University endowment models: A tale of two missions
It is not often that the death of a university employee is a lead story in the
Wall Street Journal’s business section. That honour went last weekend to David F Swensen, the creator of what came to be known as the Yale Model. This was not an academic programme like the Dalton Plan or some exquisite combination of theory and practice, but the diversified investment strategy that in 35 years took Yale’s US$1 billion endowment to US$31 billion.
The Yale endowment is about 5% of the combined endowments of all US universities and is roughly US$5 million for each of the 6,000 undergraduates currently enrolled. Last year the endowment contributed over one-third of Yale’s annual operating budget – about US$1.5 billion. Of that, 20% went to scholarships, fellowships and prizes and 25% was unrestricted and could be used for general purposes.