IMPACT

“Our hope is that this research initiates critical conversations about enhancing support for HBCUs whose endowments have been historically underfunded and engaging asset managers to help these institutions meet their long-term goals,” said Sancia Dalley, managing director, PGIM, who oversees its HBCU investment strategy.

UNCF’s member institutions are all private HBCUs. Private HBCUs are crucial in providing quality higher education to their students, but they face significant obstacles in building substantial endowments. The study, which gathered insights from nearly one-third of private HBCUs, highlights several constraints these colleges and universities face:

• Limited Infrastructure and Capabilities: 86% of private HBCUs studied use endowments primarily for scholarships, leaving little for other needs.
• Fewer Investment Management Resources: Private HBCUs typically have one internal investment professional, while non-HBCUs often have at least six people in this role.
• Risk Aversion: 63% of HBCUs classify their risk tolerance as moderate, with only 13% having dedicated resources for risk management.
• Smaller Allocations to Alternative Asset Classes: Private HBCUs allocate 27% less to alternative assets than non-HBCUs.

The asset management industry can address these challenges by offering investor education, access to innovative investments and risk management expertise, such as developing and implementing risk management strategies and support for endowment pooling initiatives.

This study highlights the vital need for increased investment and support for HBCUs, emphasizing the critical role they play in advancing educational opportunities for Black students. By engaging with asset managers and leveraging this research, UNCF aims to significantly enhance the financial stability and growth of private HBCU endowments, accelerating their impact and ensuring their long-term success.

“HBCUs have historically pursued their missions with limited endowment resources,” said Ed Smith-Lewis, UNCF’s vice president of strategic partnerships and institutional programs. “They have done tremendous work despite these challenges. Using this study as a foundation, UNCF is leading the charge to enable HBCUs to cultivate the endowments needed to accelerate their impact.”

This focused effort aims to bridge the gap and provide HBCUs with the necessary resources to thrive, helping them continue to serve as vital pillars of educational excellence for future generations of college students—and ultimately, working toward improved futures for us all.