Dear Bulldog Nation:
Our nation is experiencing truly extraordinary times. Americans are being sequestered from each other in ways this generation has never experienced before. Schools are closing, concerts postponed, sporting events canceled, and any gathering of more than 10 people is discouraged.
The University of Georgia and surrounding communities are not immune from these times. Students leaving for spring break with thoughts of relaxation and fun with friends have come back to campus with an entirely different set of feelings. The spring sports calendar has been canceled, commencement canceled, and classes have moved to online formats. This was not what spring in Athens was supposed to be.
Despite these trying and troubling times, we will persevere.
The University of Georgia Foundation was established in 1937 in order to support the University of Georgia, its students, faculty, and programs. The Foundation was born in the depths of the Great Depression. Through the generosity of individuals who cared deeply about the University of Georgia, they formed a Foundation and gave their own money to help their alma mater and the school they loved during one of the nation’s most challenging moments.
Since 1937 and navigating immediately through the Great Depression, the Foundation has since endured another twelve recessions including the most recent Global Financial Crisis in 2008.
Over the past 83 years, the Foundation has maintained its support of UGA, its students, faculty, and programs through World War II, the Korean War, the Vietnam War, the Gulf War, 9/11, the Cold War, the Cuban Missile Crisis, a presidential assassination, presidential resignation, Chernobyl, Tiananmen Square, oil spills, hurricanes, tsunamis, and on and on. The Foundation will maintain its support of UGA through a global pandemic.
While the human suffering and concerns cannot be overstated, one of the key priorities of the Foundation is financial support. The Foundation provides financial support through a highly diversified investment portfolio. Upon founding the Foundation in 1937, the Dow Jones Industrial Average declined 50%. It had already fallen 40% from 1929. It suffered another 50% drawdown during the 2008 crisis. The 1970’s saw multiple 30%+ drawdowns. On October 19, 1987, the Dow fell 22.6% alone.
Through all of this, the Foundation endured and continued its support of UGA.
Today presents another stressful time period for the investment portfolio. However, the portfolio is designed to absorb many of these short-term fluctuations. Our spending formula is designed to minimize short-term market aberrations and provide consistent support to our students, faculty, and programs.
Regarding the investment portfolio specifically:
1. We entered 2020 with over 3 years’ worth of spending held in cash and U.S. Treasuries.
2. Given the significant decline in interest rates, the Foundation has sold some of its Treasury holdings in early March. We realized healthy gains and are holding these proceeds in cash.
3. Our liquidity position is very strong with over 50% of the portfolio held in instruments with daily liquidity.
4. In late summer and early fall of 2019, the investment portfolio sold all direct public energy and commodity exposure. Oil prices have experienced tremendous volatility given both demand and supply shocks in the near-term.
5. In February, the Investment Committee approved a reduced pace of private capital deployment given elevated valuations. This decision further increased liquidity within the portfolio.
6. The investment team is evaluating opportunities for the first time in many years within the high yield bond market and other distressed corporate credit markets.
Over the 83 years of Foundation history, the investment portfolio has absorbed similar levels of volatility. While the short-term is concerning, the long-term is quite clear. The University of Georgia Foundation will continue its support of our students, faculty, and programs. These scary times will pass. We will gather again in support of our athletic teams. We will celebrate scientific breakthroughs. We will recognize our student achievements. And we will rally together again and proclaim, “Go Dawgs!”