (6.8 percent as of fiscal year 2009), leaving the rest to be paid by high tuition fees. Georgetown still doesn’t have the endowment it needs, but with progress like this, someday it could.
CORRECTION: This article originally stated that Georgetown’s endowment was recently ranked 67th largest in the country by the National Association of College and University Business Officers. In fact, Georgetown’s endowment is currently ranked 61st. The Voice regrets this error.
