Indian endowment fund in 'version 2.0', to focus on asset-building

The CEO of a premier Indian business school's endowment fund explains how the fund is now in 'version 2.0' as it set its sights on bulking up its funding commitments, which should help to plot its investment strategy later on.
Indian endowment fund in 'version 2.0', to focus on asset-building

The initial groundwork to set up an Indian management institute's endowment fund is complete, and focus will now shift on increasing the financial commitments for the fund, which should help with drafting more thoughtful investment strategies later on, the top executive of the fund said.

'The first level of work has happened and we are now at what I consider is ‘endowment 2.0’,” Chhavi Moodgal, CEO of the Indian Institute of Management Ahmedabad (IIM-A) Endowment Fund, told AsianInvestor.

The first phase involved the institute formally setting up an endowment fund in 2020 and building an advisory team and other skilled expertise.

IIM-A is India’s top business school and is known globally for its various management programmes. Established in 1961, It is based in Gujarat state and is part of a chain of 20 IIMs across the country.

Some of IIM’s famous alumni include World Bank President Ajay Banga, former PepsiCo CEO Indra Nooyi and former Indian central bank governor and chief economist of the International Monetary Fund Raghuram Rajan.


Moodgal, a former student at IIM-A and an ex- investment banker, was hired in 2021 to become CEO as the institute wanted someone with roots to the educational institute. A team was gradually built up to manage the endowment.

Now attention is shifting to other areas.

“We are quite young and effectively beginning our third year of operations. The current focus is on asset building so that we can become more stable from a fundraising perspective,” she said.

“We’d like to bring in some more structure to our fundraising approach and decide on long-term strategy.”

The fund launched with an initial commitment for 1 billion rupees ($12 million), has been quite successful in getting donors to build up the endowment’s corpus.

“The philanthropic commitments are now close to Rs 450 crore ($42 million), although these commitments span across several years.

“We want to grow these commitments to Rs 1,000 crore ($120 million) as a first milestone and more funds subsequently based on the strategic needs of IIM-A,” Moodgal said.

Typically, once the first few batches of students of an educational institute hit their 50s, the timing is ripe to persuade them to make donations. By then, they are typically well-off and can afford to give back.

India’s philanthropy scene, in addition, is becoming more organised and is creating an ecosystem of giving, raising strategic capital and reinforcing long-term collaborations.

The IIM-A Endowment fund is managed by an independent advisory board, which oversees the key activities of the fund via IIM-A Endowment Management Foundation, a non-profit company.


IIM-A is among India’s top business schools and is known globally for its various management programmes. Established in 1961, It is based in Gujarat state and is part of a chain of 20 IIMs across the country.

Moodgal said the fund has geographical priorities for fundraising because “many of our many of our alumni are well placed in markets such as the US, the UK, Singapore, Hong Kong and the Middle East. We are trying to enhance our engagement with them.”

Several Indian universities and higher educational institutes have been setting up endowment funds to manage money for the long-term.

Part of this is driven by increasing pressure on government funding of state-owned educational entities even as expectations on quality and access to higher education and campus administration costs are climbing rapidly.

Many academic institutes are realising that to ensure their long-term survival, they need to tap different sources of funding, including alumni.


Unlike university endowment funds in the US, which can invest in a variety of asset classes, the scope of investments for Indian funds is still fairly restricted, given that the industry locally is in its fledgling stage.

“Investments are very restricted for IIMs for a variety of reasons,” said Moodgal.

“The funds collected by endowment funds have to adhere to local income tax regulations specifically Section 11(5) of the Income Tax Act, which state that any charitable institute can only invest in certain securities.

"What is allowed is essentially investments in government securities and fixed deposits, Unit Trust of India investments. Basically, IIM-A can invest in any security created by the central or state government, said Moodgal.

“So IIM-A has adopted a primarily fixed income model, investing mostly in government securities as well as deposits.”

In India, we hope in time and regulations permitting, the journey could go from fixed income to listed equities to eventually unlisted equities and then alternative assets,” she added.

“But for the industry to have such flexibility and growth, requires intent as well as government approval.”

Some other technology institutes like the Indian Institute of Technology Delhi, have the flexibility to invest up to 15% in equities or equity mutual funds, similar to pension funds in India.

Globally, some of the largest university endowments with more than $1 billion in assets can have up to 50% of their portfolio in complex asset classes such as alternatives.


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