According to the report, almost all organizations reported either having an endowment fund or that another organization held or maintained an endowment fund on their behalf (87% of small, 97% of medium, and 100% of large organizations). Organizations at all sizes reported investing endowment assets in a variety of investments; U.S. fixed income (93% small, 97% medium, and 100% large) and U.S. equity investments (95% small, 95% medium, 100% large) predominated.
The majority of colleges and universities reported engaging in foreign investments (53% of small, 67% of medium, and 82% of large respondents reported investments in non-U.S. equities). Many reported using investment entities to make foreign investments of endowment funds (34% of small, 47% of medium, and 69% of large colleges and universities). Of those, at all size levels, respondents used more than one type of entity to make foreign investments (36% of small, 48% of medium, and 47% of large organizations that reported using investment entities).
In addition, most colleges and universities reported having investment committees and large universities tended to have the most members on their investment committees. The median number of individuals for each organization size category that were on staff whose primary responsibility was investment management of endowments was zero showing that the majority of organizations had no individual on staff whose primary job was investment management of endowment funds (averages were 0 for small; 1 for medium and 3 for large).
A higher percentage of large and medium colleges and universities reported using an outside consultant for investment guidance than did small colleges and universities. In most cases, the investment committee had responsibility for approval of selection of external fund managers. More than half of the organizations in each size category reported engaging an outside consultant and that the investment committee approved the selection of external parties and approved their investment advice.
At least 80% of organizations in each size category reported having investment committees approve investment guidance made by outside consultants.
Executive Comp for Nonprofit Colleges and Universities
According to an interim report on the Colleges and Universities Compliance Project initiated by the Exempt Organizations (EO) function of the IRS Tax Exempt and Government Entities Division (TE/GE). the reported compensation of the highest paid officer, director, trustee or key employee (ODTKE) was highest for the large colleges and universities (average approximately $428,000; median $361,000) and lowest for the small colleges and universities (average $202,000; median $174,000). In the majority of cases, the highest paid ODTKE was the chancellor/president.
The reported compensation of the highest paid employee that was not an ODTKE was highest for the large colleges and universities (average approximately $798,000; median $352,000) and lowest for the small colleges and universities (average $145,000; median $98,000).
In small and medium organizations, the highest paid employee (other than an ODTKE) was most often a faculty member (approximately half of the organizations). In the case of large organizations, the highest paid employee (other than an ODTKE) was most often a sports coach (43% of organizations). A faculty member was the highest paid non-ODTKE employee in 34% of large organizations.
In the case of large organizations, the average amount paid to the highest compensated non-ODTKE employee was more than $350,000 higher than the average amount paid to the highest paid ODTKE (the medians were similar).
In general, large organizations reported the highest percentages of colleges and universities with various governance policies. More than 80% of organizations in each size category reported having conflict of interest policies covering members of the ruling body and top management officials. Many organizations also reported conflict of interest policies for full-time faculty (ranging from 58% to 100%).
Seventy-six percent of small colleges and universities reported making their audited financial statements available to the public, while 91% of medium organizations and nearly all (97%) of the large college and universities reported doing so.
The IRS project includes a compliance check of colleges and universities principally focused on (1) the conduct and reporting of exempt or other activities that may generate unrelated business taxable income; (2) investment, management, and use of endowment funds; and (3) executive compensation practices. It also is focused on a number of issues related to governance in these areas.
The interim report covers data reported by 344 colleges and universities – 177 private and 167 public organizations of various sizes. Thirteen colleges and universities that received the IRS compliance questionnaire failed to respond and were referred to EO Examination. Based on the responses to the questionnaires and information on the Form 990, EO has opened examinations of more than 30 colleges and universities.
The interim report is here.