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Charitable Trusts

A note from Simon Krinsky ’96 Chair of the Investment Committee

The Amherst College Endowment is actually part of a modestly larger investment pool that includes the Endowment for the Folger Shakespeare Library, some longer-term operating reserves, and a number of Charitable Remainder Trusts (CRTs) created by our alumni and parents.  I am deeply biased as an alumni, alumni spouse, a Trustee and the Investment Committee chair, but I believe Charitable Remainder Trusts are an under-utilized form of estate planning, an interesting portfolio diversifier, and a great way to give back to Amherst! 

CRTs invested alongside the Endowment typically pay annual distributions to their donors (as a percentage of assets or a fixed dollar amount) and ultimately pass principal on to Amherst, either after a certain number of years or at the death of the donor.  There are a lot of good tax and estate reasons to create a CRT including deferring capital gains, diversifying concentrated holdings and reducing taxable income, but investing alongside the Amherst Endowment has its own financial planning merits too.     

The Endowment – as part of this larger pool aptly called the Long-term Investment Partnership (LTIP) - is managed in partnership by an on-campus Investment Office and an active Investment Committee.  Over the 20 years ending June 30, 2017, the Amherst Endowment has earned 10.7% per year, which puts it in the top 10 of all elite colleges and universities over that time period.  Our Amherst education is now within reach for the very best students in the country and the world, regardless of their financial means.  Amherst is one of only five U.S. institutions of higher education, and the only liberal arts college, to be need-blind in its admissions, meet the full financial need of every admitted domestic or international student, and provide all financial aid via grants rather than loans, so that students do not graduate with crippling debt.  52% of our budget is funded from the Endowment, one of the very highest rates of “endowment reliance” of any college or university in the world.  This year, Amherst will provide nearly $55 million in need-based financial aid, which is an increase of over 400 percent since my time at Amherst!  You get the picture: Amherst is a special place, with a special endowment, and we are working hard to put it to use.

Amherst’s attractive long term results are a function of many factors – a perpetual time horizon, a talented investment office, wise counsel from an experienced investment committee, and a reputation in the investment community as a thoughtful, stable and ethical counterparty, to name a few.  This pool is invested across a range of strategies including stocks, bonds and alternative investments like venture capital, private equity, real assets and hedged investments.  We try to manage the portfolio so that returns are durable over time, and not dependent on predicting economic cycles. 

By creating a CRT and naming Amherst as the remainder beneficiary, alumni and parents will participate in all Endowment investments, which might provide exposure they could not replicate personally.  In addition, because of the Endowment’s perpetual time horizon and governance structure, donors benefit from access to truly long-term and capital constrained investment opportunities.  Our CIO Mauricia Geissler connected these two concepts of time horizon and access well in a recent interview with Trusted Insight, where she was named one of the top 30 CIOs in 2018.   Mauricia said, “One of the underrated or under-appreciated values that exists in many endowments, foundations and family offices is continuity and longevity of the investment teams and the committees with which they work. In addition to that, the perpetual nature of the pool of assets that they manage, allowing them to have a long-term focus in managing that asset pool. There clearly has been turn over in the endowment and foundation world, but where you find longevity and continuity of leaderships in teams, you tend to find better performance. I think there's definitely a correlation there.”