At the Fall Board of Trustees meeting last weekend, the University released its long-awaited endowment figures for the 2018 fiscal year. As reported by DUMAC, the organization tasked with overseeing Duke’s investments, the University’s total endowment now stands at a whopping $8.5 billion, up from last year’s record high of $7.9 billion. Buoyed on by relatively strong growth rates in the private financial sectors—especially the stock market—Duke drew in a 12.9 percent return on its investments, far exceeding the average 8.3 percent gain reported by endowments of all sizes in fiscal 2018 so far.
Duke, like most research universities, derives a large part of its annual budget and operating expenses directly from its endowment. Consequently, the financial health of the University, and its operations, is directly correlated with the health of its endowment. When the endowment experienced a nearly 20 percent reduction in market value in fiscal 2009—a casualty of the early Great Recession—Duke cut back on a number of projects, including a plan to renovate Central Campus and plans to expand financial aid. Given the relative financial robustness of our current endowment, it makes sense that we should take advantage of our newly-grown dollars to improve the quality of the University, striving to spend more on the various facets of the Duke experience that seem somewhat lacking.
Financial aid represents one such category that could benefit from the injection of our new endowment dollars. Recently, institutions possessing lesser endowments than Duke’s have announced drastic improvements in their financial aid programs. Rice University—with an endowment of less than $6 billion—announced only a few weeks ago that it will begin providing full-tuition scholarships for every student whose families earn less than $130,000 a year. Most of our peer institutions that possess endowments comparable to, or much less than, $8.5 billion—Northwestern, Brown and Vanderbilt to name a few—boast no-loan financial aid policies. Moreover, as reported by the Chronicle in 2015, Duke’s average cost of $28,058 (at the time) exceeded average costs at Georgetown and Johns Hopkins, despite Duke’s endowment far exceeding both peer institutions’ ($3.5 billion and $1.5 billion respectively).
Responding to the Chronicle in 2015, Alison Rabil, director of financial aid, noted that “Until we are in a financial position to expand our award parameters, I don’t believe we will be changing our packages or expanding our policies anytime in the near future.” With an $8.5 billion endowment, is it finally time to use our financial position to expand our award parameters?
In the ever-growing college admissions arms race, there has been a growing trend in higher education toward improving campus amenities at the expense of more important academic concerns. To attract the so-called “best” students, universities are spending more and more of their operating costs on gourmet dining, luxury housing and other facets of campus life that do not necessarily contribute to a better academic environment. Massage chairs in Edens, a movie theater in Trinity and a gelato vendor in West Union are nice, but they do not represent the most pressing concerns that Duke faces as a research institution in the 21st century. Funding more tenure-track academic positions, improving graduate student stipends, constructing livable (not necessarily the most luxurious) dorms and improving other more pertinent matters central to the University’s mission should be the focus of our new endowment wealth.
Finally, as an institution with an $8.5 billion endowment, we should look closely at our investments and discern whether or not they truly align with the mission statement of Duke University. Last year, via the infamous Paradise Papers, it came to light that Duke possessed a number of investments in Ferrous Resources, an iron mining company in Brazil with a somewhat problematic environmental record. Given the opacity and size of the university’s many investments, it is perhaps impossible to determine if every facet of Duke’s multi-billion endowment has been invested in a socially responsible manner. However, Duke’s status as an international, non-profit research university dedicated to “Knowledge in the Service in Society,” should deter us from investing in explicitly problematic industries and areas of the world. Duke’s successful divestment from Apartheid-era South Africa in 1986 and Sudan in 2008 should act as models of socially responsible investing for the University moving forward into the 21st century.
$8.5 billion should not just represent some abstract measurement of institutional worth for us in the Duke community. More than just an arbitrary mathematical variable in the many college rankings Duke is a part of, our endowment has the ability to directly improve our quality of education and life as students and community members at a major research university. Financial aid, socially responsible investing (and divesting) and other important areas of the institutional infrastructure would benefit greatly from the infusion of our new endowment wealth.
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