What is the Wayne State University Foundation?

The Wayne State University Foundation was established by the University’s Board of Governors in 2000  to consolidate, encourage, and manage financial support from private philanthropic sources. The WSU Foundation is a nonprofit 501(c)(3) corporation that is organizationally distinct from the University and governed by its own independent board.

The WSU Foundation’s Board and its officers have a fiduciary responsibility to prudently steward the endowment on behalf of the University without conflicts of interest and to preserve its assets for future generations and university needs. Wayne State University’s Division of Development and Alumni Affairs has the responsibility for philanthropic fundraising in support of the University's mission, its faculty, and students, where development officers are assigned to schools, colleges and divisions. In this way, the WSU Foundation and the University’s Division of Development and Alumni Affairs together collaborate to cultivate and steward private philanthropic support to advance the university’s mission.

The WSU Foundation Board includes an Investment Committee that assists its board with all investment-related decisions, including oversight of the University’s endowment. The fiduciary management of the endowment is not just a responsibility, it is a critical tool to achieve the University’s long-term objectives and promote intergenerational equity.

What is WSU Foundation’s endowment?

The Foundation’s endowment is a dedicated and permanent source of donated funds that advance Wayne State University's educational, research, and community service mission. There are no federal, state, or tuition funds in the endowment. Comprising approximately 2,000 individual funds invested as a single entity, distributions from the endowment provide a critical source of funding for activities and programs across WSU's thirteen schools and colleges, including supporting student financial aid, groundbreaking research, and hundreds of professorships across a wide range of academic fields.

The overwhelming majority of endowed funds are donor-directed through legal gift agreements to support specific purposes, programs, or units, and therefore, must be spent per the donor’s stated purpose. Therefore, distributions to the University from these endowment funds may be used only to support the donor’s designated purpose.

Endowed gifts are intended to benefit both current and future generations of students and scholars. As a result, WSU and the Foundation are obligated to preserve the purchasing power of these gifts by spending only a fraction of their value each year.  A portion of the endowment is disbursed and distributed to respective University units to fulfill the donor’s intended purpose. The additional earning appreciation is reinvested, adding to the endowment's growth that bolsters support for future generations. This perpetual cycle of investment and distribution positions the endowment as a critical source of financial support for the University, both currently and into the future. Spending significantly more than that over time would privilege the present over the future, inconsistent with an endowment’s fundamental purpose of maintaining intergenerational equity.

How large is the WSU Foundation’s endowment?

Endowment funds were valued at $507 million as of September 30, 2023.

Who manages the WSU Foundation’s endowment?

Commonfund, an outside asset management firm, serves as the WSU Foundation’s outsourced, independent chief investment officer (OCIO) and has managed the portfolio since 2022. Commonfund supports the WSU Foundation by managing the endowment’s assets in alignment with the Foundation’s investment policies and return objectives.

How are endowed funds invested?

The endowment’s investment objective is to achieve an inflation-adjusted return sufficient to support the spending policy, preserving intergenerational equity with moderate risk. The long-term return target for the endowment, net of inflation (and investment management fees) is 5.5% or greater. (Statement of Investment Policy)

The endowment has no direct investments. All exposure is indirect, through funds. These funds combine capital from numerous investors in portfolios (or funds) comprising various financial instruments. By using this approach, the endowment gains access to investment management expertise and optimizes cost efficiency in the endowment.

The annual investment report for the Foundation endowments can be found here.

How are Divestments and Socially Responsible Investing Different?  

Divestment and Socially Responsible Investing (SRI) are two approaches to aligning investment decisions with environmental, social, and governance (ESG) considerations, but they differ in their strategies and objectives. Divestment avoids or removes investments from sectors or assets for political, ethical, social, environmental, or other non-financial reasons.  SRI involves incorporating ESG criteria into investment decision-making while remaining invested in companies or funds. SRI seeks to generate positive social and environmental impact alongside financial returns. 

The endowment’s investment policy prohibits direct investment in companies with significant involvement in the tobacco industry. However, indirect investment through commingled or pooled funds, where investment in such securities is incidental, is allowed.

How much support does the endowment provide to the University?

In FY23, distributions from the endowment to the University totaled approximately $23 million as of September 30, 2023, which comprises approximately 2% of total University revenues. WSU Board of Governors statute provides that the annual rate of the endowment distribution will be 5.0% of the three-year rolling average market value of the endowment fund, and that 80% of the funds are spent for the endowment purposes and the other 20% to fund the cost of the University’s fundraising activities led by the division of Development and Alumni Affairs. With the reduced share of state support over the last two decades, growing the endowment and increasing its distribution to the University is a high priority to support our mission and enable our community affordable access to Wayne State.

What do the endowment distributions to the University support?

The endowment distributions provide annual income to university programs and initiatives in accordance with the donor-specified terms, where approximately two-thirds of the distributions directly support student and faculty needs. An additional 10% supports the research facilities, equipment and infrastructure used by students and faculty in scholarly research.

There is a common misconception that endowments are like bank accounts that can be accessed and used for any need at any time. In reality, donor intent restricts expenditure to a specific purpose, and the endowment's perpetual nature limits spending at any particular time.

The breakdown of how the endowment supports university activities is provided below.

Area	Percentage
Student Support	41%
Program Support/Other	26%
Faculty Support	22%
Research	10%
Building Maintenance/Renewal	1%

 

Details on the WSU Foundation and university investments were shared at the June 26, 2024 Board of Governors meeting. A copy of that presentation is available on the board site.