Category Archives: Philanthropy

School Name: Norfolk State University

Median Cost of Attendance: $21 740

Undergraduate Population: 6 264

Endowment Needed: $2 723 587 200

Analysis: Norfolk State University needs approximately $2.7 billion for all of its undergraduates to attend debt-free annually. One of two public HBCUs in the state of Virginia and located near the state’s coastal area. Norfolk State University shares the region with a major private HBCU within close proximity. This creates both opportunities for shared fundraising efforts and competition as well. Catering to a different demographic of African America being a public university certainly does help them cast a larger net in terms of quantity. The school is one of the larger HBCUs by population which means more alumni per year and a larger pool to pull from in terms of soliciting donations. Norfolk State University is actually still fairly young by university standards which explains part of the reason it does not have a top ten endowment. Its institutional youth means it is playing catch up to its older HBCU peers. The NCAA basketball tournament last year increased the school’s public profile tremendously and should do wonders for academic recruitment and quality of student. It also located near one of the most important naval bases on the eastern seaboard which bases a large navy personnel. Creating a partnership with the armed forces base there could serves as a way to increase both alumni size and long-term support. Although 50 years younger than most of its institutional peers Norfolk State University is in a prime position over the next decade if it can get solid commitment from alumni and see it make a push to move into the top ten of HBCU endowments.

As always it should be noted that endowments provide a myriad of subsidies to the university for everything from scholarship, faculty & administration salaries, research, and much more.

School Name: Tuskegee University

Median Cost of Attendance: $25 500

Undergraduate Population: 2 684

Endowment Needed: $1 368 840 000

Analysis: Tuskegee University needs approximately $1.3 billion to allow all of its undergraduate students to attend debt free annually. Tuskegee University, although not appearing in our top 10 HBCU endowment lists in 2010 or in 2011 because the school does not report its endowment figures to NACUBO, which tracks the nation’s largest endowments in higher education, is reported to have the sixth largest HBCU endowment at approximately $107 million. Of the five HBCUs with over $100 million endowments and an undergraduate component, Tuskegee ranks fourth in the group in terms of endowment capital per undergraduate. The university is the flagship HBCU in the state of Alabama. It holds the distinction of being the only private HBCU that is a recognized 1890s HBCU and thus able to receive federal funding for agriculture like its public counterparts. With the Tuskegee brand, historically and nationally recognized, it is rather baffling that Tuskegee’s endowment is not considerably larger. At its current undergraduate trending size, it is hard to see Tuskegee competing to become the first HBCU to achieve a billion dollar endowment.  This despite having an extremely healthy alumni giving rate at reportedly 20.8 percent versus a national average of 13.5 percent. It has the brand and the alumni support certainly but there is clearly something missing.

Tuskegee could make up ground with a major advantage it currently has over all HBCUs. LAND. It is far and away the largest landowner among HBCUs and one of the largest landowners among higher education institutions period. This advantage allows it the potential to develop a timber asset class in its endowment portfolio without having to bring in an institutional manager as it could serve as its own manager and developer through its agriculture department. Timber was the only asset class during the last recession to NOT decline. With a large enough investment in timber, private institutional managers typically require clients to invest a minimum $50-100 million investment for timber, in 15 years Tuskegee could gain significant ground. It will be no easy task given the minimum investment is currently the size of Tuskegee’s entire endowment and at a minimum would constitute 50 percent of the school’s endowment. Timber is also a highly illiquid asset which is why it usually constitutes no more than 5 percent of an investor’s portfolio.

The school has served itself well by remaining on the Division II level through athletics and not requiring the enormous outlay often needed to play on the Division I and I-AA levels therefore allowing it to invest cash in its academic and research infrastructures. Something it should continue to hold steady to.

Overall, the school has all the right ingredients but its endowment capital per undergraduate lags sorely behind its peers. For perspective Spelman’s endowment capital per undergraduate is approximately $150,000 per undergraduate while Tuskegee’s is approximately $40,000. Although a healthy alumni giving rate, just how much the alumni is giving per donation on average is unknown and could be an area of concern and/or opportunity. The endowment’s portfolio returns also could be questionable in comparison to its peers as another reason for the gap between itself and other HBCUs in the $100 million endowment club if the school’s investment strategy is too conservative. Tuskegee should easily be a top three endowment but it is sorely in need of an eight figure donation within a fiscal year soon if it wants to be considered a serious player in the race to a billion.

As always it should be noted that endowments provide a myriad of subsidies to the university for everything from scholarship, faculty & administration salaries, research, and much more.

School Name: Paul Quinn College

Median Cost of Attendance: $20 800

Undergraduate Population: 200

Endowment Needed: $83 200 000

Analysis: Paul Quinn College needs approximately $83 million to allow all of its undergraduates to attend school debt free annually at its current cost of attendance and population. The little private school in Texas with big potential is in a geographic sweet spot. Located in the Dallas/Fort Worth area, it is far away from the throws of the two public HBCUs located in the more southern part of the state who have a vast amount more resources at their disposal. Paul Quinn College makes up for this with leadership focused on long-term planning to maximize the resources at their disposal. If it can connect itself as the African American institution in the area then it will have an immense opportunity to grow its population selectively as opposed to the quantity route that public universities must pursue. This quality over quantity will allow its graduates to be best in class and garner strong community and economic support from the African American community. Oak Cliff, a very prideful working class African American neighborhood in Dallas with a strong fabric would be an ideal place to start. At $83 million, this is one of the smallest amounts needed to achieve debt free status but critically vital the buy in of the AME church financially and the “adoption” of the Dallas/Forth Worth African American community since the alumni base is not that large. It is unknown if the school actually has an endowment currently but given its recent outside of the box approach via its leadership it would be highly surprising if the establishment of an endowment is not already in the works.

As always it should be noted that endowments provide a myriad of subsidies to the university for everything from scholarship, faculty & administration salaries, research, and much more.

School Name: Morgan State University

Median Cost of Attendance: $15 095

Undergraduate Population: 6 711

Endowment Needed: $2 026 050 880

Analysis: Morgan State University needs approximately a $2 billion endowment to allow all of its students to attend school debt free annually. Located in Baltimore it shares the city with one other state HBCU. Immense opportunity and challenges exist for Morgan State University. In a city with the seventh largest African American population by numbers the opportunity to grow its population with homegrown talent is immense. High school graduation rates for African Americans have improved dramatically in the city the past year but with fiscal cuts coming from the federal and state governments it remains to be seen if the improvement can be sustainable without strong commitment from the private sector. Home to multiple African American owned banks there is opportunity to secure real sponsorships and circulation between the African American private sector and the university. Prior to the great recession Maryland also boasted the highest median income for African Americans in the nation for states with sizable African American populations. This leaves a bit of head scratching then for a school with its size and income around it to only have a $2 million endowment which is a mere 0.1 percent of the amount needed. While the opportunity is there for Morgan State University to easily become a top five endowment there is obviously a disconnect somewhere. If the riddle can be solved watch for Morgan State to become one of the darlings of HBCU endowments.

As always it should be noted that endowments provide a myriad of subsidies to the university for everything from scholarship, faculty & administration salaries, research, and much more.