Endowment and Finances
Assets of The UCLA Foundation are managed by the UCLA Investment Company, a wholly owned subsidiary of The Foundation. For more information, please visit www.uclainvestmentcompany.org.
Performance Highlights - For the fiscal year ended June 30, 2023 (FY23):
- Net position comprising total assets in excess of total liabilities and deferred inflow of resources increased by $572 million (13% increase): $5.1B
- Total assets (11% increase): $5.5B
- Total liabilities (7% decrease): ($0.4B)
- Revenue in the form of donor contributions (15% increase)*: $589M
- Gift fund distributions and operating expenses (21% increase): ($371M)
- Non-operating revenues compared to FY22 non-operating expenses of $373 million (168% increase): $252M
- Private gifts of permanent endowments (1% increase): $156M
- Endowed Investment pool return: (7.0%)
- Total FY23 endowment payout available to the campus and affiliated entities increased by $15 million (10% increase): $158.8M
The UCLA Foundation’s support of the university remains strong thanks to donor contributions of $745 million and endowment performance of 7.0%. The Foundation’s net position increased to $5.1 billion. Total assets increased by 11% ($548 million) to $5.5 billion while total liabilities decreased by 7% ($31.6 million) to $427.8 million.
*Excludes contributions managed by the Regents, additions to permanently endowed funds, and endowed or conditional pledges.
The purpose of The Foundation's endowment is to support the educational mission of UCLA by providing a reliable source of funds for current and future use. The income/payout from each individual endowment fund is used to support the purpose established by the donor in the gift instrument. However, endowment funds are commingled for investment purposes in The Foundation Endowment Pool to maximize returns and minimize investment and administrative costs.
The endowment seeks to maximize long-term total returns consistent with prudent levels of risk. Investment returns are expected to preserve or enhance the real value of the endowment to provide adequate funds to sufficiently support designated university activities. The Endowment assets have an indefinite time horizon that runs concurrent with the endurance of the university in perpetuity. As such, the investment portfolio assumes a time horizon that may extend beyond a normal market cycle and therefore may assume an appropriate level of risk as measured by the standard deviation of annual returns. It is expected that professional management and portfolio diversification will smooth volatility and assure a reasonable consistency of return. The endowment's portfolio is expected to generate a total annualized rate of return, net of fees and spending, that is greater than the rate of inflation as measured by the National Consumer Price Index over a rolling 5-year period. The Foundation accomplishes these objectives by engaging a number of professional managers who are assigned specific investment mandates for equities, fixed income and alternative investments.
The Foundation's spending policy governs the rate at which funds are released to fund holders for current spending. The Foundation's spending policy is based on a target rate set as a percentage of a rolling market value. The current stated payout rate is 4.25 percent for fiscal year 2023-24. The Board of Directors of The Foundation reviews and approves this rate annually. Investment returns earned in excess of the approved spending rate are retained in the endowment principal to protect from the effects of inflation and to allow for growth. During periods of investment market decline, endowment distributions for newer funds may, if needed, reduce the fund value to assure that predictable funding is available for individual endowed fund program activities and objectives.
Endowment Cost Recovery
Endowment Cost Recovery (ECR) is an annual charge which UC Board of Regents authorized the UC Foundations to establish to help defray all of the reasonable and appropriate tasks, activities, operations and costs incurred that are incidental to but necessary for the proper running of an endowment program and the carrying out of the terms of the endowments. The UCLA Foundation ECR is set at .65 basis points annually and is used to support the UCLA External Affairs infrastructure required to manage the endowment.