University Grows Endowment by 200%, Uses Whitebirch Financial Modeling Software to Manage Success

Thursday, September 6, 2018

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University Grows Endowment by 200%, Uses Whitebirch Financial Modeling Software to Manage Success

ORANGE, CA – Sept. 6, 2018: As higher education institutions plan for the future, chief financial officers must balance their strategic plans and spending projections against the projected growth and composition of their endowment.

Chapman University has created a prospective view of this balancing act by utilizing sophisticated financial modeling across a ten-year planning horizon. With Whitebirch, Chapman has been able to understand and manage the planned growth of its endowment, from $134 million to $392 million over the last 10 years, while increasing the percentage held in unrestricted quasi-endowment.

“We have been able to take our endowment from roughly eight percent restricted and inaccessible, and we have flipped that ratio to about 50 percent liquid,” said Harold Hewitt, EVP/CFO, Chapman University.

The increased liquidity offers Chapman major benefits, including:
• readily accessible liquid assets if and when needed for off-budget, mission-critical expenditures;
• increased spending for need-based financial aid; and
• advantages during the credit rating process

“Whitebirch financial modeling is a perfect match for forward-looking institutions like Chapman,” said PFM Managing Director Brett Matteo, who heads the company’s financial modeling practice. “It’s a sophisticated modeling platform that allows our clients to identify opportunities and risks, navigate through uncertainty toward their goals, and communicate their plans to various stakeholders.”

On an annual basis, a certain amount of net from Chapman’s operations is reinvested in a fund used to cover major repairs and renewals. Another portion of the net from operations is assigned annually to increase the size of the endowment. These are selected targets, not accidents, according to Hewitt.

“It’s the rigor of the model that has enabled us to set these targets, track our progress, meet the goals, and to readily report them back to the Board,” said Hewitt. “These financial targets guide all sorts of decision-making, including budget, strategic plan and investment decisions.

“We don’t do anything without modeling it through Whitebirch.”

The case study also outlines other uses of Whitebirch by Chapman University, including activity related to undergraduate tuition pricing, financial feasibility of new program offerings, and building strategic plans around capital expansion.

“We provide a financial modeling tool that helps ensure Chapman is adhering to its overall financial guidelines and targets,” PFM’s Matteo said.

To View the Chapman University case study, click here.

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