<p>@rjkofnovi </p>
<p>I’m not familiar with the history of Michigan’s economy(I know that it isn’t the car manufacturing behemoth that it once was, but that’s it). Why did Michigan’s economy decline so much and when?</p>
<p>California is also having a hard time. Michigan has been actually getting better since last year. Nevertheless, state funding to UMich is really little. So private donation and oos tuition are important incomes. There are not many state flagships can do that like UCLA or UMich and not relying on state funding. UMich’s endowment was probably around the same level as UCLA before the last campaign raising 3.2 billion around 10 years ago. It seems this may require continue effort and perhaps a large campaign every decade.</p>
<p>The following is just my opinion. Michigan at one time was a union dominated state (many will argue it still is). The auto industry practically invented and sustained the great middle class that had the been the backbone of our society for over a hundred years. Good wages attracted thousands to the state in the early part of the 20th century. During WWII, Michigan became the, “Arsenal of Democracy” and in a very large way helped make this country victorious over the Nazis. The area was doing very well until the seventies when corporate greed, along with union corruption, started the long decline of the American automotive industry. Factories started to close down and move to other states where the overall business climate was better. There are of course other factor and details, but that is essentially the problem of the state. Michigan has been mostly a one trick pony. When car sales dropped, the state suffered. Nowadays there is little to no loyalty of any manufacturer or any business for that matter that trades publically. Michigan’s golden era is over I’m afraid. Our most valuable resource, talented young people, are leaving the state in droves after graduation from high school and/or college. I hope eventually things might get turned around, but I don’t know if I will live long enough to see when it happens. </p>
<p>@rjkofnovi </p>
<p>That’s unfortunate. :(</p>
<p>I am sure the economy in Michigan is going to improve. It’s just never going to be the way it once was. That may or may not be a blessing. </p>
<p>It would not return to the golden age. We are hoping it would just recover part of the downturn within the last 5-10 years. Last year was the first time in a while to have a surplus in state. It will take at least 5-10 years with surplus like that to recover the lost in the last 5 years. The tax revenue increase is just an index of the economy in Michigan.</p>
<p>It should be noted that fund raising campaigns seldom add much to the endowment of a university. A large chunk of the funds raised are usually earmarked for various other purposes. The current $4 billion fund raising drives at Michigan and UCLA are not going to increase their respective endowments by $4 billion. </p>
<p>Where do you think Michigan’s endowment will stand by 2020 Alexandre, assuming there isn’t another huge correction in the stock markets? </p>
<p>Do you mean in terms of the value of the endowment, or its position vis-a-vis other endowments? In terms of value, I would expect it to be in the $15-$18 billion range. Vis-a-vis other endowments, I see Michigan separating itself from its closest peers (Columbia, Penn and Northwestern). The only school ahead of Michigan on the endowment list, MIT, will likely remain ahead, although the gap with be narrower. </p>
<p>The University’s investment team is making in average 9.6% annual return. Minus the 4.5% expenses from the endowment, it would still add around 5% per year. It would reach 13 billion by 2020 even without additional input to the endowment.</p>
<p>“It should be noted that fund raising campaigns seldom add much to the endowment of a university. A large chunk of the funds raised are usually earmarked for various other purposes. The current $4 billion fund raising drives at Michigan and UCLA are not going to increase their respective endowments by $4 billion.”</p>
<p>As Alexandre notes, campaigns don’t add much to the permanent endowment. Typically, fundraising is mostly spent intra-year and is supplemental to operational funds. A capital campaign generally seeks to add 25% to 35% to the annual number, with the hope that that margin can be permanently endowed (added to permanent capital). To that extent, Michigan’s $4Bln campaign will lead to an addition of $800MM to $1Bln to the permanent pool. One hint is that the amount sought to endow scholarships is $1Bln, or roughly the margin that I mention. Most of the other gifts will be used to add to operational support for building or replacing buildings.</p>
<p>“Do you mean in terms of the value of the endowment, or its position vis-a-vis other endowments? In terms of value, I would expect it to be in the $15-$18 billion range. Vis-a-vis other endowments, I see Michigan separating itself from its closest peers (Columbia, Penn and Northwestern). The only school ahead of Michigan on the endowment list, MIT, will likely remain ahead, although the gap with be narrower.”</p>
<p>My estimate based on the recent 10 year history would be around $16Bln. I agree as to the separation comment, again based on history. MIT is within reach as I think Michigan’s relative size advantage will gradually grind away the gap. The other schools ahead on the list appear to be too far ahead to catch in less than 3 generations.</p>
<p>“The University’s investment team is making in average 9.6% annual return. Minus the 4.5% expenses from the endowment, it would still add around 5% per year. It would reach 13 billion by 2020 even without additional input to the endowment.”</p>
<p>Endowments receive gifts, make expenditures and earn capital gains. I believe (not certain) the 9.6% for Michigan is depicted AFTER spending. That is a belief, I don 't guarantee it, but so far the spend and gifts are generally a wash. As the endowment grows the spend will exceed gifts so additions will resemble gains-only to a lesser degree and more heavily reflect the spend rate.</p>
<p>In general, a near 10% average annual return is a very good investment. From the article I read, I think that 9.6% is the annual investment return. Spending from it should be on a separated book. I think that is an average from the past 14 years.
Below is from the endowment FAQ:
</p>
<p>Here is the article I am referring to. It is from a year ago and the 9.6% average annual return is from the 14 years before that.
<a href=“U-M endowment reaches historic high of $8.4 billion | University of Michigan News”>http://www.ns.umich.edu/new/releases/21755-u-m-endowment-reaches-historic-high-of-8-4-billion</a></p>
<p>@blue85 </p>
<p>God points, but in the case of UCLA’s campaign, I should reiterate that according to the campaign;s website, one of the major goals of the fundraiser is to significantly increase UCLA’s endowment.</p>
<p>^^^^^this is the Michigan board. No one here, other than yourself, cares about the endowment at UCLA. </p>
<p>@rjkofnovi </p>
<p>You hurt my feelings.</p>
<p>But since we’re on the Michigan forum, I’ll talk about Michigan’s endowment instead.</p>
<p>Given how large it is, are there any plans to try and make the endowment compete in size with that of the Ivies(The higher ones, like Yale and Princeton, and the unofficial one, Stanford)? It seems like it could be done with enough persistence.</p>
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<p>I’m not sure if that’s true. The only mention of endowment on the campaign’s website is under the athletics section where it’s listed as ‘endowment / scholarships’ for a mere 50 million. That’s chump change for UCLA since the university likely has operating expenses over 5 billion annually.</p>
<p>The priority of the endowment is really the health sciences, which is getting a whopping $2 billion from the campaign, assuming it reaches its goal; UCLA is also investing a ton in its professional schools. Both HSSEAS and TFT are getting a $250m from the campaign. That’s not necessarily a ton for UCLA, but it is quite a lot for a professional school. Donations for both schools are likely to be used in investing in facilities and faculty (I’ve heard some complaints about the lack of quality faculty and facilities at TFT, which is really embarrassing for a school of its history and reputation.)</p>
<p>Combined, the amount of money for the health sciences and professional schools is slotted to take 84% of the campaign total. So really, the campaign’s goal is to boost the quality of UCLA’s faculty, facilities, and research. And that’s totally expected at a school of UCLA’s quality.</p>
<p>c.f. <a href=“Homepage - UCLA Let There Be”>http://giveto.ucla.edu/the-centennial-campaign/</a></p>
<p>@beyphy </p>
<p>Quoted from the website:</p>
<p>“Endowment gifts – especially faculty chairs, fellowships and scholarships – are imperative for attracting world-class faculty and students. The Centennial Campaign will help to close the endowment gap between UCLA and other top-tier universities. Together we will set the standard for a self-reliant public research institution in the 21st century.”</p>