There’s a new goal for the Texas Tech University System endowment. It’s not a capital campaign - just a mark that officials at the system’s four component institutions and Chancellor Robert Duncan are hoping to meet by 2023, the 100th anniversary of the university.
Duncan estimates the endowment by the end of this year will be about $1.3 billion. The goal now is to increase that to $2 billion in five years.
“We’re trying to be very goal-driven in our philanthropy,” Duncan says. “And by that, what I mean is we have a purpose. We have a lot of big ideas that need to be supported by philanthropy.”
Reaching the endowment goal, Duncan says, would increase the amount of income earned from the system’s investments. That income, used in accordance with the donors’ wishes, would benefit both students and faculty.
“Most of those endowments are scholarships or fellowships for professors,” he explains. “So, it’ll increase the amount of money that’s available to fund those types of activities. For example, today we distribute about $52 million a year off of our endowment. If you go to $2 billion, based on all the assumptions that you would use, it would produce about $80 million a year.”
According to information from system Vice Chancellor and Chief Financial Officer Gary Barnes, the system’s invests in multiple market sectors, including equities, debt and private investment. That allows for the system to maximize potential and returns while balancing for risk, which is managed all the time. The system works with 63 investment managers that include 98 funds.
For most of the system’s history, philanthropic activities were handled at the system level. That has changed since 2014, when Duncan became chancellor. Before the change, the system would determine or suggest priorities for each component institution.
Now the presidents of each component institution, who know their separate needs and goals best, have more autonomy. Texas Tech, Angelo State, the Health Sciences Center in Lubbock and the one in El Paso, undertake their own fundraising.
Duncan says each institution has its own development officer.
“We have been in the process of restructuring our organizational chart and our organizational structure to make sure that the institutions, under the direction of the president of fundraisers, that are there. We provide services to the institutions, we have the database. We do stewardships. We provide research. We provide the financial services and the record keeping. We do all of those things centrally. But at the end of the day, the presidents control the priorities of the institution.”
There is a new type of endowment the system is introducing. Duncan says construction endowments can utilize the system’s exceptional bond rating.
“So you raise money to build a building—you get a 10 million dollar gift—well you put that in the long-term fund and allow the long-term fund to grow interest and you pay the debt service out of that construction endowment. When you defuse those bonds, then you still have principle left and you’re able to use that principle for purposes such as maintaining the building or whatever the donor and you negotiate in the beginning of the endowment,” he says.
Duncan stresses that he isn’t stepping away from fundraising activities and if asked, will go meet with potential donors at any of the four institutions.
He believes centralizing support services will bring efficiency to the system’s philanthropic effort to reach the $2 billion goal.
“Fundraising and philanthropy is now an industry. It has its own standards for fundraising and what you can count as a gift and what you can’t. Of course there are a lot of legal issues as it relates. The federal income tax ramifications of philanthropy, when you have tax law changes and things like that, you’ve got to have the expertise to make sure you’re in compliance,” he says.