Foundation Report
Message from the Foundation President
On behalf of the Longwood University Foundation Board of Directors, I am happy to provide you with the 2012-13 President’s Report and Annual Report of Gifts.
The Foundation’s finances continue to remain strong, thanks in large part to the Spider Fund’s skillful management of our assets. The Foundation Board continues to be impressed with the fund managers’ investment strategy, which yielded very positive results in 2012-13 and has proven very effective in helping us to grow our assets.
As of June 30, 2013, the Longwood University Foundation reported total assets of $69.3 million and endowed net assets of $48.1 million—both record highs. As we continue to build Longwood University’s financial base, Longwood President W. Taylor Reveley IV has identified the annual fund as an area of increased focus for fundraising activities. Annual gifts not only create a culture of giving among Longwood supporters but also provide critical unrestricted funds that the university can commit to areas of greatest need. Increased alumni engagement and university-coordinated campaigns are two examples of initiatives targeted at boosting our annual giving participation. Unrestricted gifts have been on a downward trend in recent years, and the Foundation is excited about being a partner in this new initiative, along with the divisions of University Advancement, Strategic Operations and Athletics.
Elsewhere on campus, work is in full swing on the Maugans Alumni Center, and we look forward with great anticipation to its completion.
It is my pleasure to work with outstanding and dedicated people, including Foundation Board members and university staff, faculty and administrators. We are very fortunate to have leaders with a sincere passion for Longwood’s continued growth.
On behalf of the Foundation, thank you for your love and support of Longwood.
Bob Burger
President, Longwood University Foundation Inc.
Longwood University Financial Report
I feel as if I am repeating myself each year, but once again gifts and bequest commitments to Longwood University Foundation (“the Foundation”) were at an all-time high. For the fiscal year that ended June 30, 2013, we received more than $8.3 million compared with $3.4 million for the fiscal year that ended June 30, 2012.
According to the 2013 NACUBO-Commonfund Study of Endowments, the average return for fiscal year 2013 was 11.4 percent—considerably higher than the negative .3 percent from fiscal year 2012. The Foundation’s rate of return for 2013 was 10.25 percent. Although the Foundation’s 10.25 percent is lower than the national average, it is our position that we do well in the market during negative years as we did last fiscal year with a positive .94 percent compared with the national average of negative .3 percent.
On July 1, 2010, we moved our investment portfolio to the Richmond Fund of the Spider Management Company. The Spider Management Company’s philosophy is aligned with our own: preservation of the corpus, absolute rather than relative performance, a fully diversified portfolio and a long-term horizon. Inherent in this philosophy is that we expect to surpass the market during down years and that the market will surpass us during up years. However, we also believe that the long-term portfolio returns will provide us with steady and dependable returns that will match or exceed the long-term market returns.
Several financial achievements merit special attention:
- Gifts and bequest commitments more than doubled compared with last year.
- The comprehensive campaign concluded in 2013, surpassing its goal of $41 million.
- 16 new permanently endowed funds were created.
- 1,183 scholarship awards were provided to Longwood students totaling $1,228,247.
Click to EnlargeA goal of the Foundation is to achieve investment performance that supports stable endowment spending from year to year, which provides predictable funding for programs. The Foundation Board of Directors approved a spending rate of 4 percent. The overriding principle for this rate is simple: Funds should be managed so that a gift today will fund a donor’s objective in perpetuity. According to the 2013 NACUBO Commonfund study, the average annual effective spending rate for educational endowments in fiscal year 2013 was 4.3 percent. Our 4 percent rate is just below the national average.
In addition, the recent market crisis caused many of our endowed funds to be considered “underwater.” This means that the market values of these funds are now less than the original gift values. It was the Board’s position that these funds should be allowed to grow and strengthen. On June 30, 2013, nine of our 330 endowed funds were underwater. All underwater scholarship funds were paid using alternative funding sources from the Foundation or Longwood University so that the funds would not be further depleted and assuring that students who depended on the awards would be not be hindered from attending.
Prudent decisions such as this have enabled the Foundation to sustain the distributions to the university for scholarships as well as other programs until the endowments have grown sufficiently to handle the distributions.
Click to EnlargeCherry Bekaert LLP conducted its annual independent audit and the Foundation received another unqualified audit. A copy of the annual audited financial statements can be found on the Foundation website. Following this summary, I have included a more detailed report that highlights our endowment activity and the Foundation’s management policies.
Annual Report on the Pooled Investment Fund
This report has been prepared to provide information about our donor-raised funds and the management and performance of the Longwood University Foundation’s Pooled Investment Funds.
The Longwood University Foundation’s Board of Directors delegated the investment management of the Pooled Investment Funds to the Finance Committee, which operates within the parameters of the Investment Policy.
The Finance Committee seeks investment returns through a diversified investment portfolio consistent with the approved Investment Policy. To achieve its investment objective, the Foundation has retained an independent investment firm to provide ongoing evaluation of economic conditions, review manager performance, and provide advice on asset allocation and performance enhancement.
The Foundation’s Board of Directors has adopted the strategy of investing endowment assets to preserve the long-range purchasing power of the endowment in order to provide intergenerational financial support for programs that the endowed funds were created to benefit.
The endowed funds held by the Foundation provide a consistent level of support for current and future needs of the university. The primary investment objective for the endowed funds is maintaining the purchasing power of each individual endowment over time by reinvesting part of the endowment’s earnings and appreciation each year. If the principal value of the endowment grows at or above the rate of inflation, an increasing stream of income will be generated to meet the rising costs of education, research and campus life. The chart below represents the fair market value of the endowment funds for each fiscal year over a 10-year period.
Click to EnlargeInvestment Performance
The endowment’s performance is calculated on a total return basis, which measures the performance of equity, fixed income and alternative investments. Total return (for purposes of this report) is the combination of income, dividends, and gains and losses for the fiscal year net of investment management fees. Investment performance is determined on the endowment as a whole rather than on each separate endowed fund. Depending upon the timing of additions to an individual fund, returns on a specific endowed fund may vary from the total results.
Foundation Program Support
Endowment funds and nonendowment funds support university programs as designated by the donors. Programs supported from endowment distributions include scholarships, fellowships, professorships, faculty development and department operating funds. Nonendowed funds support capital projects and department programming.
Many important university activities could not be achieved without the financial support from the Longwood Fund. This year these funds made the following activities possible:
- Provided 39 students awards to aid with study abroad opportunities in Ecuador, Croatia, Nepal and Thailand.
- Assisted First Year Experience
- Assisted New Lancer Days
These are only a few of the activities our unrestricted funds have been used for during this past year. We are fortunate to have donor-provided funds that support systemwide university programs. The Support by Purpose pie chart depicts the various sectors of the university the Foundation has aided during the period of this report.
Click to EnlargeLongwood University Foundation’s endowments provide a permanent partnership between the university and the donor. The legacy of thoughtful donors plays a role in the life of the university in perpetuity and becomes the “foundation” upon which Longwood University can build its achievements. The generosity of Longwood University’s many donors is appreciated by generations past, present and future.
Submitted by
Hazel P. Duncan, MBA, CMA
Chief Financial Officer, Secretary and Treasurer
Longwood University Foundation
