Conflating the University of Michigan’s management of its successful, transparent and essential endowment with the horrific criminal activity of a sexual predator is irresponsible, incomprehensible and false.
The Free Press’ Feb 4 editorial (“Can MSU, U-M overcome burden of old boys’ network?”) and the endowment stories it references invent conclusions and peddle innuendo not supported by facts. It also says, “It’s fair … to expect the schools to provide answers.” U-M did.
U-M provided Free Press reporters with 15 years of annual investment reports, copies of gift agreements and links to hundreds of other documents posted publicly on our website. Our chief investment officer, two vice presidents, and I gave extensive interviews. U-M additionally responded to several follow-up rounds of questions asked by reporters.
Unfortunately, the claims made in these stories and editorial are not supported by this material.
We have said all along that our endowment’s purpose is to provide sustained resources to support our students and academic programs. The $4 billion in endowment distributions to the university’s budget that have been generated over the last 20 years that support student scholarships and university programs is evidence of our success and the endowment’s importance. Without donor and endowment support, annual tuition in Ann Arbor would be nearly $6,000 higher per student. This success requires that we achieve the highest returns through the best investments.
Only a small fraction of the endowment is invested with firms associated with members of our Investment Advisory Committee. In fact, 98% of U-M investments are managed elsewhere. This volunteer committee meets twice a year to help us assess the overall investment landscape. They DO NOT evaluate or approve individual investment opportunities. It would be irresponsible if we did not reach out to these industry-leading alumni for their high-level advice.
When potential investments meet our stringent endowment criteria, we seek to invest. The 2% of our endowment invested in well-managed funds affiliated with committee members were evaluated the same way we evaluate all investment opportunities.
We also take issue with any suggestion that U-M is investing in Pittsburgh to the tune of $220 million. This refers to a bank in Pittsburgh that invests some of the university’s cash in federal Treasury Bills and other government securities. The university created a website to present facts that we believe refute this and other inaccurate assertions in the articles.
University investments through the endowment get stringent oversight from our elected Board of Regents. The university also provides investment updates at each Regents meeting and publishes an annual report of investments.
Board oversight, rigorous professional investment management, and a record of sustained growth have made the University of Michigan endowment a critical component of our ability to advance our mission of research, education, patient care and public impact. Our 20-year annualized return of 9.7% ranks in the top decile for long-term investment performance.
For fiscal year 2017 alone, our endowment provided a $325 million distribution, and when coupled with the $314 million we received from the state, supports our mission and impact. The $325 million endowment distribution directly benefited students, faculty, staff and programs in Ann Arbor, Dearborn and Flint. These are real people who rely on these investment returns to learn, teach, conduct research and serve our great state. False conflations and innuendo won’t change that.
Published on Freep.com on Feb. 9, 2018