Among other universities that have announced emergency measures related to the COVID-19 pandemic is Evanston, Ill.-based Northwestern University, which announced earlier in May it would increase the payout rate from its $10.8 billion endowment in addition to suspending the matching contributions to its retirement plans and temporary furloughs of employees. The university did not provide details of the increase.
Jon Yates, Northwestern spokesman, did not reply to requests for further information.
Managers of endowments and foundations with whom Pensions & Investments spoke, however, feel their asset pools are safe.
Phillip Zecher, chief investment officer for the $3 billion endowment at Michigan State University, East Lansing, said in a phone interview that investment losses in the first quarter of 2020 weren't a big deal since the endowment gained 19.9% in 2019. He declined to elaborate on investment losses.
"We've tended to focus in the last couple of years more on U.S. and global companies, and we've been early in pulling out of some of the non-U.S. equity exposure," Mr. Zecher said. "That didn't hurt us any during the downturn. It helped us a lot in the last couple of years. We also underweighted real assets. Not because of any ESG particular consideration or policies, but the risks in that asset class were not being properly rewarded, so we were going underweight real assets."
Brian Neale, vice president of investments at the $1.7 billion University of Nebraska Foundation, Lincoln, said in a phone interview that diversification has been beneficial.
"Obviously as an endowment invested for a perpetual time horizon, we're pretty broadly diversified across all major asset classes," Mr. Neale said.
But what has really helped the foundation during this time of extreme market volatility was the decision to raise liquidity months before the impact of the pandemic was clear, he said.
"I would say going back to late 2019 and early 2020 — December and January — if you look at equity valuations in particular (and) if you look at where rates were, to use the term 'frothy' is an understatement. We started raising liquidity," Mr. Neale said. "It was really precipitated on the view that we were going to see some sort of correction or drawdown."
"That's been a really helpful thing for us," he said. "I will tell you what one of our biggest challenges in terms of providing stopgap revenue coverage to the university is the fact that 99% of our assets are restricted.
"That has been a challenge for us but we've been working very closely with the university to identify whether there are opportunities to work with restricted funds where perhaps we could have conversations with the donors: 'Can we re-evaluate the fund agreements to determine if there's some flexibility?'"
Justin Barton, president and CIO of the UCLA Investment Co., Los Angeles, which oversees the investment management of the $2.8 billion UCLA Foundation, said in a phone interview the foundation's endowment had cash and liquidity balances that enabled smooth management of the portfolio.
"We spent a lot of time just trying to assess what our liquidity needs are likely to be as an institution," Mr. Barton said. "We've got 'liabilities' to our stakeholders in terms of payouts."
As a result of running stress tests in the last few years that modeled instances such as public markets falling 50% or not receiving distributions from its private portfolios, the portfolio had sufficient liquidity in March to rebalance asset classes to their target allocations, he said.
The investment company, launched in late 2011, is still building up its private portfolios, Mr. Barton said.
"Being heavily exposed to marketable securities, the (first) quarter was a challenging quarter," Mr. Barton said. "What's really important for us to be aware of — and we are aware of — is what really matters is the quality of the assets you own. One of the things we stress internally as well as to our stakeholders is what we can't control is market pricing. What we can control is what we own, and I think we feel really good about just the intrinsic quality of our assets that run through our managers."
What the future holds can be difficult to determine during an unprecedented crisis, but expertise at institutions is helping.
Cambridge Associates' Ms. Chen pointed out that although it's unclear how long this crisis will last, there's new information about the coronavirus every week, which helps institutions make decisions based on the future.
Plus, colleges and universities "are very good at adapting."
"They're places of learning and they have scientists on their faculties," Ms. Chen said. "They have many disciplines that help them decide how to respond to change."