Advancing Endowments

By Dorian Martin ’06

Exemplifying one of Texas A&M University’s Core Values, Excellence, Mays Business School publicly announced its commitment to becoming the nation’s preeminent public business school. But what will reaching the highest level require?

Talent tops the list. Reaching preeminent status will mean continuing to attract and keep top talent ‘both faculty and students’ while also creating the right environment and incentives for them to thrive. It also will mean investing in cutting-edge programs that help Aggies stand out in their careers and prepare them to become respected leaders.

Reaching preeminence will also require additional funding. A key part of this financial formula involves creating and expanding endowments that enhance the school’s capacity.

Fortunately, Mays already has a strong foundation. In addition to a culture steeped in the Aggie Spirit and Core Values, the school has a strong and committed community of Former Students, current students, faculty, administrators, and corporate partners who value excellence.

And thanks to many of these individuals, Mays has a solid endowment of over $200 million that continues to grow. A recent example of the Mays community’s strong dedication to the school is their support for the planned Business Education Complex. Thus far, over $36 million has already been raised, including lead gifts from the Mays Family Foundation, Wayne Roberts ’85 ’86, and Jerry Cox ’72.

Creating a Margin of Excellence

While both Texas A&M and Mays Business School have a variety of funding streams to tap, donor support is what sets them apart. “While the State of Texas provides well for Texas A&M, philanthropy is the margin of excellence,” said Texas A&M Foundation Chief Financial Officer John Huser ’89. “Yes, there’d still be a business school building and academic programs, but private philanthropy takes it to the next level and gives Mays faculty and administrators more opportunities to provide an exceptional educational experience for business students.”

Endowments 101

So, why are endowments important? Ultimately, these financial gifts provide long-term stability and sustainability to Mays while also honoring the donor’s priorities.

Mays’ endowments are managed by the Texas A&M Foundation, a self-sustaining nonprofit organization that serves as the primary academic fundraising institution for Texas A&M University. The Foundation has a seven-member development team , led by True Brown, Senior Director of Development, embedded in Mays Business School to specifically build relationships with and support the school’s donors.

When an endowed gift to Mays is received, the Foundation invests it in its entirety, and in perpetuity, and then dispenses a standard annual distribution to the myriad of donor directed accounts supporting the school. “The beauty of this approach is that, come rain or shine, you still have a standard distribution,” Huser explained. “For example, when COVID broke out in March 2020, the market had a large temporary decline. The Foundation’s 4% payout rate is based on a five-year rolling average, so the ups and downs of any market period are smoothed. This allows predictability for all the different programs being supported; no matter what the market is doing that year, we’re going to pay out 4% based on this 20-quarter average market value. It’s a sustainable stream of money for a program.”

Endowments also create a lasting legacy for the donor because they are a legal agreement that permanently records the donor’s intent for their gift. “That means that if there’s a new dean at Mays, a new president at Texas A&M, or a new president at the Texas A&M Foundation, the original donor intent is a legal direction of spend that is not subject to change by anyone but the donor,” Huser explained, adding that endowments also offer programmatic stability. “Once funds from a non-endowed gift run out, a program can have a real sustainability risk. By making an endowment, the donor can direct that a program will have long-term sustained financial support.”

Endowing Areas of Passion

Currently, the Texas A&M Foundation manages $2.6 billion in endowed funds that are spread across 9,135 endowed accounts that support the entire campus. These funds are earmarked to support a variety of areas, including programs, departments, professorships, chairs, fellowships, scholarships, and buildings. The endowment is actively managed by a high-quality team, led by Mike Pia, the Foundation’s CIO, that is singularly focused on delivering on their mission of maintaining the spending power of the endowment portfolio through a balanced and diversified ‘all-weather’ strategy that delivers on both the preservation and growth of capital over a very long investment horizon. The seven members of the Foundation’s board also make up the Investment Committee that provides effective oversight of the investment team’s processes and procedures to best enable the endowment to excel in good markets but also weather downturns.

Creating an endowment requires an investment of at least $25,000, which can be funded over a five-year period instead of in one lump sum. Additionally, all gifts are tax-deductible.

There are many ways to support Mays through creating an endowment or adding to an already existing one:

• A group of Aggies with a common interest can pool their resources to create an endowment to support that area.
• Corporations can endow a chair or support a program in the discipline where their work is focused. An example includes the KPMG Chair in Accounting.
• Smaller directed donations can be made to support specific Mays programs and departments through the Give Now section of the Texas A&M Foundation’s website.
• Tapping company matching programs can make creating an endowment more affordable. For example, a donor could create a $25,000 endowed scholarship over a five-year period by contributing $2,500 annually and asking their employer to match that amount. By using this method, the donor pays $12,500 and gets a tax deduction while the company covers the remainder.
• Donors can incorporate planned giving into their estates as another way to support Mays in the future.

Growing Mays’ endowment is a critical piece in achieving preeminence and committed Former Students like Adam Sinn ’00 whose $20 million gift is supporting finance scholarships as well as student and faculty success initiatives are stepping up to the plate.

“To compete with the top public business schools in the country, such as the University of Michigan’s Ross School of Business and The University of Texas’ McCombs School of Business, we must significantly increase our revenue base and bring our endowment to a level similar to theirs,” said Mays Executive Associate Dean Sorin Sorescu. “An endowed gift ensures that the money will be there in perpetuity, allowing Mays to remain competitive with the top business schools in the country, irrespective of current conditions.”

Read the article, “What is an endowment?”