U of Illinois Investment Office

Ellen Ellison, who runs the University of Illinois Investment Office was recently interviewed on the Capital Allocators Podcast, and she had some pretty interesting things to say about the endowment’s investment in agriculture and farmland.

First of all, unique to endowments is that they can often receive gifted assets. When a gift is made, the person or people donating the land can take a full tax write off of the entire value of the land. This is often a good solution rather than selling and paying what may be a very large capital gains tax. When farmland is gifted to the University of Illinois, rather than selling the land they now are developing an expertise in farm management.

This program sounds like a good idea for a number of reasons. First, knowing that the endowment will have a vested interest and expertise managing the land will likely persuade more people to consider the endowment for gifted farmland. Secondly, the University of Illinois has both the faculty and connections to help advise of the holdings. Lastly, for an endowment that is otherwise mostly stocks and bonds it is a good diversifying asset.

In the podcast Ellen goes into some details of the program. For an endowment that is $1.7 Billion, she says that they have about $150 Million invested in agriculture but that it could reach 10% to 20% of the portfolio. Some of the investment is not only in land, but also in partnerships and companies. Also, they have invested in some global agriculture deals. She also makes some interesting comments about how technology is making farming much less labor intensive and much more productive.