WSU leaders give presentation on endowments and investing strategies

Leaders from the WSU Foundation and the university's Finance and Administration team provided an overview of investments and endowments during a livestreamed presentation Wednesday afternoon.

Explanations of how endowments function, the different investing strategies the foundation and the university follow, and the tools used to maximize returns for the benefit of students and the wider university community were discussed by WSU Foundation President Mike Connell and Vice President for Finance and Administration Leslie Brunelli.

The complete presentation is available to watch online.

Central to the discussion was the distinction between the WSU Foundation and the university itself. While the former does support the latter, it was established long after the university and is responsible for investing private donations and funds that don't include student tuition or state tax dollars.

The WSU Foundation manages approximately $722 million spread across more than 2,900 endowment accounts. The vast majority of that funding comes from private donors seeking to support a specific cause, such as scholarships for students, endowed faculty or deanships, as well as specific programs and activities.

When a donation is made, the foundation enters into agreement with the donor to invest the funds and use revenue generated in support of the agreed upon cause, Connell explained. On average, 4% of the endowment total is distributed each year. That amounted to $27 million in endowment distributions from the Foundation in fiscal year 2024.

The WSU Foundation uses an outside firm, Mercer, to assess the best way to allocate its funds. The largest portion of its funds, about 23%, are in U.S. equities, while significant portions are invested in private and international equities as well as hedge funds and real assets.

The Foundation does not purchase shares in individual companies. Rather, fund managers working on behalf of the university use tools like index funds to diversify investments in pursuit of maximized returns while minimizing risk. As an example, Connell noted that Mercer couldn't provide WSU a figure on how much of the Foundation's funds are invested in fossil fuels, but it can give an assessment in terms of the energy sector, amounting to 6-7 percent of the total endowment. And that figure include fossil fuel companies as well as companies working on green energy.

Brunelli noted that the university itself, meanwhile, invests some tuition dollars as well as funding from the state as its able. State law restricts the investment of these funds by separate 501c3 organizations like the WSU Foundation. Tuition and state funding are invested on behalf of WSU by the state's treasurer's office, with priority given to managing liquidity to ensure the university can pay its bills. Because of this, the university takes a more short-term and risk-adverse position compared to the foundation, Brunelli said.

As WSU and institutions of higher education continue to grapple with rising costs, Brunelli noted that private support and its facilitation by the foundation will be even more critical moving forward to ensure the long-term health of the institution.