Financial Plan, 2007-2010

[HoyaOnBothSides]

Not sure if this was posted when it came out, but after reading today's times' article about the NYU endowment's goal of raising $2.5 billion
( www.nytimes.com/2006/12/25/education/25nyu.html?_r=2&ref=nyregion&oref=slogin&oref=slogin ), did some snooping on the georgetown webpage and found the budget projections for the next 4 years...

www.georgetown.edu/finaff/budget/finplan.pdf

I never really had a good understanding of georgetown's finances, but this gives a pretty good start...You can see the budget allocations to various projects you always hear about (Performing Arts Center, new MSB buliding) and their sources of funding..


Of course, it is difficult to gather things just from these projections alone, but a few things jump out (at least at me) right away, especially regarding the endowment.

1 - If NYU and other top schools are going on BILLION dollar fund-raising campaigns, it is pretty sad that we only expect to raise $70-$80million a year (pg 8)..how can we possibly expect to stay competitive with these other schools? Our endowment is projected to grow to only $831million (p.11) by 2010...that's only a 14% increase over 4 years! Even with meeting endowment liabilities, the endowment should target far greater growth irregardless of further donations. Which brings me to:

2 - The Endowment's targets and returns seem somewhat misguided (p66) - the endowment is projected to generate a long-term 8% return with 12% volatility? That is an awful risk-return target. Not to get into it here, but considering you can get 5% risk free, targeting only 8% with 12 vol is terrible..if you look at top performing endowments, they all invest far less than georgetown in volatile (public equity) markets. If the investment goals are truly long term, it seems silly to put so much in equity markets while their fixed income investments are pretty much zero and their hedge fund and PE investments are small compared to very well performing institutions such as Yale.

Good article - etf.seekingalpha.com/article/20922

3 - I guess this can be viewed as a good or bad thing (don't know the history of it too well), but Georgetown is not expected to have positive income until 2010..regardless, this probably holds Georgetown back immensely considering the strengthening financial situation of its top competitors for talent. The gap may not be obvious now, but it probably will be more and more..not to mention the possible trickle down effects of creating additional research opportunity (and income) for the faculty if other schools are pumping more money into facilities, etc..


Anyway, I think it's a very interesting slow-day-at-work read...guess overall it is a mixed bag...enrollment, tuition, and research increases paint a positive picture, but the hospital debt and endowment are not as great...sadly, as the times article states, it seems like college is more and more about fundraising and economic growth...whether or not and how georgetown deals with that will be interesting...

Happy holidays everyone, go hoyas!

[hilltopper2000]

I am extremely confused by these fundraising numbers. When I worked in development we raised between 100 and 150 million each year -- with well over $20 million going to the endowment. Here is the website for the office of development last lists the cash raised in 2005 to be significantly higher than what is listed in this document. advancement.georgetown.edu/giving/highlights.html

The 2006 numbers are even more perplexing as I imagine the Prince's $20 million arrived this year. (He wouldn't have to pay it all at once, but I wouldn't be surprised if he did.)

Further, we are planning a new campaign. Our realistic target should be to raise nearly $200 per year. That is extremely realistic based on what I saw in the last campaign.

[StPetersburgHoya (Inactive)]

That plan was hard to read - someone should tell them that a significant number of the pages of the report are sideways.

[Cambridge]

Didn't Georgetown just complete a billion dollar campaign?

[Deleted]

cambridgehoya said:

Didn't Georgetown just complete a billion dollar campaign?

Yup.

[hilltopper2000]

Top schools never stop -- after one campaign ends you begin planning for the new one.

[reformation]

A few thoughts:
1)Georgetown is not competitive now(not close either) as a research institution with the schools listed in the NYT article(e.g. Columbia, NYU, Cornell-this shouldn't be news to anybody. I don't think that we are targeting our fundraising to be competitive with big research institutions, though some of our peers have pulled themselves into that league(Duke, Nwestern etc, while we have not.
2)The fundraising gap between Gtwn and other peers(really undergrad admissions peers) is getting bigger and could cause Gtwn to slip as a competitive instituion--or maybe not--we've treaded water for a long time with the same financial handicaps offset by positives like location etc.
3)I've heard that our new fundraising campaign is for $500mm. This is surprisingly low-its a # that I would expect from a liberal arts college.
4)NYU, Columbia, Cornell etc have world class research proposals that drive their fundraising goals. They also are very directly competing with each other. These institutions measure themselves by clear criteria like the # of top 10 depts and organize their fundraising to match these objectives--Gtwn really doesn't seem to work that way--in the few cases where Gtwn has clear and competitive goals like the GSP program for financial aid it seems to do pretty well.
5)The types of programs that Gtwn chooses to focus on and raise money to support have pretty limited and vague objectives- and really don't require a lot of money--Religion in world affairs, numerous ethics programs etc--these programs are fine but they are not what institutions with big fundraising plans focus on.
6)My real worries are both that we're kind of halfway between a real research institution and a good liberal arts college and really not focused on excellence in either objective and that the university's top management is improving in quality but still very weak compared to the schools you mention in a few key positions.

[dairishhoya]

reformation said:

A few thoughts:
3)I've heard that our new fundraising campaign is for $500mm. This is surprisingly low-its a # that I would expect from a liberal arts college.

Not sure where that number came from, but what has been discussed publicly is a campaign for a minimum of $1.5 billion. As you know, the firmness of that number depends on the success of the silent period, which I believe begins shortly (this summer perhaps?). Also, I have heard $2.5 billion as the possible high goal being sought.

[nychoya3]

I don't think we can take a step back in terms of the goals of our campaigns - that strikes me as poor imagery if true, and I seriously doubt that it is.

Lots to mull over here - who manages GU's fundraising operation?

[DFW HOYA]

nychoya3 said:

Lots to mull over here - who manages GU's fundraising operation?

Two links of particular interest:

advancement.georgetown.edu/leadership/

advancement.georgetown.edu/leadership/vision.html

[SoCalHoya]

Well, there is certainly something "silent" going on right now...I am impressed with our new advancement leadership. However, I want to see results.

[DFW HOYA]

Jim Langley really understands what is at issue with a campaign and also realizes that in numbers as big as Georgetown is reaching, it can't just keep going to the well of the same Annual Fund supporters time in and time out. With over $60 billion donated in the US last year, Georgetown needs to be reaching those foundations and organizations who can make the big gifts. To date, Georgetown's largest gift was $30 million, and that was in stock that was worth considerably less when it was redeemed. GU needs nine figure gifts.

Of course, Georgetown has to be realistic. It could double its endowment tomorrow and be about where BC is now, but still be $2 billion behind Duke, $4 billion behind Columbia. Harvard earns more in interest on its endowment than Georgetown's entire endowment is right now.

Georgetown is 78th in endowment, not only trailing every one of its academic peers out there but such names as Rochester, Richmond, Delaware, Cincinnati, Southern Methodist, GW, Syracuse, Tulsa, and Alabama. Even tiny Grinnell College in Iowa has a larger endowmrent:

www.nacubo.org/documents/about/FY05NESInstitutionsbyTotalAssets.pdf

It's also important not to make the mistake of the last campaign, which communicated that it was a "$1 billion capital campaign". In fact, only a fraction went to the endowment and much of it was just paying the bills. (That's why Georgtown's endowment is still circa $700 million even after the $1B effort.)

[HoyaOnBothSides]

dfw said:

Jim Langley really understands what is at issue with a campaign and also realizes that in numbers as big as Georgetown is reaching, it can't just keep going to the well of the same Annual Fund supporters time in and time out. With over $60 billion donated in the US last year, Georgetown needs to be reaching those foundations and organizations who can make the big gifts. To date, Georgetown's largest gift was $30 million, and that was in stock that was worth considerably less when it was redeemed. GU needs nine figure gifts.

Of course, Georgetown has to be realistic. It could double its endowment tomorrow and be about where BC is now, but still be $2 billion behind Duke, $4 billion behind Columbia. Harvard earns more in interest on its endowment than Georgetown's entire endowment is right now.

Georgetown is 78th in endowment, not only trailing every one of its academic peers out there but such names as Rochester, Richmond, Delaware, Cincinnati, Southern Methodist, GW, Syracuse, Tulsa, and Alabama. Even tiny Grinnell College in Iowa has a larger endowmrent:

www.nacubo.org/documents/about/FY05NESInstitutionsbyTotalAssets.pdf

It's also important not to make the mistake of the last campaign, which communicated that it was a "$1 billion capital campaign". In fact, only a fraction went to the endowment and much of it was just paying the bills. (That's why Georgtown's endowment is still circa $700 million even after the $1B effort.)

Great Points, DFW.

What's more, if you look at the financial statements, Georgetown has over $700m in debt, which makes the small endowment all the more worrisome. For a comparison, Notre Dame has a $5.3billion endowment to cover less than $500m in debt..overall Georgetown's assets/liabilities is terrible (1.9B/1.05B gtown, 6.05B/0.8B ND, 44.3B/9.4B Harvard). Sad to say, the endowment income does not even cover the Interest expense on this debt! Endowment income should be used to fund impovements to the University.

Of course, this is just one sign that doesn't mean much without context, but it is yet another warning sign. Something just seems fishy when (from the above posts) it seems that fund-raising is going well, tuition and enrollment are sky-high, yet the endowment hardly grows and overall, things could certainly better financially.

[StPetersburgHoya (Inactive)]

What are the chances that even if President DeGioia realizes that improving the financial standing of the university is his top priority and even if he is well liked by the Board of Directors the debt/endowment issue will be his undoing and one of the major issues in the next presidential search?