A poll of college and university endowment officials by SEI’s Nonprofit Management Research Panel showed 94% said their organizations had some or all assets in alternative investments. Fifty-three percent of endowments with $100 million had at least 21% of assets invested in alternatives as of February. Fifty-five percent of the endowments with up to $100 million in assets had less than 20% of their portfolios in alternatives. Of the 86 executives polled — none of them SEI institutional clients — 35% said they couldn’t meet minimum manager requirements for certain strategies, with 50% from endowments with less than $50 million reporting this as a challenge. However, 26% from endowments with more than $300 million also said this was a challenge.
Also, 72% said their organization used an outside investment consultant to research and recommend managers, though manager decisions were ultimately made by the investment committee; 20% said the organization used a manager-of-managers approach, while 8% said the investment committee did not use an outside consultant.
Nearly half of the executives felt a 5% endowment spending requirement, which some federal lawmakers have been discussing, would “hurt the endowment’s mission as well as the institution’s overall operations,” the survey said. Of those polled, 60% said their organization spent more than the 4.4% of total assets, the national average among endowments. Only 13% said their institution planned to increase spending in the upcoming year.
