You are currently viewing Higher Ed: Communicating Endowment Returns

Higher Ed: Communicating Endowment Returns

3m Read

Financial Modeling Supports Strategic Conversations

In the world of higher education, strategic planning around endowment returns is a critical component of a fruitful financial future. Modeling endowment scenarios helps analyze different trajectories your endowment funds could take. However, that analysis means very little if it cannot be communicated to business leaders and stakeholders.

Synario offers industry-leading higher education strategic planning software designed to both explore financial scenarios as well as communicate those scenarios in an automated and dynamic way. Endowment projections can easily be altered and updated to reflect best, worst, and expected economic conditions. Those projections can then be moved into Synario's dynamic presentation mode where visualized reports and charts can be adapted to answer stakeholder what-if questions without impacting the underlying financial model.

Watch the Communicating Endowment Returns video attached above to see Synario's presentation mode in action.

Video Transcript:

College and University investment management is a balancing act.

Finance officers need to at once support the institution's  budget today, as well as maximize returns to support  the mission in the future. The financial impacts behind  university priorities may seem opaque to stakeholders not  involved in day-to-day management.

With a tool to run real-time  scenarios, finance leaders can ask questions such as…  What will happen if we take money from our endowment  to support refunds and students in need due to COVID-19?

We can see the impacts on our key metrics and even isolate the various  investment funds that we need to manage.  What would happen if this occurs for multiple years?  We can also layer into this analysis various  investment return assumptions.

The takeaway here is using a modeling tool to evaluate  investment assumptions along with strategic priorities helps  finance officers understand and communicate the trade-offs  that their institution may face. This ultimately helps drive  better decisions for the institution.

Best practice is to regularly evaluate before decisions  are made and as market conditions change.  In today's environment, presidents, boards,  students, and alumni are asking more questions  regarding the endowment.

From the outside, the endowment looks like a pile of money to be used  to solve a short term crunch but university leaders know  better.

The vice president for public affairs and government relations  and Chief Communications Officer for Duke University told  CBS News recently…

This is all happening in real-time so it will be a while before we can fully assess the impact across the institution. And indeed across higher education. In the short-term we are evaluating a range of options with regard to the coming academic year which will depend on both health and public policy considerations.

We are also looking at the long-term effects and opportunities, which will  be considerable as well. 

As people are asking to dip  into the endowment Synario can help visualize the  impacts of alternative scenarios and what they could mean for  the institution. The long term ramifications of  decisions today can be of greater significance  than many people realize.

A complete institutional analysis includes major drivers  that impact your business. Perhaps tuition revenue,  compensation, research, deferred maintenance or  capital, and new programs. See the other videos in this series  for more!