Campaign, investments help put U-M in strong financial position

October 16, 2014

ANN ARBOR—A strong start to the Victors for Michigan fundraising campaign and overall investment returns of more than 18 percent helped to put the University of Michigan in a strong financial position at the end of the 2014 fiscal year.

That financial assessment comes from Douglas Strong, U-M’s interim executive vice president and chief financial officer, in his comments included as part of the university’s 2014 Annual Report, approved today by the Board of Regents during a meeting on the Flint campus.

Strong said the university increased its total net position by $1.6 billion to $13.1 billion.

“This increase is primarily the result of strong investment returns—which added $974 million to the endowment, net of distributions for operations—and a strong start to the public phase of the Victors for Michigan campaign…which included $298 million in gift revenue for capital and endowment purposes,” he said.

Strong said the university continues to employ a disciplined budget approach “that carefully balances the university’s requirement to be competitive against the challenging economic environment for several years.”

President Mark Schlissel said in his opening letter for the annual report that the university’s highest priority is student support.

“One of our most important goals will be to keep a Michigan education affordable and build the financial resources that will enable us to do that,” he wrote. “I believe there has never been a more important time for Michigan’s contributions to, and leadership in, public higher education.”

Among the financial highlights in the annual report are these:

  • Donors made gifts of cash and pledge payments totaling $436 million, an increase of 22 percent over the previous year. Corporate giving was up 27 percent to $21.6 million and donors made gifts totaling $88.9 million for student support.
  • The annualized investment rate of return over the past decade for U-M’s long term portfolio, which includes the endowment, stands at 10 percent, well above the S&P 500 stock index return of 7.8 percent for the same period.
  • Research spending exceeded the $1 billion mark for the sixth straight year, totaling $1.3 billion.
  • The U-M Health System achieved an operating margin of 0.7 percent on operating revenues of $2.5 billion, while experiencing a 5.7 percent increase in patient care activity.
  • The university continues to maintain the highest credit ratings possible from both Standard & Poor’s (AAA) and Moody’s Investor Services (Aaa), one of only four public universities nationwide to maintain both ratings.

The consolidated financial statements for the university are audited by the independent accounting firm of PricewaterhouseCoopers LLP.

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