When compared to Kentucky’s other college and university endowment foundations, Western Kentucky University’s College Heights Foundation tops the list with the highest five-year average annual return.

Foundation President Donald Smith said the foundation’s success comes down to an investment policy “driven by long-term horizons.”

Meanwhile, the Western Kentucky University Foundation – although both organizations are affiliated with WKU, the two foundations have different missions – finished last with the lowest return. Marc Archambault, who arrived in August as the foundation’s director, wants to improve that rate of performance.

“We’d like to be at a higher rate to be able to do more with the funds available for our students and our faculty,” he said. “One of my objectives is to try to ensure we get the highest rate of performance we can achieve while managing risk.”

The Kentucky Center for Investigative Reporting looked at five years’ worth of investment returns from 11 of Kentucky’s college endowment organizations. With $53.4 million in total assets, the College Heights Foundation had a five-year average annual return of 7.35 percent. The WKU Foundation’s total assets amount to $68.9 million. Archambault said the foundation’s rate of return was 2.66 percent as of Dec. 31.

The College Heights Foundation focuses on student scholarships, while the WKU Foundation is more about supporting academic programs, capital projects and professorships.

College and universities are relying more on endowments as state support for higher education dwindles.

“Endowments are critical in terms of sustaining long-term impact of programs,” Archambault said.

One example, Archambault said, would be the WKU Foundation’s support of university professorships. That could include a professorship supported by private money helping with a salary, stipend or money for students and faculty to present research at conferences.

“Generally there are insufficient funds from the state to do these sorts of activities,” he said. “Those funds tend to support even more core programs.”

Smith described endowments as “university savings account” that creates revenue streams lasting in perpetuity.

Total assets for the Kentucky Community and Technical College System are $49,650,198 with an average return of 5.52 percent. 

When it comes to the College Heights Foundation, Smith said the foundation tends to avoid “alternative investments,” which are investments outside of the stocks, bonds or cash. They include hedge funds, for example.

Smith said those investments tend to require large amounts of money to see good returns.

Archambault also outlined plans to improve the WKU Foundation’s return. In January, the foundation’s board approved a move to rebalance its investment portfolio to reduce risk.

“We think that’s gonna have some very positive impacts on the performance of our portfolio,” he said. Archambault also wants to convene a blue ribbon panel of financial experts to help with decision making.

“In general, we’re looking at our investments in the energy industry,” he said. “We’re making some investments in some well balanced real estate opportunities and we’ll be also evaluating our exposure to global markets.”

Archambault has been in his position for less than a year and said he wants to improve performance as the foundation’s newest director.

— Follow Daily News WKU, county schools and general assignment reporter Aaron Mudd on Twitter @aaron_muddbgdn or visit bgdailynews.com.