USC trails region in funding

New president will try to close endowment gap

By WAYNE WASHINGTON - wwashington@thestate.com

The University of South Carolina might be competitive with neighboring state schools in athletics, but when it comes to endowment size, USC is the scrawny backup being taped to the goal posts and doused with Gatorade.

USC’s $439 million endowment is hundreds of millions less than that of the universities of Georgia and Tennessee, one-fifth of the University of North Carolina’s and one-10th of what the University of Virginia has at its disposal, according to 2007 figures from the Council for Aid to Education, which tracks giving to colleges and universities.

USC noted that those endowment figures are closely tied to cash-on-hand and do not include some assets that can be counted in determining endowment size.

Herbert Adams, chairman of USC’s board of trustees, said those assets push the university’s endowment in 2007 closer to $465 million, with 2008 numbers expected in the next few days.

Still, he and others at the university acknowledged that the gap between USC’s endowment and those at nearby state schools is large.

What gives? Or, rather, what doesn’t?

“South Carolina was late getting into the private money (fundraising),” Adams said. “People would give things to Carolina — book collections and things like that, but that’s not an endowment. Very little was solicited until the 1980s.”

The top priority of new USC president Harris Pastides is to lead the school on a fundraising drive that will close the gap between USC and other schools.

Pastides said he will begin “as soon as next week assessing the landscape” for a fundraising campaign.

He said he plans to go to the school’s trustees before the year is over to lay out a plan to raise money.

“I want to do a lot of planning,” he said. “I need to talk to my advisers.”

Pastides said he is confident USC can raise what it needs — even in sluggish economic times.

USC’s fundraising drive is expected to last from five to seven years, and board members have mentioned $500 million as a goal, but no official target has been established.

Already, however, university officials are working to maintain contact with potential donors.

“We have the donor base,” said Michelle Dodenhoff, USC’s vice president for development and its interim vice president for advancement. “It’s out there.”

Dodenhoff explained how large capital campaigns work.

First, she said, there is a “silent” phase when the university attempts to reach large donors who might help the school get as much as 65 percent of what will later be announced as its target.

“With your leadership donors, you’re getting all of your big gifts,” she said.

Then, Dodenhoff said, there’s a public phase of the campaign. A target figure and time frame are announced, and donors are urged to help the university meet its goal.

“It puts a sense of urgency to the funding needs,” Dodenhoff said. “You don’t want people to hear about a campaign for seven years.”

With only one large, professionally run capital campaign to its credit, USC is relatively new to the big donor game.

That has been costly, as other schools have perfected their fundraising and investing techniques.

In 1997, USC’s endowment stood at $146.2 million, according to the council. The University of Georgia, by contrast, was about $115 million ahead of USC at that point, and UNC was even further out, with just under $720 million.

Endowment money — at USC and other schools — is used for scholarships and to recruit high-quality professors. It is invested in a variety of funds and managed by financial experts.

Endowments are taking on increasing importance as state-supported universities across the country struggle to get what they feel is adequate funding from state legislatures.

Different schools include different things in their endowments.

Of course, the larger the investment of endowment funds, the larger the potential return on that investment.

UNC saw its $720 million endowment triple from 1997 to 2007.

Jerry Odom, executive director of University Foundations at USC, said USC has averaged double-digit returns on its invested endowment money.

And there have been bonanza years. In 1991, for example, the school’s invested endowment money brought in a return of 23.5 percent.

The worst year in the past 16 was 2002, when the investment lost 5.4 percent.

Some of USC’s money is invested in hedge funds, private pools of money where investors are essentially betting on whether assets fall or rise in value.

The foundation board that oversees USC’s invested endowment money has a rule prohibiting the investing of any more than 15 percent of that money in hedge funds.

Odom said hedge funds are safer than they are reputed to be and can bring a healthy return in sour economic times.

USC’s money is invested and its endowment is calculated in a conservative manner, Odom said.

For USC alumni who don’t like the idea of their school lagging behind others in the region in endowment size, Odom had another message.

“Give,” he said. “Support your university.”

Reach senior writer Wayne Washington at (803) 771-8385.