Sustaining the University’s Long-Term Financial Stability

As state support declines, the strength of an endowment is more important than ever

The University of Virginia’s endowment strength provides the financial support and flexibility necessary when other revenue sources decline.

Historically, the University relied heavily on appropriations from the Commonwealth of Virginia. However, in Virginia and in many other states, macroeconomic changes and constrained state budgets in recent years have resulted in less revenue available for public education. Steadily declining state support means the University must increasingly rely on past and continued donor generosity to sustain its margin of excellence. Annual contributions help cover the University’s yearly operating expenses, whereas new gifts to the endowment, along with the endowment’s long-term investment performance, help secure the University’s long-term financial stability.

As the following graph illustrates, endowment spending has surpassed state appropriations as a funding source for the University’s academic budget for the past seven fiscal years.

UVIMCO’s primary investment objective is to maximize the long-term, inflation-adjusted return of the Long Term Pool within the risk tolerance of the University. UVIMCO achieves this objective by actively managing the Long Term Pool in a manner carefully designed to provide a substantial and growing stream of income to support the University and its related foundations while preserving for future generations the purchasing power of their long-term investment assets.

Over the past decade, UVIMCO’s active management of the Long Term Pool added $1.3 billion to the University’s endowment beyond the amount that would have been earned by investing in a passive benchmark portfolio.

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