Endowment and MGIMO Alumni Association Report 2016 And New Projects for 2017 “The MGIMO confidence in its future is based on the support of the Board of Trustees members that helped the University to shape the Endowment Fund. This tool is a “safety bag” which is especially important under current economic circumstances.” Sergei Lavrov “Endowment financial assets have been aimed at the development of the University. Certainly, there are some extra-budgetary resources in MGIMO, but the spending is also enormous. To begin with, we have a great number of professors. We spend much money on students’ internships, lecturers’ academic assignments, participation in international conferences. The state budget does not allocate funds for such goals. If, for example, students learn a rare Albanian language, how won’t they do a language course in Albania? Or if they learn a very difficult Chinese language, and there is an opportunity to send them up to China for a year? The subsidies for every student don’t provide these expenditures. However, “I consider the activity we cannot save money on the level of language training.” of MGIMO Endowment, Anatoly Torkunov where I participate together with other alumni, extremely important. Endowment is a foundation of the dynamic development of academic “…Anatoly Vasilevich asked us to set an programs, financing scientific example. Three of us gave 125 million rubles studies and strengthening each. I gave 50 million rubles additionally to material and technical basis of support the veterans of the Ministry of Foreign the University. Such practice Affairs. Since then, every year we increased was firstly used in Russia in Endowment capital threefold giving a million MGIMO and it became an dollars every time. This was a real quantum example for other universities.” leap in our support of the University as we laid its financial foundation. By managing it efficiently, MGIMO is Alisher Usmanov able to plan its development on its own…” Patokh Chodiev “Charity doesn’t depend on the existence or lack of spare money. This is a demand of the soul – to share what you have. I help those that I believe can become strong, independent and start to help himself or herself. I try to reproduce this capability – to help.” Vladimir Potanin 1 th Anniversary 2 The MGIMO Endowment which celebrates its 10th anniversary in 2017 has been growing and developing. We have succeeded to combine three important dimensions of our work: fundraising, investment, and project activity. The Endowment is a simple and transparent tool that proved its efficiency. Our openness provides the trust of alumni and companies supporting the Fund every year. In 2016 we attracted a record number MGIMO is famous for its consolidated of new partners. We achieved the “height” of alumni community throughout the world. 1.5 billion rubles! 2016 marked the 25th anniversary of the We pay much attention for implementing MGIMO Alumni Association, during this particular projects, cooperate with their authors time it has become a unique mechanism of and grantees to internationalize MGIMO and contacts. Today more than 10 000 people are develop international competences and studies. the Association members, more than 25,000 The Endowment aims at attracting the people are somehow involved in its activity attention of the business community to and related to the University, more than 20 cooperation with the universities. To reach this alumni clubs are open abroad. goal the Association of university endowments We succeeded to create a bright palette (UnivEn) was established at the initiative of the of events – in expert sphere, art and sports. MGIMO Endowment. The Association turned into a secure foothold In 2017 we continue our partnership with of MGIMO. We work on maintaining the alumni and companies, grantees and academic traditions established by our predecessors – community. collect memoirs, develop the University The share of Endowment will for the first time History Museum, share the experience of go beyond 10% of MGIMO budget! elder MGIMO generations to the young one. Marina Petrova, For a new development period the Head of the Endowment Fund Association sets ambitious goals. It is planned to increase the number of alumni clubs abroad and new events for MGIMO students and alumni. These goals will be achieved with the support of our alumni. Igor Arsenyev, Head of the Alumni Association 3 Budget Dynamics of the University in 2013-2016 years (mln rubles) Budget nancing Fund balance 845.7 882.7 –4.1% 856.4 +3.1% 724.3 Income-generating 822.7 +4.1% 690.5 449.3 +4.9% activities 307.0 +53.7% +46.4% 2539.6 2055.5 2212.9 +14.7% 1790.1 +7.7% +14.8% 20132013 20142014 20152015 20162016 +15,1% +12,6% +7,1% 2919.8 3361.2 3786.1 4109.6 Structure of the budget expenditures in 2016 (mln rubles) 3% 2% 3% Real estate and propetry tax – 98.58 2% Scholarship fund – 119.39 13% Fund assets and material assets increased cost – 58.49 Other expenses – 79.58 1% 1% Operating costs – 440.72 Cultural events – 23.7 Business trips, student internships – 52.8 75% Salary – 2563.68 Total expenditures: 3,436.94 mln rubles 4 Structure of revenues of the University for 2017 (mln rubles) 3% 1% 2% 11% Research and Development — 42.32 15% Rent and other expenditures — 82.69 Fund balance 01.01.2017 — 544.23 18% Paid aducation services —1840.68 Budget nancing — 659.37 Target income — 406.9 50% Subsidies— 11.6 Total revenues – 3,693.79 mln rubles Revenues from entrepreneurial activity – 1,965.69 mln rubles Budget financing — 659.37 mln rubles. Fund balance – 544.23 mln rubles Planned structure of budget expenditures for 2017 (mln rubles) 3% 2% 4% Real estate and propetry tax – 96,96 2% Scholarship fund – 131,62 12,5% Fund assets and material assets increased cost – 84,17 Other expenses – 70,67 0,5% 2% Operating costs – 496,17 Cultural events – 17,3 Business trips, student internships – 70,81 74% Salary – 2696,78 Total expenditures: 3,436.94 mln rubles Total expenditures: 3,664.48 mln rubles 5 MGIMO 1 Endowment Fund 2016 год Endowment capital – 1 billion 500 mln rubles Return on investment – 8% (107 mln rubles) Funds raised – 226 mln rubles Including 23 mln rubles to the endowment capital; 203 mln rubles for current expenditures. Transferred to MGIMO budget – 64.6 mln rubles 6 2007–2016 in figures Revenues transferred to MGIMO budget – 457.6 mln rubles Funds raised for current projects – more than 760 mln rubles Annual average return on investment – 10% 7 Financial dynamics of MGIMO Endowment Fund 2008 2009 2010 2011 2012 2013 2014 2015 2016 Endowment 385 499 621 854 1091 1205 1263 1397 1500 volume (mln rub) Funds raised to the Endowment 394.3 58.6 107.5 264.6 221.8 68.2 118 18 23.1 capital (mln rub) Funds raised for current projects – – – – 17.2 147 216 173 203 financing (mln rub) Funds transferred to the University 36 0 40 62 45 30 80 80 64.6 budget (mln rub) Return on investment – 78 69 48 78 89.3 28 220 107 (mln rubles) Return on –2 26 11.4 7.8 8.3 8.5 2.6 19.8 8 investment (%) Inflation rate 13.3 8.8 8.8 6.1 6.6 6.5 11.4 14 5.4 in Russia (%)* *According to the Bank of Russia 8 Graph 1. Fundraising VS return on investment in total volume of the Endowment, mln rubles (after the transfer to the University budget) 1600600 1440000 1200 1000 800 660000 440000 200 0 2008 2009 20102010 20112011 20201212 20201313 20201414 20201515 20201616 Endowment size Investment income Funds raised Transfer the part of income New donation for actual projects to MGIMO budget In 2016 the Endowment reached 1.5 billion rubles. The Endowment capital increased due to investment and fundraising. Profitability from the funds managed by ‘Gazprombank – Asset Management’ in 2016 is 7.6% (return on investment in ruble instruments is 13.4%, return on investment in currency instruments (dollar deposits and eurobonds) is 6.4%, currency revaluation because of the stronger ruble is 16.8%), by ‘Alfa-Capital’ Asset Management Company is 11.2%. The third endowment capital formed in July, 2016 was placed under management of ‘VTB Capital Asset Management’. In early 2016 a portfolio manager formed a position in the most preferable eurobonds. Within the declining key rate of the Bank of Russia and the situation on global markets in 2016 the medium-term bonds of reliable emitters were bought to the portfolio (an average term was 1.3 years). By the end of the year an average maturity term reached 1.7 years. The manager took part in the IPO’s of corporate bonds. By the end of 2016 a share of subfederal bonds was cut and the dividends from Eurobonds were received (Graph 2). For 2017 we plan to invest in corporate bonds with an average BB credit rating and to participate in the most beneficial IPO’s (up to 80% of the portfolio) and the maintaining of foreign exchange instruments. 64.6 mln rubles transferred from the Endowment to the MGIMO budget were used for payments for scientific and publishing activity of the professors, support of MGIMO veterans, modernization of education quality audit system, automatization and implementation of budgeting and management accounting, and invitation of foreign professors. 9 Major contributions in 2016 were made by the Deputy Chairman of the MGIMO Board of Trustees and an USM Holdings founder Alisher Usmanov and ‘Transneft’ (CEO and the President, the member of the MGIMO Supervisory Board Nikolai Tokarev). The particular projects and events were supported by ‘Rostech’ (Director General, the member of MGIMO Supervisory Board and the Board of Trustees Sergei Chemezov), ‘Sad-Gygant’ and Belan Khamchiev, Bank ‘Rossiysky Capital’ (CEO, the member of the MGIMO Board of Trustees Mikhail Kuzovlev), MGIMO trustees Georgiy Krasnyansky, Frederik Paulsen, Sergei Katziev, Vladimir Gruzdev, Andrei Epifanov, Robert Paranyants, Dmitri Rakovtschik, Igor Potapenko.