Temple endowment grows by 12 percent

Temple’s endowment grew last year where other universities took a loss, some by nearly 11 percent, due to the recent downturn in the stock market.

Universities invest endowment money donated by alumni and other private individuals and groups. The universities manage part of the funds, with outside trustees managing a portion as well. The monies’ returns are then used for scholarships, research and other things.

In a story dated Sunday, Aug. 26 in The Philadelphia Inquirer quoted Temple’s endowment growth as 12 percent for the year ending June 30. Minus contributions from the year, the rate of return was closer to 6.7 percent. This number represents just a portion of the endowment that Temple manages on its own, which is approximately $122 million. Outside trustees run the remaining amount for the University as per contributors’ demands.

An estimated $10 million was added to the endowment through contributions, while the remaining came from returns on investments, to total nearly $156 million.

Martin S. Dorph, the University’s Treasurer, said last year was “a good year for contributions to Temple’s endowment.”

That number is lower than in previous years, but when compared to other indexes during the same period, Temple’s rate of return was larger than the Standard & Poors 500, a major stock index that lost 14.82 percent. Bonds, on the other hand, returned between 10.5 and 11 percent.

Temple’s middle ground return is a result of a change in its investment strategy. A year ago, that strategy was mostly bonds, but the Business & Finance Committees voted to change the endowment investment strategy. The current standing is closer to 78 percent fixed income (i.e. bonds and cash) and 22 percent equity (i.e. stock). By 2003 Temple’s strategy will be a more lucrative 50/50.

Temple has been slowly adjusting its investment strategy by moving $5 million out of bonds and into equity each quarter for 10 quarters. At the end of September, $20 million will already have been moved.

The stock market is slumping, but the University is still pushing ahead with its move to stocks, though the strategy is always subject to review by the Business & Finance Committee if certain return criteria are not met.

“Sometimes a good time to buy is when the market is down,” Dorph said.