By the end of 2011, The Duke Endowment fell just shy of the $3 billion dollar mark in total donations since it began in the 1920s. Roughly half of that money finds its way into North Carolina's higher education system by means of universities like Duke, Davidson, Smith, and Furman. While higher education has always received the endowment's money and attention, it appears that the best is yet to come for universities in the North Carolina area, and especially Duke itself. (See Duke Endowment: Grants for Higher Education).
As Duke's site explains, the money they receive from the endowment, along with several other of the university's main benefactors, is managed under the university's roof like a stock by an investment organization called DUMAC. According to The Duke Chronicle, DUMAC tends to invest aggressively.
If the arrangement seems strange, it is. The IRS allows only a handful of the country's universities to manage their finances in this way.
What's the downside? When the stock market suffers, so does Duke's endowment. Fast investment footwork was the only thing that saved DUMAC from a multi-billion loss in 2006 when Amaranth, a hedge fund in which they had invested a large chunk of the university's money, folded. It stumbled again in 2008 when the real estate bubble burst, cutting gifts by 73% that year.
Since then, however, the Endowment has recovered. In 2011, they put more money into their home state's university system than at least the previous four combined. Among several other smaller gifts, they managed to front $80 million to Duke; the largest single shot in the arm the school has ever received. They also give the university an annual $12.5 million for operating expenses.
Eugene Cochrane, Director of Higher Education at The Duke Endowment, traces the underlying patterns of its spending since the early 20th century. As the endowment first opened during The Great Depression, much of the money was initially tied up keeping the major universities in the North Carolina region above water. During the mid and late 20th century, the Endowment provided capital for the campuses to expand.
Contemporary spending at endowment is more interested in attracting brains and enticing promising students and scholars to the area through fellowships, residencies, and scholarships. They have also become interested in funding environmental sustainability and community outreach programs like DukeEngage.