Wilmington Trust N.A. is stepping up its institutional investment marketing to an area it considers an emerging market — community college foundations.
To gauge the size of the market, Wilmington Trust examined 207 community colleges in the northeast and mid-Atlantic regions. Of those, 163 schools have separate foundations, whose combined assets totaled $1.1 billion, as of June 30, 2011, according to a study by Wilmington, released Jan. 30. That total is up 25% from the previous year.
The “community college arena … is a growing sector with very little coverage,” Walter J. Dillingham Jr., New York-based managing director-endowments and foundations and co-author of the study, said in an e-mail.
“We view this as an emerging market. We find that there is significant information on four-year schools but a paucity of research on community colleges, especially on how they typically have stand-alone foundations and emerging endowments.”
The three largest foundations have a combined 13% of the total assets in the study. The foundation of the Culinary Institute of America, Hyde Park, N.Y., has $77.7 million; New England Institute of Technology, East Greenwich, R.I., $34.5 million; and Northampton Area Community College, Bethlehem, Pa., $29.9 million.
“While most foundations are invested in longer-term strategies over 93% of the time, 10 community colleges still have most of their funds invested in cash only, and many of those with longer-term investments still hold very large savings accounts that seem much higher than necessary,” according to the study. “If the (foundation’s) funds are comprised of endowment funds, the board should develop a longer-term strategy. Also, some have large (certificate of deposit) investments as part of their balances, which has the potential to lower long-term returns for a foundation.”
The study provides no detail on asset allocation of the foundations or their use of investment managers.
“Community colleges will need to assess and maximize their endowment investment strategies and spending policies as future returns are expected to be lower,” the study notes.
“We are going to explore expanding the study but there is no timetable yet for this,” Mr. Dillingham said in the e-mail.