2007 - 2008: Yale University Finance Annual Financial Report

Over the past few years, Yale University has made significant progress towards reducing its impact on the environment in the areas of energy conservation, alternative energy sources, new transportation systems and incentives, reducing waste, purchasing “green” products, using local, fresh food in its dining halls, and adhering to high performance building standards. The University is committed to a level of investment in energy conservation and alternate energy sources that will lead, based on current projections, to a reduction in its greenhouse gas emissions by 2020 that will be 10% below its 1990 levels, or a 43% reduction from 2005 levels. By adopting this goal, Yale is one of the first universities in the country to commit to a long-term strategic energy plan. Collectively, these goals represent aspects of a growing global “sustainability” movement that seeks to benefit successive generations by reducing negative impacts on the environment through actions and decisions being made today. Many of these efforts are described in this report. More than many organizations, planning for future generations—and thinking in centuries, not decades, when planning—is closely linked to Yale’s mission. Beyond environmental goals, “sustainability” is embedded in the very heart of Yale, as is the understanding that the actions we take today will have consequences well beyond the lifetime of those making the decisions. This awareness of the impact on future generations is perhaps most evident in Yale’s endowment management practices and its campus construction programs, but this same awareness applies to all aspects of financial and administrative services. The University applies prudent management techniques to control spending and continues to make strategic investments in programs to further its mission of teaching and research while also meeting its fiduciary responsibilities. This year, the University has again made great strides in managing its financial assets prudently, even as the economic environment posed particular challenges. Operating revenues exceeded operating expenses by $34 million. The largest source of operating revenue was generated from the endowment, which represented 36% of total operating revenue. This year’s return on the endowment was 4.5%. The University capital program during the past fiscal year was a record $570 million. The most significant expenditure, $109 million, was the purchase of a 136-acre research campus from the Bayer Pharmaceuticals Corporation. This acquisition, which included recently-built research facilities, allows the University to greatly accelerate its research plans. Plans for the new West Campus include research programs ranging from the exploration of genetic variation and the molecular basis of cell biology to the causes of and possible cures for cancer, infectious diseases and disorders of brain function. In addition to this acquisition, the University continues to renovate and expand its research, classroom and student living spaces. Of particular note this year was the decision to add two new residential colleges for undergraduate students. This major new initiative anticipates adding approximately 800 new students to the undergraduate population by the year 2013. Steady investment in capital maintenance of existing buildings is also a key priority. Taken together, these enhancements to the campus infrastructure ensure that faculty, staff and students are provided with state-of-the-art research and learning environments.

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