Endowment University of Navarra
The Endowment is a portfolio that serves to provide stable funding for part of the university's activities. Its goal is to allocate a sustainable annual amount to the ordinary budget for the fulfilment of the University's own purposes and, in this way, to ensure that the donations received have a lasting impact and are a stable support for financing the activity over time.
It also aims to achieve an additional return in order to preserve the purchasing power of the fund's assets over the long term deadline .
Currently, there are two endowments within the University: academic centres and IESE, which have a distinct management and their own financial report .
Endowment academic centres
The endowment of the academic centres is made up of two sub-funds: the Hipólito Astigarraga Fund, constituted from a bequest received and whose purpose, according to the donor's wishes, is to help the research in illnesses; and that of the activity professor, a generic fund to help the purposes assigned by the University.
In order to achieve the double goal of financing projects and maintaining the purchasing power of the assets over time, the University hasinvestment regulations and expense which regulate certain limits on investments, mainly aimed at limiting risk, as well as complying with the values of the institution.
It also sets out the formula for calculating the amount earmarked for purposes each year. The investment policy limits the allowed volatility to 10%. Another limit is a maximum of 70% of exhibition to equities, 15% in fixed income assets rated high performing, and 30% in alternative asset positions. In addition, no leverage is allowed, except for leverage arising from derivative positions, which in any case may not exceed 30% of the value of the assets under management. The expense policy establishes that the amount available for expense is calculated on the basis of 3.5% of the average value of the portfolio in the previous year (giving it a weight of 20% of the equation) and the amount drawn down in the previous year adjusted for inflation (weight of 80%).
Application at end: 80% of previous year's figure + 20% of the value of the endowment x 3.5%.
The endowment is managed internally by the University's financial team, advised by the Fundación Universitaria de Navarra (FUNA). For a portfolio of these characteristics, and a long time horizon deadline, a relevant data are the average returns obtained over long periods. In this case, the annualised return average since the beginning, in the 2011/12 academic year, is 4.19%.
The University's endowment closed the academic year with a return of 16.92%. Equity contributed 95% of the return, due both to the good performance of this asset subject in the period and to the increased weight given to it in the portfolio, which went from 41% at the beginning of the academic year to 69% at the end of the year.
For the 2021/22 academic year, the good results of companies are expected to continue, which will foreseeably translate into good results for equities. Asset weights similar to those at the end of the year are expected to be maintained.
Origin and destination of the fund
The existence of an endowment is linked to the generosity of the donors who have provided the funds for it to exist and to support many of the activities carried out. An endowment is characterised by the fact that it is linked to specific purposes (scholarships, Chairs, etc.) by the will of the donors. The total fund is usually made up of the sum of endowments for different purposes. The annual earmarking comes from its profitability according to the approved "law of expense". This is a formula that allows an amount to be earmarked annually for purposes and the rest of the return, if any, to recapitalise the fund so that it does not lose purchasing power.