About the Endowment
Since Northwestern’s founding in 1851, alumni, parents, and friends have generously supported the University in its efforts to provide an unparalleled educational experience for students and to conduct research in a range of important areas. When you invest in the endowment, Northwestern accepts responsibility for ensuring that these contributions sustain their intended purposes in perpetuity.
Gifts to the endowment are invested in Northwestern’s Long-Term Balanced Pool (the Endowment Fund, or the Fund.) A widely diversified pool of assets, the Endowment Fund maintains the University’s capital investment, while providing a continuous and growing stream of income. Your contributions to the endowment enhance a multitude of resources benefiting students, faculty, and our entire academic community.
The Fund is stewarded by the Investment Committee of the Board of Trustees. Guided by policies established by the Investment Committee, the University’s Investment Office (the Office) invests this Fund. The Office manages about 6% of the Fund internally, chiefly a portion of the fixed income portfolio. For the balance of the Endowment Fund, the Investment Office employs outside investment managers in equity, the majority of fixed-income, absolute return, private equity, and real asset strategies. Directed by Vice President and Chief Investment Officer William H. McLean, the Investment Office is comprised of 16 members, including eight Chartered Financial Analysts.
The Endowment gained over 10% in fiscal year 2010, rising above $6 billion in asset value as of August 2010. Strong gains emanated from the Long Term Pool's public equity holdings as global stocks rose. In addition, numerous refinancings and increased acquisition activity bolstered returns in the illiquid asset classes. Increased distributions from private investments also had a positive impact on the University’s cash flow and the Endowment ended the fiscal year in a strong position.
Fiduciary Responsibility
Northwestern University's 1851 Charter - creates a corporation and a Board of Trustees with "perpetual succession" authorized "to acquire, hold and convey property...solely for the purpose of education." The Charter also authorizes the Trustees to "place out at interest, or otherwise depose of "property" for the use of said institution in such manner as to them shall seem most beneficial."
The By-Laws of the Board of Trustees establish an elected Committee on Investments to "advise the Board of Trustees with respect to investment and endowment, trust and general funds of the University" and to be responsible for developing and recommending...policies relating to such investments" and for "authorizing by resolution all appropriate actions by the officers or agents of the University" (Investment Office).
The Trustees of the University are subject to the standards applicable to Trustees generally, namely the Prudent Investor Rule. Trustees shall "display the skill and prudence which an ordinarily capable and careful man would use in that conduct of his own business of like character." Specifically with regard to investing trust funds, the Trustees shall "use the care and skill of a reasonably prudent investor."