The University's endowment has reached a new record high after having 12.9 percent returns for fiscal year 2018.
Board of Trustees members learned at their September meeting that the endowment has ballooned to $8.5 billion as of June 30. This is the second record-breaking year in a row for the endowment, which grew to $7.9 billion as of June 30, 2017.
Jack Bovender, chairman of the Board of Trustees, noted the returns had jumped by six-fold since what was projected a few years ago, when the U.S. economy expected to see two percent returns.
“So the economy is obviously doing much, much better,” Bovender said. “Stock prices have gone up significantly. The DOW JONES has gone up significantly, and so has our returns—12.9 percent returns.”
The endowment contributed $416 million to Duke's operating expenses for 2018, with funds going towards financial aid, faculty salaries, athletics and facilities. In total, the payout from endowments and investments for 2018 was $598 million. In 2017, the endowment contributed $416 million and the total endowment and investments contributed $534 million.
The value of Duke's endowment has nearly doubled in the last nine years. In 2009, it was valued at $4.4 billion and grew to $7.3 billion in 2015, before dipping to $6.8 billion the next year.
At $8.5 billion, Duke’s endowment would be on the cusp of breaking into the top-10 largest endowments in the United States based on the 2017 rankings.
“The wellbeing of the economy and the wellbeing of the stock market and the other kinds of investment opportunities that we have impinge a lot on what we’re eventually going to be able to do about a lot of the issues ranging from student housing to science initiatives going forward,” Bovender said. “Of course, at some point we’re going to talk about another capital campaign, but that has got to be sized.”
Before the campaign can be sized, however, the Advancing Duke Science & Technology Task Force will have to come back with benchmarks about what is needed in its area, Bovender said.
“We’re not ready to declare [the campaign] anytime soon,” Bovender said. “It’s going to take some thought, preparation and planning.”
The effects of the endowment’s growth will be seen in various areas, the chairman said. Bovender noted financial aid as one beneficiary, as gaps in financial aid funding is filled in by unrestricted funding from the University.
“Our purposeful focus on recruiting more first generation students puts a bigger and bigger burden on financial aid. We’re committed to doing this, so this becomes an important part of having the resources available to do that.”
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As for the effects of the increased returns on Duke’s capital projects, Bovender addressed the housing gap.
“The Hollows won’t solve the housing problem created by tearing down Central Campus,” Bovender said. “So we’re going to have to do some more construction.”
Executive Vice President Tallman Trask has plans for financing the construction, Bovender said.
The endowment is overseen by DUMAC, Inc., which is the professional organization that handles the University and health system's investments.
“As we think about some of these things we’re going to need to tackle, DUMAC becomes an increasingly important part in this,” Bovender said.
In other business
The September meeting was the Board’s first gathering under its new governance structure, which divides the group into task forces and committees. Bovender said the feedback from the trustees on the new structure has been positive so far.
Correction: This article was updated Monday morning to reflect the correct distribution of endowments and investment funds to the University's operating expenses from 2017 and 2018. The Chronicle regrets the error.