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Having been steered by our Ministry of Education since 1996, the financial support system for running national universities is changed from government budget to endowment funds. This change affects private universities to broaden the scope of financial operation. And also, when arranging budget, they only need to be responsible to the board of directors. All these increase the flexibility of executing the budget.
This study, selecting four of domestic universities, including NTU, NCTU, FCU, and TU, through checking their financial statements and interviewing with them, inducts the current financial tools used in financial planning activities for endowment funds among these universities and difficulties faced by endowment funds in financial planning. Also this study finds, among these four universities, only FCU has established simple portfolio for asset allocation, with a full-time employee. The other three universities basically deposit their endowment funds in banks, without any full-time employee to deal with these endowment funds, targeting their annual return merely at rates of time deposit.
This study also reviews the annual financial reports of two American universities, Harvard University and Yale University, and finds the financial vehicles used in these two universities’ endowment funds are diversified. They have set up risk management systems and organized investment committees, which consist of professional and full-time members. Over the past ten years, both endowments of Harvard University and Yale University have outstanding performance, with annual investment returns of 11.8% and 16.8% respectively.
Owing to both the development histories of endowments in Harvard and Yale are longer and more mature than those in our universities, this paper proposes nine suggestions for our universities’ reference: first, pay more attention on financial management for endowment, second, organize a professional and full-time team, third, build a simple model of asset allocation, fourth, establish risk management system, fifth, change investment attitude of keeping the principal all the time, sixth, team up a financial management association among universities to increase the opportunity for discussing and interchanging opinions, seventh, the Ministry of Education should draw up incentive measures, eighth, set up financial information network, and finally, cooperate with world-wide professional and decent asset management companies.
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