Frequently Asked Questions
The Investment Office shares full transparency with the Investment Committee and the administration. Publicly, the University shares the endowment’s broad asset allocation and investment returns. Santa Clara—along with most universities—does not share the specific investments in these categories with the public. Part of Santa Clara’s competitive investment advantage is the ability to partner with selective, top-tier third-party investment managers skilled at finding superior investment opportunities. Keeping the investments and relationships confidential preserves those relationships and investment advantage.
No. The endowment is funded by donations, not tuition.
The SCU’s Investment Office, led by the chief investment officer, is charged with implementing investment policy and choosing outside managers who help us achieve our objectives for growth, liquidity, risk management, and cash flow.
The endowment is regulated by federal law, the Uniform Prudent Management of Institutional Funds Act, which protects the assets of nonprofit institutions from misuse or loss and sets rules for modifying donor restrictions, among other things.
The endowment aims to maintain 65% equity investments; 15% fixed income; 10% hedge funds; and 10% real assets.
Research literature suggests that impact investing is more meaningful, measurable, and impactful than divestment. For instance, helping fund the next generation of utility-scale battery storage helps address climate change far more directly and with greater impact than refraining from investing in auto manufacturers.
Furthermore, divestment often has unintended negative consequences, such as shifting fossil fuel production to less environmentally friendly countries, which ultimately exacerbates climate change. Many universities, including SCU, prefer impact investing over divestment for these reasons.
Corporate responsibility and the University’s values are reflected in the investment process. The endowment office avoids investments in corporations that consistently practice forms of racial, ethnic, religious or gender discrimination, or have a track record of gross ecological violations, for example. It is not our practice, however, to purchase or divest from assets based on world events.
Changes to the investment methods and investing policy are made very infrequently, and with great deliberation and thought by the Investment Committee and the Board of Trustees in consultation with University leaders.
The role of the endowment is to manage and grow the assets entrusted to the University, ultimately for the benefit of current and future generations of students and faculty. If the endowment were directed to solve other social or political issues in a way that impaired its investments, it would be at the expense of the Santa Clara community. This would run contrary to the goal of the endowment, and it would violate the trust of the donors, whose explicit intent is to support the University and its community.
The investment team at Santa Clara University, as well as the outside fund managers, are all chosen for their unique expertise and skill at managing SCU’s endowment to achieve our current, short-term, and long-term objectives, while also managing risk, liquidity, and cash-flow needs. The Investment Committee, which is composed of both members of the Board of Trustees and individuals with unique insight into investment management, provides oversight and additional expertise. Input from campus is received through means such as town halls; meetings with concerned parties; and occasionally through subcommittees convened by the Investment Committee of the Board of Trustees.
No. Gifts to the endowment are different from so-called “expendable” donations, such as those to the annual fund or for buildings. Most gifts made to the endowment are restricted to support a specific purpose, for example, financial aid for students, endowed professorships, academic programs, etc. Some gifts are unrestricted, and can be used by the University to support critical university needs.
A common misunderstanding about the endowment is that it is like a savings account that can be tapped to a larger or smaller degree as needed for current expenses. Instead, an endowment is a permanent, growing pool of capital that is carefully invested so the earnings and growth can be used for donor-designated purposes such as scholarships, endowed professorships, or new academic programs, over generations. Only the earnings or growth from those invested gifts are used to fund all such donor-specified goals, which comes to about 4.5% of the total endowment each year.
Imagine a donor giving $100,000 to an endowment for scholarships. That $100,000 is not spent but pooled and invested so that its investment gains are enough to cover the scholarship goals each year. With careful investing and planning, that $100,000 will have far more impact as an endowed gift than if it were doled out each year to recipients until it was gone.