Tag Archives: spelman college

HBCU Money’s 2016 Top 10 HBCU Endowments


piggybank

2016 was a rough year for the world, it was even afforded a scary movie trailer, and top ten HBCU endowments were not spared the carnage. Eight out of the top ten HBCU endowments saw negative changes in their market value. The only two to be spared the rod were Meharry Medical College and rising supernova, University of Virgin Islands, who not only led all HBCUs in market value percentage increase, but was second among all American and Canadian institutions reporting in that category. Howard University continues to hold the number one spot and sheer inertia could carry it onto becoming the first billion dollar HBCU endowment. However, after being the star of the top ten last year, Howard finds itself the dog of the show this year with the worst market value percentage performance.

Since breaking into the top ten a few years ago, University of Virgin Islands continues its ascension up the ranks. It is clear they have the special sauce in the islands and if the winds continue in their favor, then the school in Nassau could give HBCUs its sixth endowment over $100 million in short order. Another notable endowment, Texas College with an endowment of only $3.2 million, did see the second highest market change percentage of HBCUs at 6.8 percent.

After a notable absence last year, Florida A&M University, has returned to the list and takes its place as HBCU nation’s fifth endowment over $100 million. This in comparison to 93 of the 799 HWCUs reporting with endowments over the $1 billion mark. Reminding us there is a long way to go before institutional economic equality is achieved.

As always, if you do not see your HBCU in the top 10 – DONATE!**

Endowment in millions $000 (Change in Market Value*)

1. Howard University – $685 775  (-8.5%)

2. Spelman College – $346 789 (-4.5%)

3.  Hampton University – $253 814 (-3.6%)

4.  Meharry Medical College – $142 703 (2.6%)

5. Florida A&M University – $113 117 (N/A)

6.  University of the Virgin Islands – $54 968 (60.4%)

7.  Tennessee State University – $50 246 (-2.3%)

8.  Texas Southern University – $48 163 (-1.1%)

9.  North Carolina A&T State University  – $48 074 (-0.1%)

10. . Virginia State University – $45 812 (-3.4%)

Take a look at how an endowment works. Not only scholarships to reduce the student debt burden but research, recruiting talented faculty & students, faculty salaries, and a host of other things can be paid for through a strong endowment. It ultimately is the lifeblood of a college or university to ensure its success generation after generation.

endowment-works-1

*Note: The change in market value does NOT represent the rate of return for the institution’s investments. Rather, the change in the market value of an endowment from FY2015 to FY2016 reflects the net impact of: 1) withdrawals to fund institutional operations and capital expenses; 2) the payment of endowment management and investment fees; 3) additions from donor gifts and other contributions; and 4) investment gains or losses.

** Notable exclusions to the list that HBCU Money believes would otherwise make the top ten are Morehouse College, Tuskegee University, and Dillard University. These HBCUs have never reported their endowment to NACUBO in the time HBCU Money has been recording its annual top ten endowments.

Additional Notes:
NACUBO Average Endowment – $640 737 (-2.9%)
NACUBO Median Endowment – $120 330 (-1.3%)
Top 10 HWCU Endowments combined – $182.5 billion
Source: National Association of College & University Business Officers

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HBCU Money’s 2015 Top 10 HBCU Endowments


 

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The keyword for  2015’s HBCU endowments – concerning. Two bellwether HBCU endowments, Spelman College and Hampton University, saw negative declines in their endowment’s market value. Outside of Howard University storming ahead at 11.7 percent, no other HBCU endowment saw double digit gains with North Carolina A&T State University missing the mark by 10 basis points. This is a far cry from 2014’s list when 9 out of 10 reported double digit gains. If there is any solace in the numbers and there is not much, it is that the top ten endowments of our HWCU counterparts had no endowments return double digit gains and also saw 2 out of their 10 with declines in market value.

Although there are some notable absences** from our top ten list, it certainly would not change the reality that still only three HBCUs have endowments above the $200 million mark and none have reached the $1 billion plateau, although Howard University, despite its noted financial issues seems to be headed there unabated and without much competition from Spelman College or Hampton University, the only real challengers. John Wilson, president at Morehouse College, in an interview with Harvard Magazine in 2013 noted, “is the need to build endowments; less than $200 million makes you, by definition, unhealthy.” This still remains the case and as a baseline means that 97 percent of all HBCUs are financially unhealthy. Even more concerning is that there seems to be no real plan in place to address this. A canary in the coal mine though is that donations of $1 million or more to HBCUs jumped from one in 2013 to nine in 2014, but donations of the eight and nine figure variety, also known as transformative donations, are still absent at HBCUs.

As always if you do not see your HBCU in the top 10 – DONATE!**

Endowment in millions $000 (Change in Market Value*)

1. Howard University – $659 639 (11.7%)

2. Spelman College – $362 986 (-1.1%)

3. Hampton University – $263 237 (-8.7%)

4. Meharry Medical College – $139 054 (1.5%)

5. Tennessee State University – $51 416 (1.8%)

6. Texas Southern University – $48 684 (4.5%)

7. Virginia State University – $47 432 (4.9%)

8. North Carolina A&T State University – $48 100 (9.9%)

9. Winston-Salem State University – $37 219 (8.5%)

10. University of the Virgin Islands – $34 274 (-9.0%)

Take a look at how an endowment works. Not only scholarships to reduce the student debt burden but research, recruiting talented faculty & students, faculty salaries, and a host of other things can be paid for through a strong endowment. It ultimately is the lifeblood of a college or university to ensure its success generation after generation.

endowment-works-1

*Note: The change in market value does NOT represent the rate of return for the institution’s investments. Rather, the change in the market value of an endowment from FY2013 to FY2014 reflects the net impact of: 1) withdrawals to fund institutional operations and capital expenses; 2) the payment of endowment management and investment fees; 3) additions from donor gifts and other contributions; and 4) investment gains or losses.

** Notable exclusions to the list that HBCU Money believes would otherwise make the top ten are Morehouse College, Tuskegee University, Dillard University, and Florida A&M University. Morehouse College, Tuskegee University, and Dillard University have never reported their endowment to NACUBO in the time HBCU Money has been recording its annual top ten endowments. Florida A&M University who was number five last year did not appear in this year’s list from NACUBO.

Additional Notes:
NACUBO Average Endowment – $648 074 (1.7%)
NACUBO Median Endowment – $115 828 (-0.9%)
Top 10 HWCU Endowments combined – $185.4 billion
Source: National Association of College & University Business Officers

HBCU Money’s 2014 Top 10 HBCU Endowments


piggy-bank-with-glasses-m

The keyword for  2014’s HBCU endowments – disappointing. In the past twelve months, HBCU’s top ten endowments added $200 million to its coffers. So why is this disappointing? The S&P 500 over the past year had returns of 13.4 percent. The benchmark by which we measure endowment return success. Given many of the tax and capital advantages that college and university endowments have it takes quite a bit of effort to underperform the market. This year only six out of ten HBCU endowments outperformed the market, while HWCU counterparts clocked in at nine out of ten. This has allowed the institutional wealth gap between top 10 HWCU/HBCU endowments to balloon from 103:1 to 106:1 the past twelve months. 

This year was fairly standard with no real changes except one among the top ten, but what a change it was. The University of the Virgin Islands unseats Winston-Salem State University in the ten spot from last year after an unprecedented change in market value of 48.5 percent. A performance that not only led all HBCUs, but was fifth among the 851 American and Canadian endowments reporting. However, there is still real concern about the lack of HBCUs with at least $100 million endowments. Notable absences are Morehouse and Tuskegee who do not report. Even including these two, it would mean only approximately 7 percent of HBCUs are above this mark. This is concerning because even schools with only a $100 million endowment that achieved a market return of 13 percent leaves the school roughly $6.5 million to potentially to work with. Showing that HBCUs are still highly dependent and vulnerable to tuition revenue. A matter we saw continuously pop up after the Parent Plus Loan debacle that sent many HBCUers home. HBCU endowments should have been there to lessen the blow, but again given 93 percent of HBCUs are at $50 million or less it shows the vulnerability most are facing. The MEAC continues its dominance of the top ten HBCU endowments with four institutions present.

As always if you do not see your HBCU in the top 10 – DONATE!

Endowment in millions $000 (Change in Market Value*)

1. Howard University – $586 104 (14.0%)

2. Spelman College – $367 037 (12.2%)

3. Hampton University – $288 370 (13.5%)

4. Meharry Medical College – $136 975 (9.6%)

5. Florida A&M University – $127 186 (10.3%)

6. Tennessee State University – $50 492 (17.5%)

7. Texas Southern University – $46 577 (10.4%)

8. Virginia State University – $45 145 (18.6%)

9. North Carolina A&T State University – $43 785 (17.3%)

10. University of the Virgin Islands – $38 184 (48.5%)

Take a look at how an endowment works. Not only scholarships to reduce the student debt burden but research, recruiting talented faculty & students, faculty salaries, and a host of other things can be paid for through a strong endowment. It ultimately is the lifeblood of a college or university to ensure its success generation after generation.

endowment

*Note: The change in market value does NOT represent the rate of return for the institution’s investments. Rather, the change in the market value of an endowment from FY2013 to FY2014 reflects the net impact of: 1) withdrawals to fund institutional operations and capital expenses; 2) the payment of endowment management and investment fees; 3) additions from donor gifts and other contributions; and 4) investment gains or losses.

Additional Notes:
NACUBO Average Endowment – $616 188 (15.0%)
NACUBO Median Endowment – $112 967 (16.3%)
Top 10 HWCU Endowments combined – $180.3 billion
Top 10 HBCU Endowments combined – $1.7 billion
Source: National Association of College & University Business Officers

The HBCUpreneur Corner™ – Spelman College’s Morgan France-Johnson & Aesthetically Spoken; Lux Creative


AestheticallySpokenLogo2013 LuxLogo

Name: Morgan France-Johnson

Alma Mater: Spelman College C’07

Business Name & Description: Aesthetically Spoken, LLC is a greeting card line that caters to the LGBTQ community; Lux Creative, LLC is a graphic design company that specializes in branding development and marketing materials.

What year did you found your company? Aesthetically Spoken, LLC – January 2012; Lux Creative, LLC – November 2012

What has been the most exciting and/or fearful moment during your HBCUpreneur career? It’s hard for me to list just one moment, as the entrepreneurial journey is one of the most exhilarating roller coasters I have ever been on! However, if I were forced to pick just one exciting moment for Lux Creative, it would be when I secured a business deal with an international brand while living in Dubai, UAE. This accomplishment affirmed that I am as good as I know and believe I am.

Exciting moments for Aesthetically Spoken are centered around the positive feedback I receive from other members of the LGBTQ community whenever they are able to share the perfect heartfelt greeting. As my overarching purpose is to positively impact lives, knowing that people truly appreciate what I do is very exciting for me.

Fear, like excitement, pokes its head up every once in a while. The most fearful moments always occur before my team and I made our most pivotal changes. The common reminder that fear projects lies in the basic concept of Newton’s Law of Relativity: For every action, there is an equal but opposite reaction. At times, we have found that increased vision is met with low visibility, growth with set backs, and opportunity with void. However, the converse is also true— opposition is met with formidability, loss precedes gain and most importantly fear is met with faith!

What made you want to start your own company? Since I could remember I wanted to “start something.” I distinctly remember at the age of 6, watching a news story with my mother about homelessness in Baltimore and afterwards saying, “Mommy, I’m going to ask God to bless me with money so I can build a place for all of the homeless people to live.”

At 6, I knew my purpose. I didn’t know what that was called back then, but I knew I was going to change the world with my ideas. Spelman cultivated my seed and honed the skills that I would need to make my mark on the world.

Who was the most influential person/people for you during your time in college? Honestly, all of my Spelman Sisters. As a native of Baltimore, I had very few experiences with African-Americans with such diverse perspectives and experiences; they gave me glasses to see a world I never knew existed. I’m forever grateful to Spelman and the women I call “Sister.”

How do you handle complex problems? I spend 20% of my effort on the problem. What’s the real issue here? What other areas does this problem affect? And so on. Then I spend 80% of my effort on the solution. I call mentors, read books, search the web, call my attorney. I do what’s necessary to ensure I’ve neutralized the problem and do my best to prevent any recurrences.

What is something you wish you had known prior to starting your company? This journey isn’t for the faint hearted, expect opposition. Stay vigilant and build your personal networks wisely as you’ll need a support system outside of business to ease the disappointments that will occur along the way.

You are the first HBCUpreneur we have had that is operating not one, but two companies at the same time. As an HBCUpreneur operating multiple companies at the same time and those considering it; what can you tell us about the experience, challenges, and advantages of being a multi-CEO? Balancing the complexities of “normal” life while owning and operating one business is difficult. Two businesses requires an intense level of focus, having great teams in place, and having a good support system. I’m reminded of the Shonda Rhimes Stanford graduation speech in which she stated: when you are in charge of multiple entities, home/multiple businesses, you will have to sacrifice. Everything can’t have your attention 100% of the time. You will mess up. You will make mistakes. But it’s all worth it.

What do you believe HBCUs can do to spur more innovation and entrepreneurship while their students are in school either as undergraduate or graduate students? As a freshman at Spelman, I attended a seminar that prompted me to change my major from Child Development to Economics. That one seminar ultimately changed my entire life. I believe that HBCUs can spur innovation and entrepreneurship by hosting meaningful events that spark creativity while simultaneously educating and supporting individuals who are considering entrepreneurship.

Given the LGBTQ community has an estimated $830 billion in buying power; what are some of the blooming opportunities you believe are on the horizon to HBCUpreneurs looking to provide goods or services to the LGBTQ community in particular? I believe that it is the responsibility of those in the LGBTQ community to assess the market for needs and meet them. Aesthetically Spoken, a card line created specifically for the LGBTQ community was born simply out of need. I found myself in need of a Valentine’s Day greeting card fitting for my same sex significant other. Heteronormative pronouns and insinuations were not fitting; and, as a graphic designer, the inspiration to create an LGBTQ greeting card company derived from this disheartening deficit.

How do you deal with rejection? (chuckle) I keep moving. The year I graduated from Spelman, I joined a network marketing company. (Pre-Paid Legal. Now, Legal Shield) Network marketing is FULL of rejection. We were taught to not take it personally. Once you realize you can take a no and keep moving. You can do anything.

When you have down time how do you like to spend it? Down time?!?! What’s that? I really enjoy spending time with my girlfriend, friends, and family. I enjoy the outdoors, traveling, being active, yet I also enjoy staying in and reading a good book. You’re liable to catch me enjoying life in a variety of ways.

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What was your most memorable HBCU memory? Again, there are so many. Most memorable would have to go to standing on the grass on the Spelman Oval, holding the hands of my other Spelman Sisters and speaking my name to the Universe like so many other Spelman Women before me. It was a spiritual experience. That’s when I knew I had made the right choice.

In leaving is there any advice you have for budding HBCUpreneurs? Don’t quit.

The Race To The First Billion Dollar HBCU Endowment: Can Anyone Catch Howard?


By William A. Foster, IV

Whenever I may be tempted to slack up and let the business run for awhile on its own impetus, I picture my competitor sitting at a desk in his opposition house, thinking and thinking with the most devilish intensity and clearness, and I ask myself what I can do to be prepared for his next brilliant move. – H. Gordon Selfridge

brathwaite-photo-finish

 

There will be a lot of excitement whenever an HBCU finally reaches the magical one billion dollar endowment plateau. It will be unfounded excitement, but there will be excitement. By now, multiple HBCUs should have achieved billion dollar status, but a mixture of desegregation, poor financial literacy even among our educated alum, and arguably poor communication historically between the institutions themselves and alumni about the endowment and its value have stymied the growth of HBCU endowments. Many have the attitude that their attendance and tuition is all the “giving” they need to give to their HBCU. Some argue bad experiences while during matriculation also has made alumni adverse to giving, but that logic can be a bit dunce and short-sighted. This is because many of the poor experiences that the alum experienced were often a result of poor resources available to train staff better and antiquated software. Alas, this is not to remove the institutions’ responsibility. They certainly deserve their share for not making customer service the number one, two, and three priority. Too many HBCUs still are stuck in mimic mode of their HWCU counterparts in strategic behavior. This includes institutional outreach and advancement where often HBCUs did not and do not pay attention to the cultural differences in giving patterns between African Americans and other groups.

HBCUs in general lack a pool of high-quality and transformative donors. We define the former as “high-quality donors who give consistently and over their lifetime will probably give six to seven figures of donations” and the latter as “donations from transformative donors range from eight to nine figures.” The top ten donations to colleges last year were a combined $2.5 billion with Phil and Penelope Knight, the owners of Nike, putting $500 million in the lap of University of Oregon. HBCUs have missed accessing high-quality donors in the world of hip-hop and entertainment in my opinion at times because they have not wanted the association that comes with many of these artist and their image. Meanwhile, schools like Rice and Harvard University have welcomed the likes of Bun B of UGK and Nas into their wombs, respectively. The latter actually having a fellowship named after him at Harvard. This has cost HBCUs in terms of both finances and publicity. Publicity that is strongly needed to make up for the imbalance in being able to recruit today’s students also known as future donors.

So who is in the running to reach the billion dollar mark? Howard University comes in with the largest endowment at $513 million, which puts it a full $186 million ahead of number two rival Spelman who has a $327 million endowment. In third place, Hampton University with an endowment of $254 million and trailing Howard’s endowment by $259 million. Other notables who are long shots in the race are Meharry Medical College, Florida A&M University, and Tuskegee University with endowments of $124 million, $115 million, and $105 million, respectively. Before anyone ask where is Morehouse and its $130 million endowment, current president John Wilson himself pointed out that in terms of endowment-expense ratio, Spelman is 4:1 and Morehouse is at 1.3:1. Needless to say, while Morehouse needs to desperately build its endowment it appears to have bigger concerns that could leave it too unfocused to be a legit player. These are all of the HBCUs who have at least $100 million endowments. After them the drop off is so acute that it would take a transformative donation for any kind of consideration.

The big 3 of Howard, Spelman, and Hampton all have unique advantages and problems. Howard’s biggest advantage other than being halfway there is the Howard University Endowment Act sponsored by Dan Quayle in 1984. The act currently grants Howard $3.6 million currently in a matching endowment grant. According to Govtrack, “Requires the University, in order to receive such a grant, to deposit in the endowment an amount equal to such grant.” In other words, Howard University is working with a 1:1 match. What is not clear in the bill is if it is limited to specific type of donations from donors. If it does not have limitations, then that is one heck of a weapon. The school is also the only HBCU that is a full-service HBCU meaning it has both a medical school and law school. Something that allows it to produce higher earning alum than its counterparts. Unfortunately, with the good comes some bad. Howard has recently been in the news recently with downgrades by credit agencies for its debt, cutting about 200 staff positions, and public fighting between trustees in the media. Spelman, ranked number two, definitely benefited from what is today valued at a $40 million gift from Bill and Camille Cosby in 1988. An amount equivalent to 12 percent of today’s endowment. You can look at that as glass half full or empty. Full in that they have secured a transformative donation and could again or empty that to this day it still comprises a disproportionate amount of their endowment. On the negative, Spelman has struggled the past few years with their ROI returns for their endowment. The ROI ranking was been the lowest among all top ten HBCU Money endowments in 2013. There seems to be some serious questions about conflicts of interest with Spelman’s board of trustee, Theodore Aronson, who is also the head of their investment committee, his company AJO, and some of Spelman’s investments which have not faired near as well as other HBCUs over the past few years. That could allow Hampton to push pass who trails Spelman by $73 million. Another headwind facing Spelman is the lack of a graduate school which aforementioned in regards to Howard produces higher earning alumni on average. Lastly, Hampton would need to double its endowment or achieve a 100 percent ROI on its current endowment to catch up to Howard – lightning would strike Emancipation Oak twice before the latter would happen. Warren Buffett, considered the greatest investor of all-time, has historically managed around 20 percent annually for the past 45 years. However, given Hampton’s leadership in the form of president William Harvey, who has always kept Hampton fiscally aggressive by limiting the amount it takes from the endowment to 3 percent allowing for greater reinvestment than their peers. It would seem that financial talent and strategy is on Hampton’s side. Hampton is potentially too reliant on its investment strategy and not as much on its alumni development as the school’s giving rate is among the lowest among the big three. Their biggest donation still is from George Eastman, founder of Eastman Kodak, whose $1 million donation in 1924 is valued at approximately $13.8 million adjusted for inflation.

A major factor in all of this and at the heart of it is alumni. An examination of alumni giving rates since 2008 have seen Howard range in the 13-17 percent, Spelman in the 39-41 percent range, and Hampton with 10-16 percent. Percentages can be somewhat misleading giving alumni populations. Howard has by far the largest alumni base of the three schools followed by Hampton and then Spelman. Although the size of the alumni base can be offset by higher giving per alumni, so not too much should be read into these numbers, but it is better to know them than not if you are a development office.

So who do we think we get there first? It is honestly still too early to tell. Given the recent unsettled nature of HBCUs from the private elites to the state institutions to the small liberal arts HBCUs, it seems HBCUs are in a constant proverbial minefield. These three are the head and shoulders favorites, but a transformative donation among any number of HBCUs could change the landscape in a hurry. This could be as they say in the racing world a photo finish.