Pitt endowment grows by 25 percent in 2011

Despite significant endowment growth at the University over the past year, Pitt students… Despite significant endowment growth at the University over the past year, Pitt students shouldn’t expect any decreases in their tuition payments next fall.

In 2011, Pitt saw its endowment increase by 25 percent to $2.53 billion, up from $2.03 billion in 2010. The endowment growth reflected a trend in the region, as Duquesne, Carnegie Mellon, Chatham and Robert Morris universities all also rebounded from the recent recession.

Pitt’s endowment consists of all donations made to the University for a specific cause — such as founding scholarships or fellowships — based on the wishes of the donor.

University spokesman John Fedele said that people often mistake endowment growth for an increase in the University’s “general savings account,” when in reality, a vast majority of donations have restrictions placed on them based on the donors’ intents.

“The donated money goes into a bank account or is invested in stocks,” Fedele said. “The principal doesn’t get touched, and usually a portion of the earnings are donated and spent on the donor’s wishes.”

Fedele said in an email that an example of this is a $1 million donation from the David Berg Foundation of New York to endow the H.J. Zoffer Chair position in the Katz Graduate School of Business.

Pitt uses a formula that expends a certain amount of earnings based on a two- to three-year average, Fedele said. He added that Pitt uses this formula to ensure that even during years when investment returns are low, the University can count on having a definite dollar amount for the budget.

Fedele attributed the endowment’s growth to solid financial planning by the University, and said that the growth reflects a combination of skillful investment decisions and fundraising.

Despite having a small alumni base compared to Pitt, Chatham also saw recent growth in its endowment, with a 24.9 percent increase to $72.9 million in 2011.

Walt Fowler, Chatham’s vice president for finance and administration, said dealing with a smaller donor base provides an added challenge for the university’s staff when seeking funding.

“We concentrate on locating [alumni] and have goals of participation for our institution,” Fowler said. “We’re trying to engage the students while they’re here as undergrads and grad students and get them involved after they graduate.”

Fowler also said that Chatham sought new donations in order to fund the building of a new campus in Pine Township to add to its current location in Shadyside. He said that the new campus would serve as the university’s center of sustainability, where students would be able to earn graduate degrees related to the environment and sustainability. Fowler said the campus would be funded as a “capital project,” through which the university seeks funding for a specific purpose.

While Pitt and Chatham experienced endowment growth in the 2011 fiscal year, no Pittsburgh-area University fared as well as Carnegie Mellon. Backed by a $265 million donation from the late William S. Dietrich II, a former steel executive, CMU saw a 28 percent increase in its endowment, which jumped from $815 million in 2010 to $1.02 billion in 2011.

Dietrich, the former president of Dietrich Industries, also donated $125 million to Pitt’s School of Arts & Sciences, which now bears his father’s name. Through his charitable organization, the

Dietrich Foundation, Pitt and CMU will receive 5 percent of his donation each year.

Teresa Thomas, a spokeswoman for CMU, said in an email that the growth in the university’s endowment is the result of a combination of factors, including strong investment returns and the generosity of alumni.

“The return was driven by a number of factors, including strong market performance and the University’s long-term asset allocation strategy,” Thomas said.

She said that endowed projects over the past year funded fellowships for graduate students and professorships, allowing CMU to attract and retain “top-notch, world-renowned” faculty. She added that the new funds allowed for an increase in funding toward scholarships and financial aid as well as additional resources that furthered the university’s mission.