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The Impact and Importance of Endowment

Kristin Agatone, Lehigh’s chief investment officer, shared insights into the university’s endowment philosophy and management as part of the Tower Society annual breakfast meeting on October 8.

Lehigh University celebrated members of the Tower Society on Saturday, October 8, at the annual breakfast meeting held in the Wood Dining Room, Iacocca Hall. Guest speaker Kristin Agatone, Lehigh’s chief investment officer, provided insights into the university’s endowment philosophy and management as part of the program. Agatone joined the Lehigh staff in May and was previously managing director of Summit Rock Advisors, a financial investment advisory firm.

Tower Society members were welcomed by President John Simon who expressed his gratitude to the guests in the room for their role in making Lehigh exceptional. The society recognizes those who are part of the university’s life income program, who have made a gift to endowment of more than $10,000, or who have included Lehigh in their estate plans. Simon and his wife, Diane Szaflarski, became Tower Society members last year when they created the Simon-Szaflarski Family Scholarship.

“At Lehigh we’re not content with the status quo, with just doing what we’ve always been doing. On the contrary, we’re committed to new areas of knowledge and providing education opportunities for our students that will serve them well in an ever-changing world,” he said. “A big reason Lehigh can look to the future with such confidence is right here in this room. As members, your gifts help sustain our momentum and carry us forward.”

Before Agatone’s presentation, Simon introduced Joseph Buck, Lehigh’s new vice president for development and alumni relations. Buck comes to Lehigh from the University of Chicago’s Booth School of Business, where he led a successful $850 million fundraising campaign.

During her detailed overview of the Lehigh endowment, which is the university’s largest tangible asset, Agatone said she became interested in endowment management while in business school, attracted by the flexibility of the types of investments that could be made. “You can look at any asset class, in any part of the world, in any structure, with a long-term horizon.”

The investment mandate of Lehigh’s endowment, she explained, is to provide long-term growth for future generations of students and provide current spending for today’s students. The overall goal is to meet or exceed a 5% real return, plus inflation.

Agatone reviewed sources of the university’s operating revenue, the current spending breakdown of the endowment, how endowment assets are allocated, and performance through the past 10 years.

She also talked about key changes she and her team are looking to make, including broader performance objectives, better alignment between asset classes and investment philosophy, fewer managers with greater investment per manager, and enhanced analytics and processes around investment selection. She described the importance of more discussion with the investment committee about risks, goals, and allocations, as well as more active engagement with the senior leadership team, students, and faculty. She noted that her team will be based in New York City.

Tower Society members took advantage of a question-and-answer session to pepper her with questions about international investing, endowment spending through the years, and the make-up and credentials of her team.

Chairman Michael Caruso ’67 shared his own experiences as a Tower Society member.

“Now that I am looking at my 50th reunion, I can’t help but reflect on the blessings of my life and how it all started here on South Mountain,” he said, recounting beloved professors and coaches such as Leeman, Tresolini, Dunlap, Smolansky, Barry, and Dowling. “The relationships I had with these remarkable people molded me, so that I had a very useful and productive life. With that in mind, how could I not pay it forward?”

Caruso encouraged the group to look into Lehigh’s life income program as a way to support Lehigh that also makes tax-wise sense in an estate plan. He highly recommended the Lehigh gift planning team as knowledgeable professionals who are easy to work with.

Paul Smith ’61 Receives Packard Award

At the close of the program, Paul Smith, Class of 1961, was presented with the James Ward Packard Award, which recognizes “an individual or family who has championed the educational mission of Lehigh University.” It also “acknowledges the meritorious volunteer work done for the planned giving program.”

Smith accepted the award on behalf of his class. “The banner on our website says ‘The Great Class of 1961’ and it’s with no uncertainly that I can say that’s who Lehigh is honoring today,” he said.

He recounted the classes’ achievements, recalling its class gift, bringing to campus the Kingston Trio, and the establishment of the Tresolini Lecture and the Class of 1961 Professorships. “The Class of 1961 has really made a difference,” he said.

Smith earned a B.A. degree in applied science at Lehigh in 1961 and a B.S. in mechanical engineering in 1962. After Lehigh, he served as an engineer with the army, and from there went on to earn an M.B.A. from Drexel University.  Paul founded Calconix, Inc. in 1976, a business that is still in his family today.

Smith has been class president for 10 years and has held many other leadership roles, including vice president, treasurer, class agent, 25th reunion chair, and a key volunteer with the 50th reunion committee. He was also a member of Lehigh’s Career Advisory Network, a longtime phonathon volunteer, and a member of the Wrestling Club. He received the Alumni Award at his class’s 50th Reunion and was one of the catalysts for what ultimately became the Endowed Fund for the Teaching of Ethical Decision-Making.

Smith is most proud of his role in fostering the connection between his Class of 1961 and the Class of 2011, which began during the first-year rally.

He recalled psyching up the crowd with a cheer to spell “L-E-H-I-G-H” – only he neglected to finish spelling the word “I had a thousand undergrads shouting, ‘What happened to the ‘H’?” he laughed. “I failed my first test, but we became great friends.” The class supported the class throughout its years at Lehigh and beyond, and has established endowed scholarships to continue to support students in perpetuity.

He said he hopes that each 50th class will make the most of the chance to adopt an incoming class. “It makes our family the family we want to be,” he said.

— Janet Norwood ’16G

— Photos by John Kish IV