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Unused Endowment Spend: A Streamlined Process

Jason MacDonald, M.B.A.
Chief Investment Officer
Rutgers University Investment Office
Email: jason.macdonald@rutgers.edu

Jason MacDonald is the Chief Investment Officer at the Rutgers University Investment Office, overseeing approximately $1.6 billion in endowment assets.  Prior to joining Rutgers in 2016, Jason was Senior Portfolio Manager for Private Markets with the New Jersey Division of Investment.  In that role, he was responsible for investing the Division’s $20 billion alternative investment portfolio and managing the underlying portfolio team. Jason began his career at the Division as an analyst within the private equity group.  Jason holds a BS in Environmental Business Economics from Rutgers University, and an MBA in Finance from St. Peter’s College.

Project Sponsor
Michael Gower
Executive Vice President and Chief Financial Officer, University Treasurer
University Finance & Administration

Every year there is a subset of annual endowment spending dollars that goes unused for one reason or another. We are recommending the creation of a university-wide working group to develop the processes and procedures needed to address this issue. The initial group would consist of senior representatives from the following areas: University Finance & Administration, Office of the General Counsel, the University Foundation, and senior finance officials across Chancellor units.

For context, the “Endowment” is a pool of assets that is actually made up of over 2,500 individual endowments which were created by donors, departments, or schools to support a variety of causes – some of them quite old. Annually, each endowment receives 4% of a 3-year market value average of these assets (the “spend”) to fund their specific purpose. Therefore, funding very important initiatives without affecting the University’s budget. These funds (the “spend”) sometimes go unused for a variety of reasons, increasing budgetary burdens. Some of the most common reasons include: lack of proper protocols, lack of clarity on what the money can be spent on, or the purpose of the gift is too narrowly focused and cannot be spent. The University needs a uniform annual auditing process to evaluate unspent funds and provide a standard set of procedures that would outline the necessary steps and people to engage in order to remedy the situation in the most efficient manner possible. If successful, this would free up unspent funds to be used for great causes while reducing the University’s budgetary burdens. This could also create additional goodwill amongst donors.