Imperative XII

June 3, 2004

They live by acronyms and numbers, tracking the rise and fall of NASDAQ and the NYSE. Yet, the University's financial officers -- caretakers of the endowment, contributions and fiscal management -- will tell you that the 12th imperative of Baylor 2012, achieving a $2 billion endowment, isn't about raising a number; it's about raising the next generations of Christian world leaders.
"The way one can look at endowment is how it transcends into the future, for students yet to come," says Jonathan Hook, Baylor's chief investment officer. "What you want to make sure the school can do is continue to have as good or better environment, faculty, facilities. It's a notion of intergenerational equity. What this office does is not necessarily seen by anyone today. It's always focused on what it's going to provide years out." 
When Hook, MBA '81, returned to his alma mater in February 2001, he was given the task of investing the endowment for growth -- specifically from $611 million to $2 billion. He works with current endowment, the investment yield compounded and new monies raised or designated through University Development. The last three years have been challenging because of a slow economy and a declining stock market, so the question is, would not meeting the goal by 2012 be considered a failure? Hook says he doesn't think so. 
"The number that was put out there when 2012 was first conceived was an aggressive goal -- a goal that was coming off the best stock market this country has ever seen," he says. "No one anticipated the stock market of 2000 through 2002, and that set everybody back." 
According to the Jan. 23, 2004, issue of The Chronicle of Higher Education, between June 2002 and June 2003, nearly 300 college and university endowments had less money at the end of the year than at the beginning. 
"To have a goal that is difficult is not a problem. What is more meaningful is, are we making progress?" Hook says. Recent numbers seem to indicate that Baylor is. In 2003, overall contributions to Baylor were $45 million -- the fourth-largest amount in a calendar year; $17 million of that was earmarked for the endowment. As of March 31, 2004, the gross endowment totals were $693 million, an increase of 23.4 percent from the end of fiscal year 2002-03. "At the end of March, Baylor had its highest endowment total ever," Hook says.
One reason giving increased was the strong end-of-the-year economy and market, says Richard C. Scott, vice president for University Development since 1996. "When people have a good feeling about the money they have and how long it's going to last, then they're more interested in giving," he says. "We also have a lot of people who believe in what we're doing." 
Scott agrees that attaining a $2 billion endowment is not crucial to the implementation of the Vision. "The achievement of the goals laid out in 2012 are not dependent upon us getting the endowment to $2 billion. Probably with any endowment of $1 billion or more, we can achieve everything in Baylor 2012," he says. 
In 2003, contributions came from more than 16,000 donors, the third-largest in Baylor's history; of that total, more than 3,500 gifts came from first-time contributors, also a record-setting number, Scott says. "That's very high. I think they like what they see happening and want to be part of it." 
Endowed scholarships comprise the majority of designated gifts, Scott says. During the 2003-04 academic year, more than 3,000 undergraduate students benefited from the $10.5 million available, and 235 postgraduate students received an additional $1.2 million. "That's something donors can get their arms around. You can start with a relatively small amount and build it through a number of years to provide a very significant scholarship." 
The notion of watching something grow over time appeals to many donors, says Ben Renberg, associate vice president for University Development. The endowment, he says, is "a stewardship, it's a part of their philanthropy that gives them a real idea of how they are making an impact on society by taking their money and investing in a student." 
At Baylor, the overall participation rate for giving among alumni for 2002 was 20 percent, a number that has grown in the last decade or so, Scott says. "It's not where we would like to see it, but it's a good, strong representative sample." At Boston University, George Washington University and Southern Methodist University, the rates were 11 percent, 12 percent and 18 percent, respectively, during the same period, he says.
In development circles, there often is talk of "transformational gifts" -- at some universities, individual donations of more than $100 million. For Renberg, though, the process is more important than the number. "You've got to look at the way the donors identify with the institution and its mission, its vision," he says. "They don't want to give to another campaign. They want to give to an institution that is moving forward and continuing to be innovative in how it does its work."