Endowment Management at American State Universities: A Case Study of the University of California

Abstract

 Due to the constant decrease in government subsidies for state universities in the United States, it has become more crucial for American state universities to manage and expand their endowments. This study examines how the University of California (UC) has managed its endowment and clarifies the characteristics of UC's endowment by focusing on the role of its multicampus system and its investment management policies. The findings indicate that UC headquarters and each UC campus have autonomously invested and managed their endowments while taking advantage of the multicampus system. In particular, by investing in endowments collected from each campus, UC headquarters can manage endowments on a relatively large scale and succeed in increasing investment returns for UC as a whole. UC headquarters has an endowment management policy that reduces costs and fees for investment professionals and narrows the number of financial products that can be invested in. In addition, by increasing the proportion of alternative investments while retaining a relatively large proportion of traditional investments such as stocks and bonds, high returns have been achieved while maintaining stability. These research findings have implications for Japanese national universities regarding how to improve their financial stability through effective endowment management.