"The Incentive for Legacy: Tsinghua University Education Foundation", co-authored by Hao Gao, Director of Global Family Business Research Center at Tsinghua PBCSF, Lauren Cohen, professor at Harvard Business School and Chief-editor of Review of Financial Studies, and Spencer Hagist, research associate at Harvard Business School, was recently included in Harvard Business School Case database with accession number: 221100-PDF-ENG. It is the first case on Asian university foundation included in the database.
(Website of Harvard Business School Case collection)
University endowment fund plays an increasingly important role in modern University development whose role includes fundrising, value preservation, donation, and providing long-term stable resources for sustainable development. For example, due to COVID-19, Harvard's research funding from government and non-governmental agencies in the 2020 fiscal year dropped 2%, while Harvard's endowment, the world's largest university endowment (USD 41.9 billion), has provided strong financial support in the tough times, with annual distributions increasing by 5%. Another example comes from Princeton University, where the USD 26.6 billion endowments for the fiscal year 2020 contributed 60 percent of the university's annual financial outlay, with which the university has created more than 200 chairs to attract the world's best academics, and offered full scholarships to all doctoral students and all undergraduate students with annual household incomes below USD 65,000.
To maintain and increase the capital value, university endowment is one of the most important institutional investors in developed capital markets, along with national funds, pension funds, insurance companies and family offices. As an important source of long-term capital and a major driving force in technological innovation and economic growth, university endowment's asset allocation strategy takes in full account of factors including yield, liquidity, risk appetite and investment cycle. It helps to maintain real purchasing power across nations, thus strongly safeguarding the long-term sustainability of a university. For example, the Yale University endowment, one of the world's top-performing institutional investors, has grown its assets from USD 5 million in 1900 to USD 31.2 billion in 2020, with an average annual return of 12.4% over the past 30 years. The strong investment performance of the endowment has provided a solid financial foundation for Yale's growth.
Tsinghua Foundation case focuses on the practice, exploration and innovation of Tsinghua University Education Foundation (hereinafter referred to as "Tsinghua Foundation"). Founded in 1994, Tsinghua Foundation is a national non-public foundation. Both in 2013 and 2019, it was awarded for “the 5A social organization”. As one of the first Chinese university foundations to follow the operation mode of university endowments, Tsinghua Foundation has gradually become specialized, professionalized, and internationalized in resource development, project management, fund operation, legal risk control, strategic research, public relations, and comprehensive management. It has become an important channel to gather alumni and social resources, support the building of universityy with Chinese characteristics, an important platform to show the spirit of Tsinghua and promote Tsinghua culture. It has played an active role in the sustainable development of Chinese university foundations and in reform and development of Chinese higher education and public charity.
This case analyses the development concept and innovative practice of Tsinghua Foundation, guiding students to the in-depth thinking on the development opportunities and challenges of university endowments, how to systematically plan and carry out the development strategy of university endowments, and how to respond to the internal logic between universities, donors and foundations for fundraising and investment allocation and other related issues. This case is applicable to the related fields including economics and finance, business administration, public administration for Master, MBA, MPA, EMBA, DBA, and executive education programs.
Focusing on family business, wealth management, family office and philanthropy, Tsinghua PBCSF Global Family Business Research Center has published more than 150 papers and cases in academic and financial journals at home and abroad, 16 academic monographs and translations, and co-authored several Harvard cases. It has provided high-quality think tank research for national ministries and industry organizations. It closely cooperates with the World Economic Forum, Bill & Melinda Gates Foundation, the Monetary Authority of Singapore, HK Financial Services Development Council, Private Wealth Management Association, UBS Group, and other renowned agencies. It is seeking to provide intellectual support for sustainable national economic development and globally important issues and is committed to becoming a renowned think tank with international influence in the field of family business and wealth management.
Harvard Business School was the first business school in the world to create a case-based teaching model and has the most authoritative Harvard Business School case library in global business studies research and teaching area. That the research result of a Tsinghua PBCSF faculty shows the Tsinghua PBCSF's contribution to the building of China's financial case database and promoting global academic exchanges and research cooperation.
