Endowment
Columbia's endowment is an approximately $6 billion portfolio of equities, commodities, fixed-income instruments, and cash equivalents. It is not a "slush fund" for spending, as it is mean primarily to serve as a long-term investment vehicle. On the other hand, it's not just a pile of money that serves no purpose but to grow each year either.
Contents
Structure
As of 2004, Columbia's endowment was diversified among approximately 4,000 equity and commodity securities, and unknown fixed-income positions.
Spending rule
With various conditions, the Trustees aim to spend approximately 5% of the endowment per year to fund the university budget. Indeed, approximately $200-$300 million of the university's $2 billion budget comes from endowment spending. This is not just a round number, but actually a legal requirement for a non-profit which maintains significant investments to keep its non-profit status.
Size
At $6 billion in fiscal 2006, Columbia's endowment lags significantly behind its Ivy League peers. Harvard's is the largest at $30 billion. Princeton's is the largest on per-student terms.
Performance
Columbia's endowment has performed well for its approximately 20 years of existence (prior to the sale of Rockefeller Center in 1985, Columbia's endowment in securites and investments was insignificant). It has averaged an approximately 16.5% compound annual growth rate (CAGR), which outpaces the S&P 500 index by a respectable margin, and is on par with other alternative investment concerns. It should be noted, however, that Columbia's endowment is exempt from both corporate and capital gains taxes, and does not face unpredictable principal volatility, as the the 5% spending rule is more or less fixed.
Socially Responsible Investing
Columbia's investments are subject to review by the Committee on Socially Responsible Investing, which does what its name implies. Notable actions by the SRI and its predecessors include divesting Columbia from South Africa in the 1980s. Presently, a modest effort spearheaded by left-leaning elements on campus seek to have Columbia divest from companies that presently materially support or benefit from the war in Iraq, like Lockheed-Martin or Boeing.
It is unlikely to consider how much effect this will have. Consider that Boeing has a market capitalization of $76 billion. If Columbia's endowment even remotely mirrors the SEC's definition of a "diversified investment company", then it can have no more than 5% of total assets in a single company, or approximately 0.395% of Boeing's market value.
Hedge fund?
It is debatable on whether Columbia's endowment is actually a hedge fund in disguise (as Harvard's clearly is). However, it is known that they employ the services of a prime broker.
