Following a national trend of increasing returns on endowments, the LSU Foundation experienced about an 11 percent bump in performance on endowments, or gifts, that have been invested for the 2012-2013 fiscal year.
When individuals give to the private foundation, their money can be spent in different ways depending on donors’ decisions. Not all gifts to the Foundation are invested, making those that are invested subject to shifts in the market.
If individuals give endowments, the money is invested and only part of that money, the return of the investments, can be spent, said Sara Crow, director of communications and donor relations of the LSU Foundation.
Crow said endowments work similarly to savings or retirement accounts and the University receives a perpetual stream of funding.
The Chronicle of Higher Education conducted a national study and found that investment returns for University endowments also improved by 11.7 percent.
This national trend of increases in returns on philanthropic investments can be attributed to market growth.
The University’s investment returns are typically similar to other SEC peers and national trends, Crow said. She added that similar to last year’s trend, the University experienced a negative return rate on endowments and now the Foundation is seeing growth.
A positive market and an increase in endowments help the University because the invested funds provide long-term money.
For example, several scholarships are funded through endowments and the positive growth gives the University a sense of security given a trend of reduced state appropriations.
The more endowment gifts the University receives, the better the University will be able to offset the impact of state cuts, Crow said.
This year’s growth is an encouraging sign for the foundation, Crow said, as the Foundation is focusing on donors giving gifts through endowments.
“It helps us grow that perpetual stream of funding,” said Crow.
Last fiscal year, out of the $30 million in gifts the Foundation received, $6 million were endowment funds.
Crow said this is only 20 percent of gifts that can be invested and the Foundation would like to see those numbers increase.