Annual Endowment Report

A large endowment strengthens a university's academic reputation. An endowment grows when alumni and friends want to create a lasting legacy for future generations. The value of a university endowment makes a statement about the value of every degree granted.

The SJSU endowment portfolio is comprised of over 600 individual funds benefiting all areas of the campus -- from the colleges to the Dr. Martin Luther King, Jr. Library, to intercollegiate athletics and other university-wide programs. Most endowments are restricted to specific uses such as establishment of a scholarship, support for a center, or creation of an endowed chair.

SJSU’s endowment stood at $163 million on December 31, 2019. The portfolio grew 6.3% in the second half of 2019. In 2019, more than $5.5 million of new gifts were added to the endowment portfolio. Inception to date composite return was 6.5%, ten-year return was 7.3%, the three-year return was 8%, and the one-year return was 20% as of December 31, 2019.

SJSU's endowment is ranked 382 out of 785 universities reporting endowments. This is up from our ranking of 391 in 2018. The 2019 annual endowment standings published by the National Association of College and Business Officers show that 110 universities have endowments that top $1 billion.

The Tower Foundation works with investment firm Beacon Pointe Advisors to allocate the endowment assets to a diversified portfolio of domestic and international equities, fixed income, real estate, cash equivalents and other investments as required by our Investment Policy [pdf], all of which reflect varying rates of return. The long-term financial objective of the portfolio is to produce a relatively predictable and stable spending stream each year and to grow both the spending stream and the corpus over time, at least keeping pace with the general rate of inflation.

As California's public universities continue to face budget challenges, SJSU's endowment becomes even more important to its success. The 2020 endowment distribution of over $5.7 million is helping to fund programs that are vital to San Jose State. Income from the endowment provides student scholarships, such as the Simpkins Family Donor Advised Endowment Fund; vibrant programs, such as the Natalie and James Thompson Gallery and the Valley Foundation School of Nursing Endowments; and sustainable fellowship and faculty support programs, such as the Martha Heasley Cox Steinbeck Fellowship and the Newnan Brothers Excellence in Teaching endowments.

The 2019 annual distribution was 4 percent of the average market value of the endowment for the previous 36 months ending December 31. According to a survey conducted by the Council for Advancement and Support of Education, university distributions typically range from 3 to 5 percent of the market value of the endowment. SJSU's 4 percent distribution was approved by the Tower Foundation Board of Directors and was consistent with CSU distribution recommendations. A three-year average is used to minimize the impact of market fluctuations on the endowment funds and is consistent with practices adopted at other leading universities. A 2 percent management fee is charged to endowments. The fee covers administrative costs and provides a sizeable investment SJSU's fundraising efforts.