ROOTS FOR GROWTH

ROOTS FOR

GROWTHOUR WORK IN AN UNPRECEDENTED YEAR

2020 ANNUAL REPORT

LETTER FROM OUR LEADERSIn 2020, we were reminded how fragile our health, communities and hopes for the future can be. Amid social distancing and social unrest, we learned how difficult life can feel when we cannot come together physically or philosophically.

At The Duke Endowment, the COVID-19 pandemic complicated our grantees’ work by pushing the most vulnerable among us — often people of color — further behind. Their families faced higher rates of sickness, death, financial hardship and housing instability. Black, Latino and Native American children fell further behind in school.

Calls for racial equity and social justice never felt more urgent.

We began taking a deeper look at our grantmaking and organizational culture, hoping to better understand how we might take action to fight the pernicious effects of historic inequities and systemic bias across our work.

While we have a long history of working across diverse communities, we know we have room for improvement. That is why we chose

“Roots for Growth” as the theme of this year’s annual report.

In his Indenture of Trust, the 1924 legal document that governs our grantmaking, James B. Duke planted the seeds of racial progress within the Endowment’s work. In an era when racist policies barred minorities from society’s benefits and protections, he made explicit provisions for his philanthropy to help Black students, orphans and hospital patients. While his aid could not change the fundamental injustices of a segregated society, it did seek to mitigate its effects.

Today, much work remains before we can safely say the color of a person’s skin no longer foreshadows their potential life outcomes.

In this Annual Report, you’ll learn how we are systematically reviewing our work through a racial equity, diversity and inclusion lens. We disaggregated data on our giving, looking for disparities. We directed special COVID-related funding to organizations serving communities of color and made major racial equity and diversity grants to colleges and universities we support.

We provided three days of training for staff members to advance racial equity. And we joined hands with other foundations to invest in leaders of color across the Carolinas.

The Indenture does not specifically position us as a racial justice funder. Nevertheless, it makes clear Mr. Duke’s intent to help the poor, regardless of their race. With race and poverty so often and so tightly linked, our work on issues such as health care and child well-being leads us to confront racial disparities and systemic bias. As we strive for deeper impact, we know we need to be even more intentional about the role we can play.

The quest for racial equity, diversity and inclusion remains one of the most important challenges of our time. We do not pretend to have all the answers, but we stand committed to continuous learning and improvement. These efforts represent a starting line for us, not the finish.

MINOR M. SHAW, BOARD CHAIR RHETT N. MABRY, PRESIDENT

WE LOOK FORWARD TO LEARNING AND GROWING WITH YOU.

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As James B. Duke drew up plans for the Endowment nearly a century ago, he realized how challenging it would be to meet his philanthropic goal of improving education, health, child welfare and spirituality in the Carolinas.

“This is a harder job than I thought it would be,” he said. “I’m beginning to think it is almost as difficult for a man to give away his money rightly as it is to make it.”

Generations later, using Mr. Duke’s charitable dollars most effectively remains a goal of our work. During COVID-19, that challenge grew even more complex as the pandemic took its disturbing and disproportionate toll on our grantees’ most vulnerable clients — often people of color.

The crisis underscored the fact that supporting racial equity, diversity and inclusion isn’t optional to the success of our work in North Carolina and South Carolina — it is essential. Arrow-alt-circle-right

“ OUTCOMES FOR CHILDREN IN KINSHIP CARE TEND TO BE BETTER THAN FOR THOSE PLACED IN FOSTER CARE.”

When addiction nearly triggered foster care placement for her son’s five children, Virgie Anderson stepped in to claim them.

She never figured on parenting five school-aged grandkids at 74, but she could not countenance strangers raising them. The decision placed the Charleston resident in a little-noticed but increasingly important segment of the child welfare landscape: family members who take in underage relatives to prevent foster care placement.

In South Carolina, about 69,000 children — mostly African American — live with kinship caregivers. Social services officials increasingly turn to these willing caregivers to keep siblings and families together. But additional support is crucial, since these are often older women battling health and poverty challenges themselves.

Anderson turned to HALOS, a Charleston-based organization that assists more than 300 kinship care families annually. It provides support groups, help for meeting basic needs and referrals to other community resources. During the pandemic, referrals shot up by more than 200 percent as these already challenged families faced additional burdens, said HALOS Executive Director Kim Clifton.

The assistance proved critical for Anderson, who struggled financially and faced heart disease and a bout with COVID-19 while overseeing her grandchildren. “I was just so glad to be a part of HALOS,” she said. “DSS can only do so much.”

The Endowment supports HALOS with a $420,000 grant aimed at helping it adopt the more intensive “Success Coach” case management model for families needing more than just material or parental support. A special COVID-19 Emergency Financial Assistance Project created by HALOS also received Endowment support.

“Outcomes for children in kinship care tend to be better than for those placed in foster care,” said Ravenel Curry, chair of the Endowment’s Committee on Child & Family Well-Being. “We are proud to help HALOS as it works to keep children and families together.”

KEEPING KIN TOGETHER

CHILD & FAMILY WELL-BEING ROOTS FOR GROWTH

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As it widened racial disparities in health outcomes, the COVID-19 pandemic revealed how critically important it is for health care providers to expand their reach and build trust with communities of color.

One organization doing so effectively is Durham-based El Futuro, a nonprofit mental health services provider focused on underserved Latino communities. Although the common stigma of therapy as a sign of “weakness” runs strong in some Latino communities, El Futuro draws nearly 1,800 clients per year for individual, group and family treatments.

Key to El Futuro’s appeal is a humble, inviting approach centered around the theme of “La Mesita” — Spanish for “the little table.” Dr. Luke Smith, El Futuro’s executive director, says he and his staff see themselves not as teaching or leading clients, but rather learning with them, and with other service providers.

“We say pull up a chair to La Mesita and learn with us,” said Smith, a psychiatrist. “Everybody has a seat at the table.”

El Futuro focuses on building “confianza,” or trust, with clients. A therapeutic garden next to its building invites the community in, as does a colorful wall mural, Latino heritage celebrations and related workshops.

Its nearly 50 employees hail from across Central and South America, but their bilingual fluency isn’t enough. Smith says they also must show “calor humano,” or human warmth. For instance, no walking through the waiting room without greeting clients.

With a $675,000 grant from the Endowment, El Futuro also offers culturally appropriate training to more than 1,000 mental health professionals, school counselors, community outreach workers and others through its La Mesita Latinx Mental Health Professionals Network.

El Futuro’s trust building opens pathways to healing for clients who often have left behind rich social networks in their native countries. At times, they may struggle with loneliness, anxiety, depression and substance abuse.

“I felt like my life was not worth living,” said one client. “But not now, thank God. Everything is good, and thanks to the señoritas (therapists) who helped us, now I am very optimistic.”

“The pandemic showed how important it is to build trusting bonds between health care providers and the communities they serve,” said Charlie Lucas, chair of the Endowment’s Committee on Health Care. “El Futuro’s successes should serve as an encouraging example of how to bridge gaps and deliver critical services.”

CENTERING EQUITY IN PANDEMIC RESPONSEThe Endowment’s guiding principles require us to follow Mr. Duke’s intent to address current and emerging needs, provide ethical leadership by seeking diverse opinions, direct resources where they will produce the best results, and build effective relationships with grantees by listening to them, learning about their communities and challenges, and working together toward solutions.

The events of 2020 provided a rich opportunity for the Endowment to lean into these principles with an emphasis on learning more about under-resourced communities and working collaboratively to identify solutions.

The Board of Trustees increased the Endowment’s 2020 giving by $35 million, with the new funds earmarked to assist increased demands for aid and communities disproportionately affected by the pandemic. Aided by an ad hoc staff committee, the effort to center equity in the Endowment’s COVID-19 grantmaking revolved around four principles: targeting resources to populations most impacted; optimizing interventions to those populations; funding organizations most proximate to those communities; and minimizing the application and reporting burden on grantees.

The work helped the Endowment forge new relationships with grassroots organizations. It also allowed program areas to open new avenues to engage communities of color. Arrow-alt-circle-right

“ THE PANDEMIC SHOWED HOW IMPORTANT IT IS TO BUILD TRUSTING BONDS BETWEEN HEALTH CARE PROVIDERS AND THE COMMUNITIES THEY SERVE.”

SUPPORTING LATINO COMMUNITIES

HEALTH CARE

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“ULTIMATELY, REAL PROGRESS WILL REQUIRE AN EMBRACE OF BOTH PERSONAL AND INSTITUTIONAL HUMILITY, ADMITTING TO OUR BLINDNESS, OUR LACK OF UNDERSTANDING, AND CONFUSION.”

ADVANCING DIVERSITY AND INCLUSION

HIGHER EDUCATIONPROGRAM AREAS TAKE STOCK While the pandemic spurred new emergency relief grants, its disparate impact also sparked reflection about how the Endowment’s four grantmaking areas approach considerations of racial equity, diversity and inclusion on an ongoing basis. Recognizing room for improvement, program areas pledged to sharpen their focus on equity issues.

In Health Care, COVID-19 highlighted inequities around access to care and basic social needs. It created momentum for policy changes well-aligned with Health Care’s long-standing goal of reducing health disparities. Staff supported health equity training for its partners in the AccessHealth initiative, a coalition of community-based care networks for people without insurance, and also for leaders of Healthy People, Healthy Carolinas, a health-promotion effort powered by local coalitions. Health Care intends to help partners develop best practices and shared standards to advance health equity in all communities.

Child & Family Well-Being pledged to use an equity lens to inform its child welfare work and to study the potential impact on communities of color before committing new or ongoing support for evidence-based or evidence-informed programs. Arrow-alt-circle-right

As protests erupted nationwide over the death of George Floyd, Duke University President Vincent Price penned an open letter denouncing racial bias and laying out an aggressive new anti-racism campaign for the school. He called for significant increases in student, faculty and staff diversity, and announced plans to embed anti-racism instruction in curricula and programs across the university. He backed the plan with measurable goals and timetables aimed at weaving anti-racism and equity into the long-term priorities of Duke.

“Ultimately,” he wrote, “real progress will require an embrace of both personal and institutional humility, admitting to our blindness, our lack of understanding, and confusion.”

The Endowment supported the university’s plan with a five-year, $16 million grant.

Among other things, it will underwrite anti-racism trainings and initiatives to connect Duke to local communities of color.

“This is a defining moment for higher education as institutions commit to an intentional approach to diversity and inclusion,” said Bill Barnet, chair of the Endowment’s Committee on Higher Education. “We are proud to support Duke University as it seeks to lead the way on this timely and critically important issue.”

Initiatives addressing systemic racial inequity also moved forward at other Endowment-supported institutions of higher learning:

• Davidson College’s Commission on Race and Slavery released a report and recommendation for improving understanding of the college’s history regarding slavery. It also guided development of curricular and community opportunities to recognize that aspect of the school’s past.

• Furman University implemented recommendations from its Task Force on Slavery and Justice, formed in 2017 to understand and acknowledge the university’s historical connections to slavery.

• Johnson C. Smith University partnered with UNC Charlotte and Queens University of Charlotte on a year-long project to address Charlotte’s history of racism and its impact at each school.

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When the Rev. Tammy Ingram found herself leading two congregations — one Black and one white — in rural Trinity, N.C., she envisioned boosting their community impact by having them do ministry projects together.

But that proved difficult, given a history of “hurts and wounds” between the Black and white parishioners. To build and repair relationships, “people need to heal. People need to be whole,” she said. “They need to be able to express themselves in a ‘brave space.’”

She created that space and rebuilt the congregations’ relationship with guidance from Disciples of Welcome, a two-year “learning journey” for United Methodist pastors run by Faith Matters Network, a Tennessee-based nonprofit. The initiative seeks to equip United Methodist pastors as agents of hope across polarizing issues of race, sexuality or political ideology.

Supported by a $525,000 grant from the Endowment, Disciples of Welcome included a series of retreats, peer group sessions and one-on-one coaching for about 50 pastors from across North Carolina. By framing discussions around the Biblical call to hospitality, the encounters opened those brave spaces of vulnerability among the pastors, allowing them to share raw, honest stories and draw closer, even amid continuing points of disagreement.

Jennifer Bailey, director of Faith Matters Network, said the objective was to show pastors, through their own exchanges, how storytelling can open space for new conversations across differences. “We believe that relationships move at the speed of trust, and social change moves at the speed of relationships,” she said.

The Rev. Gloria Winston-Harris, lead facilitator for Disciples of Welcome, described the program as an answered prayer. “Throughout this learning journey,” she said, “I have seen how much Disciples of Welcome impacts United Methodist clergy in North Carolina as well as the broader communities they serve.”

Supporters hope to apply the model in broader groups and social contexts.

“The Church has the tools to help heal today’s divisions,” said Dr. Dennis Campbell, chair of the Endowment’s Committee on the Rural Church. “Disciples of Welcome helps people see each other as they should, as Imago Dei — being made in the image of God.”

“ PEOPLE NEED TO HEAL. PEOPLE NEED TO BE WHOLE, THEY NEED TO BE ABLE TO EXPRESS THEMSELVES IN A BRAVE SPACE.”

HELPING PASTORS HEAL DIVISIONS

RURAL CHURCH

To ensure that the goal of racial equity, diversity and inclusion remains in sight in the years ahead, the Endowment has threaded an equity focus through the learning and evaluation plans that program areas use to gauge the effectiveness of their work. Arrow-alt-circle-right

Rural Church is continuing to use its work with churches and congregations to help reduce disparities — especially in early literacy — in rural communities. It is also helping churches sharpen their connections to Black and Latino neighbors through food distribution and housing assistance.

In Higher Education, leaders at the four institutions supported by the Endowment recognized the need to address two complex and interconnected pandemics — COVID-19 and societal racism. The Endowment gave Duke University a $16 million grant to advance racial equity, and also provided $630,000 for the Charlotte Urban Research Initiative, a project established by Davidson College and Johnson C. Smith University to create research focused, engaged learning experiences for students around the issue of social mobility.

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THE ROAD AHEADIn 2020, the Endowment took an empirical look at how equitably its dollars are distributed by disaggregating grantmaking data by race and socioeconomic status. The analysis showed that from 2017 to June 2020, $141 million went to programs and services benefiting African Americans. That comprised 24 percent of the grant money allocated, meaning the share going to African Americans nearly mirrored their percentage of the Carolinas’ population.

However, African Americans account for at least a third of those experiencing poverty in the Carolinas, which suggests our connection to historically marginalized and lower-income communities is more limited than it should be.

With that in mind, President Rhett Mabry convened more than a dozen foundation leaders from across the Carolinas, seeking to pool resources to identify and support organizations led by people of color and working in communities of color.

Internally, the Endowment has embarked on a holistic approach that includes training staff; reassessing operations practices around issues such as hiring and vendor selection; and building greater racial diversity on our staff and management team.

Given the role of racial inequity in our society and its connection to poverty, we cannot ignore its impact and still hope to achieve our founder’s dream. We plan to apply an equity lens systematically to shape our grantmaking and organizational culture in the years ahead. We look forward with optimism, even as we acknowledge the hard work before us.

As Sanaa Sharrieff sought therapeutic help for her son with special needs, she felt lost in a maze of disconnected agencies and services.

Her frustration dissipated after she joined the Guilford Parent Leader Network, a group that brings a parent’s perspective to bear on the work of the Get Ready Guilford Initiative, an ambitious 10-year strategy to reform early childhood systems in Guilford County. At one of her earliest network meetings, Sharrieff met a psychiatrist who could help her son.

“We had a one-on-one conversation with no middle man,” she said. “I felt heard. I felt respected as a parent. It almost brings me to tears because it took so long to get to that level of service.”

Advocates say early childhood policies are often created without centering families, leading to programs that fail to achieve the intended impact on the most marginalized families. They believe reform campaigns such as Get Ready Guilford can’t succeed in providing equitable outcomes to Black children unless the adults who know the children best — their parents — are listened to and empowered.

Get Ready Guilford leaders say they try hard to avoid the old stereotype of white do-gooders swooping in to “fix” African American communities.

“People want a say in the trajectory of things affecting their lives,” said Heather Adams, director of engagement and literacy initiatives for Get Ready Guilford. “By centering families’ voices in our work and being truly responsive to their needs, that is how we build an equitable system.”

Get Ready Guilford is led by Ready for School, Ready for Life, a leading early childhood organization in the county. It seeks to improve individual and population-level outcomes among 55,000 area children, prenatal through age 8.

Get Ready Guilford embedded equity in its Values & Principles statement, committing to be family-led, inclusive, data-focused and equity-driven. Its Parent Leader Network provides input on major decisions. Parent leaders were placed on the Ready for School, Ready for Life Equity Strategies Committee that is crafting the organization’s equity action plan.

“Demography does not have to equal destiny for children from under-resourced communities,” said Dr. Jean Spaulding, chair of the Endowment’s Get Ready Guilford Ad Hoc Committee. “By engaging families deeply and consistently, we can build early childhood systems that give all children an equitable chance at success.”

“ BY CENTERING FAMILIES’ VOICES IN OUR WORK AND BEING TRULY RESPONSIVE TO THEIR NEEDS, THAT IS HOW WE BUILD AN EQUITABLE SYSTEM.”

LISTENING TO AFRICAN AMERICAN PARENTS

SPECIAL INITIATIVES

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INVESTMENTSSince July 2007, The Duke Endowment’s investment portfolio has been managed by DUMAC Inc., a professionally staffed investment organization in Durham, N.C., governed by Duke University.

During 2020, the investment return on the Endowment’s portfolio was 13.8 percent.* Investment performance benefited from increases in global equity, hedged strategies and private capital. The Endowment’s investment portfolio increased in value from $3.8 billion to $4.6 billion from December 31, 2019 to December 31, 2020. The Endowment’s total assets were $4.7 billion at year end.

For the 10-year period ending December 31, 2020, the Endowment’s investment portfolio, net of fees, returned 9.6 percent annualized, outperforming its policy benchmark, which returned 6.3 percent annualized, and a 70 percent MSCI All Country World Index/30 percent Bloomberg Barclays U.S. Aggregate Bond Index benchmark, which was up 7.8 percent annualized over the same period.

2020 FINANCIALS & GRANTMAKING TOTAL ASSETS

INVESTMENT RETURN

2O2O GRANTMAKING

**Includes $19,178,430 in COVID-19 relief grants distributed, out of $20,053,430 approved.***May not sum to total due to rounding.

EXPENSES & GRANTSSince James B. Duke’s death in 1925, the assets of The Duke Endowment have achieved significant growth, from $107 million to $4.7 billion. During the same time, about $4.2 billion has been distributed in grants.

Find more information about our grantmaking and audited financial statements at dukeendowment.org.

$4.7B

EXPENSES

$23.8MAdministrative expenses $13.1M

Program expenses $10.7M

Provision for taxes $11K

Newly ApprovedDistributed

$11,509,759 $6,780,382

$44,346,906 $65,781,479

$56,191,604 $48,051,651

$15,490,766 $11,001,863

$43,867,556** $71,958,930**

CHILD & FAMILY WELL-BEING

HEALTH CARE

HIGHER EDUCATION

RURAL CHURCH

CROSS PROGRAM/SPECIAL OPPORTUNITIES

TOTAL GRANTMAKING$171,406,590*** $203,574,305***

GRANTS MADE

NEW COMMITMENTS

372 167

GRANTS DISTRIBUTED SINCE 1925

$4.2B* Investment return is based on pre-audit investment valuations.

13.8%*

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MEET OUR LEADERSTRUSTEES

William Barnet IIISpartanburg, SC

John F.A.V. CecilAsheville, NC

Ravenel B. Curry IIINew York, NY

Pamela L. DaviesCharlotte, NC

Harris E. DeLoach Jr.Hartsville, SC

Constance F. GrayWinston-Salem, NC

J. Trent JonesSun Valley, ID

Thomas S. Kenan IIIChapel Hill, NC

Charles C. Lucas IIICharlotte, NC

Clarence G. NewsomeMint Hill, NC

Kenneth D. Weeks Jr.Charlotte, NC

Judy WoodruffWashington, DC

Minor M. Shaw Chair

Greenville, SC

Dennis M. Campbell Vice Chair

Durham, NC

Jean G. Spaulding Vice Chair

Durham, NC

Ashleigh J. AllessioGrants Analyst

William F. Bacon Vice President/Director, Evaluation

Laila A. Bell Associate Director, Learning & Evaluation

Chris M. CollinsAssociate Director, Health Care

Todd W. DalrympleAssociate Director, Special Initiatives

Justin M. DunhamProgram Analyst, Health Care

Eric E. Frazier Digital Communications Strategist

Kate A. Gaskin Senior Administrative Specialist, Child & Family Well-Being

Paula W. Greene Events Manager

Julie A. HaleSenior Administrative Specialist, Health Care

Melinda O. HardinAccounting Specialist

Charisma J. Hibbler Senior Administrative Specialist, Evaluation

Lin B. Hollowell IIIDirector, Health Care

Stella J. Jalon Executive Assistant, President’s Office

Anmar Y. JerjeesProgram Analyst, Rural Church

Jay E. KennedyProgram Officer, Health Care

Jeri F. Krentz Associate Director, Communications

Elizabeth A. Kupec Senior Administrative Specialist, Finance/Information Technology

Allen P. Lane Office Assistant

Rhett N. Mabry President

Tania G. Mapes Human Resources Manager

Michele S. ManceauxFellow, Rural Church

Ali Marzouq Network Engineer, Information Technology

Trena McClureSenior Administrative Specialist, Rural Church

Susan L. McConnell Vice President/Director, Higher EducationDirector, Human Resources

Laura A. Peres Project and Facilities Manager

Charity L. Perkins Director, Communications

Phillip H. Redmond Jr. Director, Child & Family Well-Being

Kristen R. Richardson-FrickAssociate Director, Rural Church

Karen H. Rogers Chief Financial Officer/Treasurer

Meka S. SalesDirector, Special Initiatives

Matthew D. Sharp Director, Information Technology

Natalie C.W. Smith Controller

K. Todd Walker Managing Director, Investments

Kristi K. Walters Program Officer, Higher Education

Stacy E. WarrenProgram Officer, Health Care

Robert R. Webb IIIDirector, Rural Church

Anita W. West Accounting Manager

Tamika D. Williams Associate Director, Child & Family Well-Being

Brittany S. WordenProgram Analyst, Special Initiatives

Anita L. WyattSenior Administrative Specialist, Higher Education

Lily H. Zhang Associate Director, Data & Analytics

Diana Zilberdrut Project Specialist, Communications/Investments

STAFF

Retirement In 2020, we said goodbye to long-time staff member Eric Stevens and wished him a wonderful retirement. Eric began his career in 1999 as a Records Administrator and in 2006 became Administrative Assistant. We are grateful for his many years of service.

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GET READY GUILFORD INITIATIVE UPDATEDespite disruptions from the pandemic, leaders of the Get Ready Guilford Initiative forged ahead with plans to build an integrated and responsive early childhood system in Guilford County. The initiative, a joint endeavor by the Endowment and Ready for School, Ready for Life, a major early childhood organization in the county, aims to improve population-level outcomes for children prenatal to age 8 across a range of key indicators.

COVID-19 caused participating programs to shift their models from in-person to virtual formats. Reduced client access and staff availability resulted in lower-than-expected participation rates. Still, the county’s early childhood leaders continued to invest time and resources to adapt, plan and evaluate critical elements, such as streamlining service navigation for families.

Ready for School, Ready for Life continued to grow its team, hiring Charrise Hart as its new CEO in 2019 and filling additional leadership roles in 2020. The programs anchoring Phase 1 of the four-part effort — Family Connects, HealthySteps and Nurse-Family Partnership — pursued their expansion goals while finalizing changes to their models for a seamless family experience. (Phase 1 targets children prenatal to age 3.) Organizers prepared for Phase 2, which will add 3- and 4-year-olds to the target population.

In our ongoing response to the COVID-19 pandemic, Trustees have awarded more than $28 million to address critical community needs across the Carolinas.

In March 2020, the Board approved $2.5 million in relief funding with an emphasis on supporting statewide efforts, particularly around health care and social supports for families and communities. Initial grants of $1.25 million each went to the North Carolina Healthcare Foundation and to the One SC Fund to help provide access to health care and meet basic needs.

The Endowment also awarded a $3.5 million grant to Feeding the Carolinas, a network of 10 food banks serving more than 3,700 charitable agencies in both states. The funding helped the organizations meet increased demand as a result of the pandemic.

In December, as COVID-19 continued to impact communities, the Trustees approved $3.8 million to bolster services and resources for demographic groups disproportionately affected by the crisis. The funding was designated for eight organizations, with a focus on helping historically marginalized communities suffering disparate rates of illness and death, job losses and other hardships. Assisting with those grants was a panel of 13 staff members whose research helped direct more resources toward African American, Native American/Indigenous and Latino families in need.

Our grantmaking has continued with support for health care providers, charitable groups and others working to relieve hunger and boost vaccination rates within communities of color.

“COVID-19 is having a profound impact on our grantee partners, the essential services they provide, and the communities and families they are working so hard to help,” said Minor Shaw, chair of the Endowment’s Board. “We are joining others in a coordinated effort to address the critical challenges emerging across both states and support the people most affected by this crisis.”

COVID RELIEF GRANTS

After redesigning our Fellowship program, we were excited to welcome Michele Manceaux as our 2020-21 Fellow. Michele, a Davidson College graduate from Euless, Texas, spent her year working with the Rural Church program area’s Summer Literacy Initiative, which is helping early readers in rural communities avoid learning loss over the school break.

The Fellowship is designed to provide hands-on experience in the philanthropic sector. Our redesigned program focuses on talented candidates from the four campuses supported by the Endowment: Davidson College, Duke University, Furman University and Johnson C. Smith University. It also shifts the Fellowship’s length from two years to one, and Fellows are hired to work on one significant project, rather than rotating through the program areas.

The Endowment is committed to this dynamic program and excited about giving it new life. Most of all, we’re eager to welcome future Fellows to our work.

NEW FELLOWSHIP PROGRAM LAUNCHES

The Board of Trustees approved a five-year, $10 million grant to support Upstream USA’s effort to increase access to contraceptive care and reduce unintended pregnancies in North Carolina.

Upstream, founded in 2014, advances clinic-based interventions to improve reproductive health care access. It has launched statewide initiatives in North Carolina and other states in hopes of reducing unplanned pregnancies and improving long-term outcomes for families. The Endowment’s support will assist Upstream’s expansion effort in North Carolina, where an estimated 43 percent of pregnancies are unplanned, resulting in nearly 38,000 unplanned births annually.

Upstream plans to deliver customized training and technical assistance to partnering hospital systems, public health departments, federally qualified health centers, clinics and private providers. Health centers will partner with Upstream for 12 to 18 months to integrate Long-Acting Reversible Contraceptives, or LARCS, among the array of contraception offered. Upstream anticipates reaching as many as 400 sites and 400,000 women annually.

UPSTREAM USA

NEWSFor the past several years, our program area teams have been systematically reviewing their grantmaking strategies, seeking input from grantees and others, and making necessary revisions. The goal is to have greater clarity — for staff and for grantees — about what the Endowment is trying to accomplish (our aims), why we may take different philanthropic approaches in different program areas, what strategies we are using to achieve our aims, and how we will know if we are successful.

Staff and Trustees in late 2018 discussed each program area’s overall aim and philanthropic approach. A year later, staff presented overviews of the program areas’ theories of change, laying out the outcomes they sought to achieve and the strategies for reaching those results. In 2020, they presented more detailed theories of change and crafted evaluation and learning plans to measure the impact of their grantmaking and track progress against their strategies.

We plan to wrap up our strategy refresh in 2021, reviewing and adjusting as the work progresses.

REFINING OUR STRATEGY

Find more information on our COVID relief grants at annual-report.dukeendowment.org/2020.

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The Duke Endowment in Charlotte, North Carolina, is a private foundation established in 1924 by industrialist

and philanthropist James B. Duke.

We seek to fulfill his dream for the Carolinas by enriching lives and communities through children’s

services, health care, higher education and rural churches.

Mr. Duke’s legacy endures today in every life touched, every institution advanced and every innovation discovered.

800 East Morehead StreetCharlotte, North Carolina 28202

dukeendowment.org

2O2O GRANTMAKING

1The Duke Endowment • 2020 Grantmaking

TABL

E O

F

CON

TEN

TS

2 2020 GRANTMAKING

13

3 CHILD & FAMILY WELL-BEING

5 HEALTH CARE

9 HIGHER EDUCATION

11 RURAL CHURCH

CROSS PROGRAM/ SPECIAL OPPORTUNITIES

2O2O GRANTMAKING

*Includes $19,178,430 in COVID-19 relief grants distributed, out of $20,053,430 approved.**May not sum to total due to rounding.


$11,509,759 $6,780,382

$44,346,906 $65,781,479

$56,191,604 $48,051,651

$15,490,766 $11,001,863

$43,867,556* $71,958,930*


HEALTH CARE

HIGHER EDUCATION

RURAL CHURCH


TOTAL GRANTMAKING$171,406,590** $203,574,305**

GRANTS MADE

NEW COMMITMENTS

372 167



PHILANTHROPIC APPROACH

The Child and Family Well-Being program area views its

grantmaking approach as advancing and supporting change

as a collaborating partner with public agencies and private

organizations to prevent, treat and mitigate the e�ects of

child maltreatment and improve child well-being outcomes.


Distributed

$11,509,759

Newly Approved

$6,780,382

NORTH CAROLINACary Lucy Daniels Center

$214,000 To continue piloting Circle of Security, an evidence-informed parenting program for at-risk parents.

Charlotte Council for Children’s Rights

$315,000 To advocate for improved educational services for youth in foster care.

Matthews Thompson Child & Family Focus

$484,168 To expand therapeutic foster care in three eastern North Carolina counties.

Morrisville Prevent Child Abuse North Carolina

$788,150 To support implementation of Incredible Years, Strengthening Families Program and Triple P.

Raleigh Benchmarks

$500,000 To continue supporting the Partnering for Excellence initiative.

Raleigh Triangle Family Services

$100,000 To continue support for Trauma-Focused Cognitive Behavioral Therapy and Child-Parent Psychotherapy.

Salisbury Families First — NC

$147,000 To continue piloting Second Step, an evidence-informed model to strengthen the social-emotional well-being of children.

SOUTH CAROLINAAnderson New Foundations Home for Children

$162,000 To continue supporting the implementation of ARC Reflections, an evidence-informed foster parent training program.

Clinton Thornwell

$357,845 To continue supporting the implementation of Trust-Based Relational Intervention, an evidence-informed foster parent training program.

Columbia Epworth Children’s Home

$500,000 To continue support for the Institute for Child and Family Wellbeing.

Columbia South Carolina Department of Social Services

$1,249,490 To continue support for the Strengthening Families Program.

$233,043 To support evaluation and implementation of the Family First Prevention Services Act.

Columbia South Carolina Youth Advocate Program

$1,091,436 To support a telepsychiatry program for children in foster care.

Columbia University of South Carolina Educational Foundation

$245,000 To study the role of social determinants of health and case worker biases on foster care entry and exit.

OTHERChicago, IL Chapin Hall Center for Children

$393,250 To continue support for creating and implementing the North Carolina Family First Prevention Plan.





The Health Care program area is an innovating partner

that aims to improve health status and reduce health

disparities in the Carolinas. Our impact can be maximized

by working with health systems to identify and cultivate

innovative models of care that have the potential to

improve health while realizing scale and sustainability

within the larger system.

HEALTH CARE

Distributed

$44,346,906

Newly Approved

$65,781,479

HEALTH CARE

NORTH CAROLINAAhoskie Vidant Roanoke-Chowan Hospital

$500,000 To expand a community network of care for the low-income, uninsured in Edgecombe and Hertford counties.

Asheville Western Carolina Medical Society Foundation

$500,000 To expand a community network of care for the low-income, uninsured in Buncombe County.

Bolivia Novant Health Brunswick Medical Center Foundation

$400,000 To pilot and test the use of telemedicine and telepsychiatry in Brunswick County middle schools.

Cary North Carolina Healthcare Association

$8,500,000 To establish the Carolinas Health Innovation Institute.

$5,750,000 To continue support for the State Implementation Assistance Center.

Chapel Hill Piedmont Health Services

$400,000 To support the expansion of a comprehensive school-based oral health program.

Chapel Hill University of North Carolina at Chapel Hill

$497,000 To expand a community network of care for the low-income, uninsured in Alamance, Orange, Chatham, Caswell and Lee counties.


$347,369 To evaluate an alternative model for providing maternity care in rural hospitals.

Charlotte Atrium Health Foundation

$1,080,000 To develop, test and implement a virtual psychiatric care transition model for people with serious and persistent mental illness.

$500,000 To expand a community network of care for the low-income, uninsured in Mecklenburg County.

Charlotte Charlotte Community Health Clinic


Charlotte MedAssist Mecklenburg

$950,000 To develop and test a new approach for improving medication compliance for the low-income, uninsured in North Carolina.

Charlotte Novant Health Presbyterian Medical Center Foundation

$449,000 To provide artificial intelligence technology and teleneurology services to five rural hospitals in North Carolina.

$420,000 To expand a community health worker program.

$400,000 To develop and test an artificial intelligence-powered tool that can improve fetal and maternal outcomes.

$199,810 To demonstrate the e�ectiveness of artificial intelligence in early detection and treatment of breast cancer.

Durham Duke University School of Medicine

$9,000,000 To help advance biomedical science through artificial intelligence.

$500,000 To expand a community network of care for the low-income, uninsured in Durham County.

Durham El Futuro

$675,000 To expand the North Carolina Latino Mental Health Provider Network.

Elizabeth City Sentara Albemarle Hospital

$400,000 To expand a community network of care for the low-income, uninsured in eastern North Carolina.

Fayetteville Cape Fear Valley Health System

$500,000 To expand a community network of care for the low-income, uninsured in Cumberland County.

Flat Rock Four Seasons Compassion for Life

$280,000 To expand a palliative care training program for primary care providers in rural communities.

Gastonia Caromont Health

$500,000 To expand a community network of care for the low-income, uninsured in Gaston County.

Goldsboro Wayne UNC Health Care

$86,000 To use technology to improve recognition of maternal hemorrhaging.

Greensboro Cone Health

$450,000 To expand a community network of care for the low-income, uninsured in Guilford County.

$424,000 To expand a community network of care for the low-income, uninsured in Rockingham County.


HEALTH CARE

Greensboro Guilford County Department of Health and Human Services


Greenville East Carolina University

$252,000 To evaluate a patient transportation program in rural eastern North Carolina.

Hendersonville AdventHealth Hendersonville

$500,000 To expand a community network of care for the low-income, uninsured in Henderson and Polk counties.

Hendersonville Blue Ridge Community Health Services Foundation


Hickory Catawba Valley Health System

$500,000 To expand a community network of care for the low-income, uninsured in Catawba and Alexander counties.

Je�erson Appalachian District Health Department


Morrisville North Carolina Institute of Medicine

$150,000 To expand a health policy program for elected o�cials.

New Bern CarolinaEast Foundation

$287,000 To establish a community paramedicine program for Craven, Jones and Pamlico counties.

Oxford Granville-Vance District Health Department


Plymouth Martin-Tyrrell-Washington District Health Department


Raleigh Transitions LifeCare

$400,000 To establish telehealth capacity for palliative care services in rural North Carolina.

Raleigh WakeMed

$1,550,000 To integrate virtual behavioral health services into pediatric and adult primary care settings.

$500,000 To expand a community network of care for the low-income, uninsured in Wake and Franklin counties.

Smithfield Johnston Health

$444,000 To expand a community network of care for the low-income, uninsured in Johnston and Harnett counties.

Snow Hill Greene County Health Care


Southern Pines FirstHealth of the Carolinas


Wilmington New Hanover Regional Medical Center

$500,000 To expand a community network of care for the low-income, uninsured in southeastern North Carolina.

Winston-Salem Novant Health Forsyth Medical Center Foundation

$500,000 To expand a community network of care for the low-income, uninsured in Forsyth, Stokes, Davie, Davidson and Yadkin counties.

$390,000 To identify best practices for advance care planning in an ambulatory setting.

Winston-Salem Wake Forest Baptist Health

$625,000 To implement home telemonitoring resources for patients discharged from intensive care.

$450,000 To expand a community network of care for the low-income, uninsured in Wilkes County.

$311,000 To expand a community paramedicine program in Forsyth County.

$285,800 To address the needs of families in food insecure households.

SOUTH CAROLINAAnderson AnMed Health Foundation

$450,000 To expand a community network of care for the low-income, uninsured in Anderson County.

Beaufort Beaufort Memorial Hospital

$500,000 To expand a community network of care for the low-income, uninsured in Beaufort, Jasper and Hampton counties.

Camden Community Medical Clinic of Kershaw County

$450,000 To expand a Healthy People, Healthy Carolinas coalition to increase capacity and improve population health in Kershaw County.


HEALTH CARE

Charleston Medical University of South Carolina Foundation

$685,000 To develop, test and implement a post-graduate psychiatric mental health nurse practitioners residency program that will use a telehealth model to reach underserved communities.

$585,000 To expand a trauma resilience and recovery program across the Carolinas.

$330,000 To identify and address social determinants of health among primary care patients.

$313,000 To promote diversity in the South Carolina health care workforce by training underrepresented minority students.

Charleston Roper St. Francis Foundation

$1,200,000 To implement a virtual hospital for acutely ill patients.

$500,000 To expand a community network of care for the low-income, uninsured in Charleston County.

Columbia Prisma Health-Midlands

$500,000 To expand a community network of care for the low-income, uninsured in Richland, Lexington, Fairfield and Sumter counties.

Columbia SCHA Foundation

$5,750,000 To continue support for the State Implementation Assistance Center.

Columbia University of South Carolina Educational Foundation

$209,000 To expand PASOs, a statewide health program for Latino families.

Conway Conway Medical Center

$615,000 To advance serious illness care at Conway Medical Center.

$500,000 To expand a community network of care for the low-income, uninsured in Horry County.

Florence McLeod Health Foundation

$1,450,000 To pilot the integration of behavioral health, oral health, nutrition, care coordination, and clinical pharmacology into a single, holistic primary care program.

$500,000 To expand a community network of care for the low-income, uninsured in Darlington, Dillon, Florence and Marion counties.

$450,000 To expand a Healthy People, Healthy Carolinas coalition to increase capacity and improve population health in Chesterfield, Dillon and Marlboro counties.

Georgetown Tidelands Health

$500,000 To expand a community network of care for the low-income, uninsured in Georgetown County.

Greenville Bon Secours St. Francis Health System

$450,000 To expand a Healthy People, Healthy Carolinas coalition to increase capacity and improve population health in Greenville County.

Greenville Prisma Health-Upstate

$500,000 To expand a community network of care for the low-income, uninsured in Greenville and Laurens counties.

$500,000 To expand a community network of care for the low-income, uninsured in Oconee and the greater Clemson area.

$475,000 To expand access to mental health providers in South Carolina.

$285,000 To evaluate a group prenatal care model developed by the March of Dimes.

Greenwood Self Regional Healthcare

$899,000 To use virtual care technology to expand access to genetic evaluations for children.

$500,000 To expand a community network of care for the low-income, uninsured in Edgefield and Greenwood counties.

Orangeburg Regional Medical Center of Orangeburg and Calhoun Counties

$450,000 To expand a Healthy People, Healthy Carolinas coalition to increase capacity and improve population health in Orangeburg, Calhoun and Bamberg counties.

Spartanburg Spartanburg Regional Healthcare System Foundation

$500,000 To expand a community network of care for the low-income, uninsured in Spartanburg County.

$323,500 To expand a community health worker program.

Winnsboro Fairfield Behavioral Health Services

$450,000 To support a Healthy People, Healthy Carolinas coalition to increase capacity and improve population health in Fairfield County.




The Higher Education program area is a contributing partner

that aims to promote the long-term success of Davidson

College, Duke University, Furman University and Johnson

C. Smith University so that they may e�ectively serve their

students and the Carolinas.

HIGHER EDUCATION

Distributed

$56,191,604

Newly Approved

$48,051,651

NORTH CAROLINACharlotte Johnson C. Smith University

$1,600,000 To support the rebuilding of the Institutional Advancement O�ce.

$956,651 To upgrade accounting software.

$515,000 To support campus improvements.

$100,000 To support the academic priorities and initiatives of the new chief academic o�cer.

Davidson Davidson College

$630,000 To support the Charlotte Urban Research Initiative, a partnership of Davidson College and Johnson C. Smith University.

Durham Duke University

$16,000,000 To support the diversity, inclusion and anti-racism initiative.

$10,000,000 To support the renovation of Lilly Library.

$7,750,000 To support the priorities and strategic direction of the Sanford School of Public Policy.

$4,500,000 To develop and implement a new holistic approach to undergraduate advising.

$3,750,000 To support the arts at Duke University.

$2,250,000 To support the priorities and strategic direction of the Sanford School of Public Policy.

HIGHER EDUCATION



RURAL CHURCHPHILANTHROPIC APPROACH

The Rural Church program area takes the approach

of an initiating partner that aims to strengthen United

Methodist systems in North Carolina so that rural

congregations can fulfill their calling to foster human,

community and economic advancement.

Distributed

$15,490,766

Newly Approved

$11,001,863

RURAL CHURCH

NORTH CAROLINAAlbemarle Central United Methodist Church

$135,000 To test a summer literacy program.

Brevard First United Methodist Church


Burnsville Higgins Memorial United Methodist Church

$60,000 To expand the social service capacity of area United Methodist churches through a building addition.

Cameron Solid Rock United Methodist Church

$220,000 To pilot a central community kitchen program for rural childcare centers.

Canton Morning Star United Methodist Church


Charlotte Western North Carolina Conference United Methodist Church

$1,171,467 To provide pensions to retired ministers and widows and dependent children of deceased ministers.

Durham Duke Divinity School

$1,886,131 To continue the Hispanic House of Studies at Duke Divinity School.

$800,000 To provide scholarships for the 2020 Summer Field Education Assistant Pastors program.

$612,838 To expand a digital ministry project.

$549,200 To provide scholarships for the 2020 Field Education Assistant Pastors and Student Pastors program.

$346,800 To support high quality continuing education events for rural United Methodist pastors.

$47,500 To support the Licensed Local Pastor Course of Study.

Elizabeth City First United Methodist Church

$90,000 To support a literacy program for Latino children and families.

Garner North Carolina Conference United Methodist Church

$798,927 To provide pensions to retired ministers and widows and dependent children of deceased ministers.

$450,000 To build communities of practice for healthy eating and local food system engagement.

$225,000 To promote clergy well-being and resilience through a Sabbath Life cohort model.

$90,000 To develop student leaders and candidates for ministry through the Wesley Foundation.

Hillsborough Union Grove United Methodist Church


$55,000 To coordinate community development ministries for a cooperative parish.

Kinston Hope Restorations

$200,000 To support a�ordable housing and workforce training for rural women in crisis.

Raleigh EducationNC

$375,000 To help rural churches build capacity through social media technology.

Raleigh North Carolina Council of Churches

$1,695,000 To strengthen the Partners in Health and Wholeness network through a focus on mental health and aging.

Raleigh North Carolina State University

$100,000 To evaluate a central community kitchen pilot.

Sparta Sparta United Methodist Church


OTHERWashington, DC American Institutes for Research

$323,600 To build evidence for the Rural Church Summer Literacy Initiative program model.

Washington, DC Community Cooperative

$177,500 To enhance clergy well-being through coaching and research, with a focus on African-American and female pastors.

Conshohocken, Center for Assessment and PA Policy Development

$187,900 To continue evaluation of the Thriving Rural Communities Initiative and related projects.



CROSS PROGRAM/ SPECIAL OPPORTUNITIES

Distributed

$43,867,556*

Newly Approved

$71,958,930*

*Includes $19,178,430 in COVID-19 relief grants distributed, out of $20,053,430 approved.


NORTH CAROLINAApex Fiesta Cristiana United Methodist Church

$100,000* To support e�orts to serve the Latino community through the Family Resource Center.

Cary North Carolina Healthcare Association

$1,250,000 To support North Carolinians impacted by COVID-19.

Charlotte Get Ready Guilford Initiative

$19,600,000 To complete the second phase of the Get Ready Guilford Initiative.

Charlotte Johnson C. Smith University

$2,000,000 To provide unrestricted operating support due to COVID-19 financial hardship.

Charlotte Read Charlotte

$750,000 To help improve third grade reading by 2025.

Clemmons Feeding the Carolinas

$3,500,000* To support food distribution in communities impacted by COVID-19 across North Carolina and South Carolina.

Davidson Davidson College


Durham Duke University

$11,000,000 To develop a university-wide initiative that helps students and faculty gain greater understanding of purpose, character and vocation.

$250,000* To help Duke University, Johnson C. Smith University, the Charlotte Mecklenburg Library and the Levine Museum of the New South document the impact of COVID-19 on communities of color in Mecklenburg County.

Durham Duke University, Sanford School of Public Policy

$500,000 To help replicate Family Connects in North Carolina and South Carolina.

Durham MDC

$265,500* To facilitate a collaborative for supporting nonprofits led by persons of color in marginalized communities.

Durham Society of St. Andrew

$100,000* To alleviate food insecurity in high-need communities.

Raleigh NC Child

$300,000 To expand a lead poisoning prevention program for children.

Raleigh North Carolina Community Action Association

$977,500* To help community action agencies in North Carolina address the basic needs of low-income families.

Raleigh North Carolina Community Foundation

$1,025,000* To support the North Carolina Healing Communities Fund.

Raleigh U.S. Committee for Refugees and Immigrants

$140,218* To address the needs of refugee and immigrant families exacerbated by COVID-19.

SOUTH CAROLINACharleston International African American Museum

$1,250,000* To support the endowment, construction and opening of the International African American Museum.

Columbia South Carolina Network of Children’s Advocacy Centers

$824,000* To meet increased demand for Trauma-Focused Cognitive Behavioral Therapy by training clinicians and supporting an evidence management system in South Carolina.

Columbia Central Carolina Community Foundation

$1,250,000 To support South Carolinians impacted by COVID-19.

Greenville Prisma Health-Upstate

$385,000* To replicate the PASOs model and deploy community health workers in the Midlands.

Greenville Furman University


North Helping And Lending Outreach Support Charleston (HALOS)

$251,712* To address the pandemic-related needs of kinship caregivers in seven South Carolina counties.

*Grant reflects The Duke Endowment’s commitment to pursue racial equity, diversity and inclusion in its COVID-19 response.



OTHERChicago, IL Start Early

$50,000 To support the Early Childhood Connector, a digital platform for communities engaged in early childhood e�orts.

New York, NY Blue Meridian

$8,000,000 To support scaling of e�ective solutions for young people and families in poverty.

Oakland, CA Upstream USA

$10,000,000 To reduce unplanned pregnancies in North Carolina.

Multiple Multiple Organizations

$190,000 To support philanthropic organizations and a¡nity groups.



dukeendowment.org

2O2O FINANCIALS

TABL

E O

F

CON

TEN

TSNOTES TO FINANCIAL STATEMENTS9

5 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

6 STATEMENTS OF FINANCIAL POSITION

7 STATEMENTS OF ACTIVITIES

8 STATEMENTS OF CASH FLOWS

2 2O2O FINANCIALS & GRANTMAKING

1The Duke Endowment • 2020 Financials

2O2O FINANCIALSEXPENSES & GRANTS

Since James B. Duke’s death in 1925, the assets of The Duke Endowment have achieved significant growth, from $107 million to $4.7 billion. During the same time, about $4.2 billion has been distributed in grants.

EXPENSES

$23.8MAdministrative expenses $13.1M

Program expenses $10.7M

Provision for taxes $11K

GRANTS DISTRIBUTED SINCE 1925

$4.2B


INVESTMENTS

Since July 2007, The Duke Endowment’s investment portfolio has been managed by DUMAC Inc., a professionally staffed investment organization in Durham, N.C., governed by Duke University.

During 2020, the investment return on the Endowment’s portfolio was 13.8 percent.* Investment performance benefited from increases in global equity, hedged strategies and private capital. The Endowment’s investment portfolio increased in value from $3.8 billion to $4.6 billion from December 31, 2019 to December 31, 2020. The Endowment’s total assets were $4.7 billion at year end.

For the 10-year period ending December 31, 2020, the Endowment’s investment portfolio, net of fees, returned 9.6 percent annualized, outperforming its policy benchmark, which returned 6.3 percent annualized, and a 70 percent MSCI All Country World Index/30 percent Bloomberg Barclays U.S. Aggregate Bond Index benchmark, which was up 7.8 percent annualized over the same period.

2.80 2.953.37 3.43 3.35 3.37

3.69 3.613.9

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

4.7

4.5

12.3

17.1

10.9

2.8

6.1

11.8

5.6

2011 2012 2013 2014 2015 2016 2017 2018

11.5

2019 2020

13.8

TOTAL ASSETS

INVESTMENT RETURN

$4.7B

13.8%*

* Investment return is based on pre-audit investment valuations.

Find more information about our grantmaking and audited financial statements at dukeendowment.org.


2O2O GRANTMAKING

**Includes $19,178,430 in COVID-19 relief grants distributed, out of $20,053,430 approved.***May not sum to total due to rounding.


$11,509,759 $6,780,382

$44,346,906 $65,781,479

$56,191,604 $48,051,651

$15,490,766 $11,001,863

$43,867,556** $71,958,930**


HEALTH CARE

HIGHER EDUCATION

RURAL CHURCH


TOTAL GRANTMAKING$171,406,590*** $203,574,305***

GRANTS MADE

NEW COMMITMENTS

372 167


Board of Trustees of The Duke Endowment

Report on the financial statements

We have audited the accompanying financial statements of The Duke Endowment (the “Endowment”), which comprise the statement of financial position as of December 31, 2020, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Endowment’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Endowment’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Duke Endowment as of December 31, 2020, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of matter

We draw attention to Note 6 to the financial statements, which describes private equity investments valued at $1,973,947,726 or 42.97% of net assets as of December 31, 2020. The fair values of such investments have been estimated by management in the absence of readily determinable fair market values. Management’s estimates are based on information provided by the fund managers or the general partners of the private equity investments. Our opinion is not modified with respect to this matter.

Report on 2019 summarized comparative information

We have previously audited the Endowment’s 2019 financial statements (not presented herein), and we expressed an unmodified audit opinion on those audited financial statements in our report dated June 5, 2020. In our opinion, the accompanying summarized comparative information as of and for the year ended December 31, 2019 is consistent, in all material respects, with the audited financial statements from which it has been derived.

Charlotte, North Carolina June 11, 2021

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


STATEMENTS OF FINANCIAL POSITIONDecember 31, 2020 (with comparative amounts for the year ended December 31, 2019)

Assets 2020 2019

Cash and cash equivalents $ 9,704,539 $ 12,727,847

Securities transactions receivable 27,021,577 38,474,553

Investments, at estimated market value (Note 6) 4,640,776,832 3,812,060,551

Land, building, furniture and equipment, net 37,068,287 38,320,037

Other assets 1,359,289 1,219,965

TOTAL ASSETS $ 4,715,930,524 $ 3,902,802,953

Liabilities and Net Assets

Liabilities:

Grants payable $ 30,867,522 $ 20,329,033

Net deferred excise tax liability 27,050,427 15,123,093

Securities transactions payable 8,641,083 5,676,072

Notes payable 31,050,545 32,324,092

Other liabilities 25,385,692 20,768,970

Total Liabilities $ 122,995,269 $ 94,221,260

Net assets:

Without donor restrictions $ 2,950,304 $ 4,452,578

With donor restrictions

Purpose restrictions 4,330,303,873 3,544,448,037

Restricted in perpetuity 259,681,078 259,681,078

Total Net Assets $ 4,592,935,255 $ 3,808,581,693

TOTAL LIABILITIES AND NET ASSETS $ 4,715,930,524 $ 3,902,802,953

See accompanying notes to financial statements.


STATEMENTS OF ACTIVITIESFor the Period Ended December 31, 2020 (with summarized amounts for the year ended December 31, 2019)

TOTAL

Revenue (Loss)Without Donor

RestrictionsWith Donor Restrictions 2020 2019

Dividends and interest income, net $ 34,434,045 $ — $ 34,434,045 $ 40,809,078

Contributions received — 9,800,000 9,800,000 —

Other income — tax refunds 52,926 — 52,926 2,054,500

Net realized gains on investment transactions — 106,225,574 106,225,574 191,701,262

Increase in net unrealized appreciation on assets — 839,559,140 839,559,140 228,748,486

Total Revenue $ 34,486,971 $ 955,584,714 $ 990,071,685 $ 463,313,326

Expenses

Administrative $ 10,938,752 $ — $ 10,938,752 $ 13,692,928

Program (Grantmaking) 8,939,162 — 8,939,162 8,666,087

Provision for taxes 11,061 — 11,061 2,755,991

Increase in pension benefit obligation 3,884,068 — 3,884,068 4,019,067

Total Expenses $ 23,773,043 $ — $ 23,773,043 $ 29,134,073

Released from Restrictions (Note 3) 169,728,878 (169,728,878)

—

—

Grants Approved

Education $ 60,771,370 $ — $ 60,771,370 $ 64,509,417

Health Care 43,556,278 — 43,556,278 45,372,147

Child Care 13,321,949 — 13,321,949 14,283,188

Rural Church 16,543,166 — 16,543,166 15,989,709

Administrative Grants 240,000 — 240,000 320,500

Special Opportunities 47,512,317 — 47,512,317 16,918,696

Total Grants Approved $ 181,945,080 $ — $ 181,945,080 $ 157,393,657

Change in Net Assets $ (1,502,274) $ 785,855,836 $ 784,353,562 $ 276,785,596

Net Assets at Beginning of Year $ 4,452,578 $ 3,804,129,115 $ 3,808,581,693 $ 3,531,796,097

NET ASSETS AT END OF YEAR $ 2,950,304 $ 4,589,984,951 $ 4,592,935,255 $ 3,808,581,693



STATEMENTS OF CASH FLOWSYear ended December 31, 2020 (with comparative amounts for the year ended December 31, 2019)

Cash Flows From Operating Activities 2020 2019

Change in net assets $ 784,353,562 $ 276,785,596

Adjustments to reconcile change in net assets to net cash used in operating activities:

Depreciation expenses 1,360,686 1,577,662

Net realized gains on investment transactions (106,225,574) (191,701,262)

Increase in net unrealized appreciation on assets (839,559,140) (228,748,486)

Increase in net deferred tax liability 11,927,334 6,529,976

Changes in assets and liabilities:

Decrease (increase) in securities transactions receivable 11,452,976 (34,905,248)

Increase in other assets (139,324) (133,189)

Increase in grants payable 10,538,489 1,292,635

Increase in securities transactions payable 2,965,011 2,016,620

Increase in other liabilities 4,616,722 4,608,212

Net Cash Used In Operating Activities $ (118,709,258) $ (162,677,484)

Cash Flows From Investing Activities

Proceeds from sales and maturities of investments $ 2,461,085,045 $ 1,929,990,693

Disbursements for purchase of investments (2,344,016,613) (1,771,734,214)

Disbursements for purchase of land, building, furniture and equipment (108,935) (206,162)

Net Cash Provided By Investing Activities $ 116,959,497 $ 158,050,317

Cash Flows From Financing ActivitiesPrincipal payments on notes payable $ (1,273,547) $ (1,225,896)

Net Cash Used In Financing Activities $ (1,273,547) $ (1,225,896)

Net Decrease In Cash And Cash Equivalents $ (3,023,308) $ (5,853,063)

Cash And Cash Equivalents At Beginning Of Year 12,727,847 18,580,910

CASH AND CASH EQUIVALENTS AT END OF YEAR $ 9,704,539 $ 12,727,847

Supplemental Cash Flow Information

Cash paid during the year for taxes $ 11,061 $ 2,755,991

Cash paid during the year for interest $ 1,232,337 $ 1,279,988



NOTES TO FINANCIAL STATEMENTSDecember 31, 2020 (With Comparative Amounts as of December 31, 2019 and Summarized Financial Information for the Year Ended December 31, 2019)

(1) Summary of Significant Accounting Policies

(a) Organization

The Duke Endowment (“the Endowment”) was established by James B. Duke by Indenture and Deed of Trust of Personalty, dated December 11, 1924, for specific charitable, educational and religious purposes. The Endowment is to have perpetual existence. Subsequently, additional amounts were contributed to the Endowment under Items VIII, X, and XI of the Will of James B. Duke and by gifts from members of Mr. Duke’s family. Additional amounts were also received from The Doris Duke Trust. The Endowment has been classified as a private foundation and, accordingly, is subject to federal excise taxes imposed on net investment income, including realized capital gains. The Endowment is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code.

(b) DUMAC

On July 1, 2007, the Trustees of the Endowment entered into a formal agreement with Duke Management Company (“DUMAC”), an organization providing investment management services for the Duke University endowment assets, whereby Duke Management Company would perform investment management services on behalf of the Endowment.

Pursuant to the terms of the arrangement, DUMAC is compensated by the Endowment for its investment management services at a rate proportionate to the Endowment’s share of the total investment assets managed by DUMAC in comparison to the total operating expenses of DUMAC, paid annually. For the years ending 2020 and 2019, the Endowment incurred investment management fees to DUMAC in the amount of $4,590,964 and $4,186,803, respectively. Such fees are netted against dividends and interest income within the accompanying statement of activities.

(c) Method of Accounting

The Endowment presents its financial statements on an accrual basis in accordance with accounting principles generally accepted in the United States of America (US GAAP). Certain items are maintained on a cash basis, which is not materially different from the accrual basis of accounting.

During the years ended December 31, 2020 and 2019, the Endowment had leased certain office facilities and equipment. Such leases were operating leases and costs were expensed as incurred.

(d) Basis of Presentation

The Endowment is required by the Indenture to use the interest and dividends (Endowment Income) earned on investments for purposes defined in the Indenture, subject to the defined authority of the trustees to withhold Endowment Income. More specifically, the Endowment is required by the Indenture to distribute to Duke University a certain amount of Endowment Income from the Original Corpus, Corpus Item VIII and Corpus Item XI, subject to a limited right to withhold by the trustees of the Endowment. The Indenture provides for additional trustee discretion with respect to the disbursement of Endowment Income to Endowment beneficiaries other than Duke University and also to Duke University out of accounts other than the three Corpus accounts listed above. In accordance with terms of the Indenture, which established the Endowment, realized gains and losses arising from investment transactions are considered part of Corpus. For purposes of presentation within the financial statements, all Corpus accounts are classified as net assets with donor restrictions.

The Endowment has elected to implement the requirements of the Uniform Prudent Management of Institutional Funds Act (“UPMIFA”). As a result of this implementation, the trustees determined that they would classify as donor restricted net assets maintained in perpetuity (a) the original value of Original Corpus, Corpus VII and Corpus XI, plus (b) the original value of subsequent gifts to Corpus, less (c) distributions specified by the donor.

The net assets of the Endowment and changes therein are classified and reported as follows:• Net Assets without Donor Restrictions — These amounts are free from donor restrictions and are available for

appropriation to the beneficiaries of the Endowment or for similar charitable purposes in accordance with terms of the Indenture.


• Net Assets with Donor Restrictions — These funds are subject to donor restrictions that will be met by the actions of the trustees for appropriation to the beneficiaries of the Endowment or for similar charitable purposes in accordance with terms of the Indenture or under circumstances described in Note 3. Using UPMIFA guidelines, the trustees have determined that $259,681,078 be classified as net assets with donor restrictions maintained in perpetuity as of December 31, 2020 and 2019. For the same periods, the remaining balance of $4,330,303,873 and $3,544,448,037, respectively, represent the appreciation in the original values listed above.

Dividends and interest are reported as increases in net assets without donor restrictions. Realized and unrealized gains and losses are reported as increases or decreases in net assets with donor restrictions. Expenses and appropriations are recorded as decreases in net assets without donor restrictions.

The financial statements include certain prior-year summarized comparative financial information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with US GAAP. Accordingly, such information should be read in conjunction with the Endowment’s financial statements for the year ended December 31, 2019, from which the summarized information was derived.

(e) Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits and certain short-term interest-bearing investments held with banks for beneficiary and expense purposes. The Endowment maintains cash on deposit and the balance, at times, may be in excess of federally insured limits.

(f) Securities Transactions Receivable

Securities transactions receivable represents investment transactions that have been sold, but not settled. The Endowment recognizes investment transactions on a trade-date basis. Amounts are recognized in the statements of financial position at fair market value.

(g) Investments

The Endowment accounts for investments under Accounting Standards Codification (ASC) 958, Not-for-Profit Entities, through which the Endowment has elected to record investments at estimated fair market value with gains and losses included in the statements of activities. Realized gains and losses are recognized when securities are sold based on the first-in, first-out method.

(h) Land, Building, Furniture and Equipment

Land, building, furniture and equipment owned by the Endowment are stated at cost at date of acquisition. Useful lives range from 39 years for buildings, 7 years for furniture and 5 years for technological equipment. Depreciation is calculated on the straight-line basis over the assets’ estimated useful lives, except for land. The Endowment reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment charge is recognized when the fair value of the asset or group of assets is less than the carrying value. There was no impairment recognized for the years ended December 31, 2020 and 2019.

(i) Grants Payable

The Endowment records grants payable once the Board of Trustees approves the grant. Once approved, each grantee organization must sign a grant agreement which stipulates guidelines and related requirements. The grantee must meet the terms of the signed grant agreement before funds are distributed.

(j) Securities Transactions Payable

Securities transactions payable represents investment transactions that have been purchased, but not settled. The Endowment recognizes investment transactions on a trade-date basis. Amounts are recognized in the statements of financial position at fair market value.


(k) Provision for Taxes

The Endowment is exempt from federal income taxes on related income under Section 501(c)(3) of the Internal Revenue Code and is classified as a private foundation. Beginning in 2020, legislation changed the federal excise tax rate on private foundations to a fixed rate of 1.39% on net investment income. For 2019, private foundations operated under the previous excise tax rules that applied a 2% rate on net investment income, which can be reduced to 1% if certain requirements are met. The Endowment qualified for the reduced rate of 1% for 2019.

In addition, the Endowment may be required to pay unrelated business income tax incurred through certain private equity investments. This tax is not material to the financial statements.

The Endowment records deferred excise taxes using the asset and liability method. Under this method, deferred excise taxes are determined based on temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to be in effect when such amounts are realized or settled.

(l) Risks and Uncertainties

A significant portion of the Endowment’s assets are held in a variety of investment forms. Investment securities, and other investments, including alternative investments in general, are exposed to various risks, such as interest rate risk, credit risk, liquidity risk, foreign currency risk and overall market volatility. Additionally, certain of the Endowment’s alternative investments contain redemption rights which may be restricted or eliminated by the underlying funds based on the provisions of the fund agreements. Alternative investment transactions are conducted primarily through secondary markets, and accordingly the risk exists that the secondary markets could experience fluctuations in liquidity and/or volume, which could impact the estimated fair value of these alternative investments.

Due to the level of risk associated with certain investment securities, it is possible that changes in values of investment securities will occur and that such changes could materially affect the amounts reported in the financial statements.

In March 2020, the United States government declared the COVID-19 outbreak a national emergency. While the national emergency could adversely affect the Endowment’s future financial condition and results of operations, the impact remains uncertain at this time.

(m) Use of Estimates

Management of the Endowment has made certain estimates and assumptions relating to the reporting of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in preparing these financial statements in conformity with US GAAP. Actual results could differ from these estimates.

Significant items in the Endowment’s financial statements subject to such estimates and assumptions include valuations for certain investments without readily determinable fair values, and actuarially determined benefit liabilities related to the Endowment’s pension and other postretirement benefit plans.

(2) Fair Value of Financial InstrumentsThe estimated fair values of financial instruments have been determined by the Endowment as follows:

Cash and cash equivalents, securities transactions receivable, and liabilities are carried at cost which approximates fair value because of the short maturity of these instruments.

Investments are carried at estimated fair value, which is generally based on year-end published quotations, except as discussed below.

Certain Endowment assets that are held in various alternative investments, including limited partnerships that invest in the securities of companies, hedge funds and other investments, may not be immediately liquid and do not have a readily determinable fair value, that is, instruments not listed on national exchanges or over-the-counter markets. The partnerships’ general partners, who must follow the valuation guidelines stipulated in their respective limited partnership agreements, determine the fair value of such partnership investments. Given the inherent risks associated with this type of investment, there can be no guarantee that there will not be widely varying gains or losses on these limited partnership investments in future periods. For its alternative investments, the Endowment is eligible and has utilized the practical expedient method to measure fair value under generally accepted accounting principles. In accordance with the practical expedient method, the net asset value (NAV) reported by the underlying alternative investment is concluded to represent the fair value.

The note payable is carried at cost as the Endowment has taken the position that cost approximates fair value due to the nature of the agreement.


(3) Release from RestrictionIn December 2009, the Indenture was modified by court order to allow the trustees to expend net assets with donor restrictions to the extent necessary in the judgment of the trustees for the Endowment to make available to beneficiaries of the Endowment funds reasonably needed for purposes described in the Indenture, consistent with the fiduciary duty of the trustees to preserve the Endowment in perpetuity. The modifications were not in effect until after the trustees’ final meeting of the year and did not affect the financial statements of the Endowment for years ended prior to January 5, 2010.

Under certain circumstances described above, the trustees may be required to transfer net assets with donor restrictions to net assets without donor restrictions to the extent necessary to comply with the provisions set forth in Section 4942 of the Internal Revenue Code. As reported on the statement of activities, the trustees determined that in 2020 and 2019 transfers of funds with donor restrictions in the amounts of $169,728,878 and $145,519,067, respectively, were required. Although the Endowment does not intend to transfer funds in excess of amounts approved for general expenditures as part of its annual budget process for operating expenditures and appropriations, trustees could release additional funds from net assets with donor restrictions if necessary.

(4) LiquidityThe Endowment manages its financial assets to be available as its operating expenditures, liabilities and other obligations come due. In addition, the Endowment invests cash in excess of daily requirements in short-term investments or fixed income securities. Although the Endowment does not intend to spend from its donor restricted net assets, other than amounts appropriated for general expenditures as part of its annual budget approval and appropriation process, amounts from net assets with donor restrictions could be made available if necessary. However, donor restricted net assets contain investments with lock-up provisions that reduce the total investments that could be made available. Other than those amounts restricted in perpetuity, all other donor restricted net assets can be spent pursuant to the above limitations. Detail regarding notes payable is available in Note 8.

2020 2019

Total assets: $ 4,715,930,524 $ 3,902,802,953

Less:

Assets restricted in perpetuity (259,681,078) (259,681,078)

Illiquid private investments and real assets (2,195,666,080) (1,548,585,313)

Land, building, furniture and equipment, net (37,068,287) (38,320,037)

Other assets (1,359,289) (1,219,965)

FINANCIAL ASSETS AVAILABLE WITHIN ONE YEAR $ 2,222,155,790 $ 2,054,996,560

(5) Provision for Taxes and Deferred Excise Tax LiabilityDuring 2020 and 2019, the Endowment recorded a provision for current year estimated excise taxes in the amounts of $11,061 and $2,755,991, respectively. This was allocated to the net change in net assets without donor restrictions. The Endowment’s net deferred excise tax liability was $27,050,427 and $15,123,093 at December 31, 2020 and 2019, respectively, which primarily relates to unrealized gains on investments. The increase in deferred excise tax liability was $11,927,334 and was allocated to unrealized appreciation in net assets with donor restrictions for 2020.


(6) InvestmentsInvestments are composed of the following:

2020

COST MARKET

Short-term investments $ 383,500,371 $ 383,500,371

Fixed income 98,133,809 104,366,610

Equities 412,176,551 656,264,442

Hedged strategies 623,299,992 1,014,467,965

Private investments 715,683,489 1,973,947,726

Real assets 424,927,153 481,399,432

Other 36,981,583 26,830,286

$ 2,694,702,948 $ 4,640,776,832

2019

COST MARKET

Short-term investments $ 342,541,075 $ 342,541,075

Fixed income 172,494,259 170,532,586

Equities 454,845,566 630,307,667

Hedged strategies 581,768,361 828,156,629

Private investments 674,971,882 1,269,000,394

Real assets 438,518,778 539,265,997

Other 52,360,912 32,256,203

$ 2,717,500,833 $ 3,812,060,551

At December 31, 2020 and 2019, ($8,256,057) and ($10,439,928), respectively, were posted as collaterals for derivatives and thus not readily available for use. Collaterals held are included in hedged strategies and short-term investments.

The Endowment’s investment classes are described in further detail below. Classes include direct holdings, which are generally marketable securities, and interests in funds for which the related investment strategies are described.

Short-term investments include cash collateral, money market funds, short-term U.S. Treasury, agency, corporate and other highly liquid debt securities with an aggregate duration of less than a year.

Fixed income includes non-government U.S. and non-U.S. debt securities, funds holding similar securities and debt-based derivatives.

Equities include U.S. and non-U.S. stocks, equity-based derivatives and interests in funds that invest predominantly long but also short stocks.

Hedged strategies primarily include interests in funds that invest both long and short in U.S. and non-U.S. stocks, credit-oriented securities and arbitrage strategies. Virtually all of the Endowment’s investments in these funds are redeemable, and the underlying assets of the funds are predominately marketable securities and derivatives.

Private investments primarily include interests in funds or partnerships that hold illiquid investments in venture capital, buyouts and credit. These funds typically have periods of 10 or more years during which committed capital may be drawn. Distributions are received through liquidation of the underlying assets of the funds, which are anticipated to occur over the next 4 to 10 years. Certain private placement securities may also be held.


Real assets include interests in funds or partnerships that hold illiquid investments in residential and commercial real estate, oil and gas production, energy, other commodities and related services businesses. These funds typically have periods of 10 or more years during which committed capital may be drawn. Distributions are received through liquidations of the underlying assets of the funds, which are anticipated to occur over the next 5 to 12 years. Additionally, certain liquid commodity- and real estate-related equities, private placement securities and related derivatives are included.

Other includes primarily other derivative instruments.

As of December 31, 2020, and 2019, redemption frequency and the corresponding notice period for all investments are shown within the table below. The values of the unfunded commitments included within the following table are as of December 31, 2020.

ASSET CLASSUNFUNDED

COMMITMENTS

REDEMPTION FREQUENCY (IN DAYS)

(IF CURRENTLY ELIGIBLE)1 REDEMPTION NOTICE

PERIOD (IN DAYS)

Short-term investments — daily 1

Fixed income — 1 to 30 1 to 30

Equities — 1 to >365 1 to 90

Hedged strategies $ 1,200,000 1 to >365 30 to 180

Private investments 270,743,390 N/A N/A

Real assets 161,306,690 N/A N/A

Other — N/A N/A

The Endowment measures fair value at the price expected to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance prioritizes the assumptions that market participants would use in pricing the asset or liability (the “inputs”) into a three-tier fair value hierarchy. This fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identical assets or liabilities and the lowest priority (Level 3) to unobservable inputs in which little or no market data exists, requiring enterprises to develop their own assumptions. Observable inputs that do not meet the criteria of Level 1 and include quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets and liabilities in markets that are not active, are categorized as Level 2. Level 3 inputs are those that reflect management’s estimates about the assumptions market participants would use in pricing the asset or liability, based on the best information available in the circumstances. Alternative investments are typically valued using Level 3 inputs, and such inputs include information provided by the managers of the underlying funds.

At December 31, 2020, $163,194,526 or 3.5% of the Endowment’s total investments, are valued using Level 3 inputs. At December 31, 2019, $145,910,864, or 3.8% of the Endowment’s total investments, are valued using Level 3 inputs. These items consisted of alternative investments in private equity funds as well as other alternative investments. The schedule below presents the Endowment’s financial assets and financial liabilities that are recorded at fair value on a recurring basis, categorized by the level of inputs utilized in determining the fair value of each.2 As of December 31, 2020 and 2019, the Endowment had no material financial assets or financial liabilities that were measured at fair value on a non-recurring basis.

1 Based on current terms, it is possible that these redemption rights may be restricted or eliminated by the funds in the future in accordance with the underlying fund agreement.

2 Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.


As of December 31, 2020: Fair Value

Quoted Prices in Active

Markets for Identical Items

(Level 1)

Significant Other

Observable Inputs

(Level 2)

Significant Unobservable

Inputs (Level 3)

Investments Reported

at NAV

Equities $ 656,264,442 $ 462,233,109 $ 53,945,517 $ — $ 140,085,816

Fixed income 104,366,610 102 47,799,970 13,608,802 42,957,736

Private investments 1,973,947,726 21,400,727 — 128,694,134 1,823,852,865

Real assets 481,399,432 24,690,148 259,324 14,850,755 441,599,205

Hedged strategies 1,014,467,965 23,559,968 886,748 — 990,021,249

Short-term investments 383,500,371 — 383,500,371 — —

Other 26,830,286 505,421 20,284,030 6,040,835 —

TOTAL ASSETS MEASURED ON A RECURRING BASIS $ 4,640,776,832 $ 532,389,475 $ 506,675,960 $ 163,194,526 $ 3,438,516,871

As of December 31, 2019: Fair Value

Quoted Prices in Active

Markets for Identical Items

(Level 1)

Significant Other

Observable Inputs

(Level 2)

Significant Unobservable

Inputs (Level 3)

Investments Reported

at NAV

Equities $ 630,307,667 $ 458,426,291 $ 33,034,608 $ — $ 138,846,768

Fixed income 170,532,586 12,688,717 106,791,892 12,251,055 38,800,922

Private investments 1,269,000,394 1,269,653 — 114,694,068 1,153,036,673

Real assets 539,265,997 20,002,092 5,029,813 12,924,906 501,309,186

Hedged strategies 828,156,629 14,295,610 11,888,297 — 801,972,722

Short-term investments 342,541,075 — 342,541,075 — —

Other 32,256,203 1,050,564 25,164,804 6,040,835 —

TOTAL ASSETS MEASURED ON A RECURRING BASIS $ 3,812,060,551 $ 507,732,927 $ 524,450,489 $ 145,910,864 $ 2,633,966,271

The Endowment has included a summary of the investment valuation methodologies in Note 2.

For the years ended 2020 and 2019, there have been no significant transfers in or out of Level 1, Level 2 and Level 3 fair value measurements of the Endowment’s investment portfolio.

The following table presents additional information about Level 3 assets measured at fair value. Both observable and unobservable inputs may be used to determine the fair value of positions that the Endowment has classified within the Level 3 category. As a result, the unrealized gains and losses for assets within the Level 3 category in the table below may include changes in fair value that were attributable to both observable and unobservable inputs.

2020 2019

Balance of Level 3 investments as of December 31, 2019 $ 145,910,864 $ 120,315,449

Net realized gains 2,677,514 4,651,114

Increase in net unrealized appreciation 23,022,438 14,929,031

Purchases 14,897,295 19,701,315

Proceeds from sales and maturity of investments (23,313,585) (13,686,045)

Net transfers out of Level 3 — —

BALANCE OF LEVEL 3 INVESTMENTS AS OF DECEMBER 31, 2020 $ 163,194,526 $ 145,910,864


The following summarizes the relationship between cost and market value of investments:

2020 2019

Gross unrealized gain, net of deferred excise tax $ 678,896,143 $ 1,354,996,927

Gross unrealized (loss) 1,240,127,332 (275,532,592)

Excess of Market Over Cost $ 1,919,023,475 $ 1,079,464,335

Increase (decrease) in net unrealized appreciation on assets 839,559,140 228,748,486

Net realized gains from sale of investments 106,225,574 191,701,262

Total Net Gain $ 945,784,714 $ 420,449,748

Net investment income 34,486,971 42,863,578

TOTAL RETURN $ 980,271,685 $ 463,313,326

As discussed in Note 5, net deferred excise taxes of $27,050,427 and $15,123,093 were also allocated to gross unrealized gain in 2020 and 2019, respectively.

At December 31, 2020 and 2019, Duke Energy Corporation common stock represented a concentration of approximately 2% of the Endowment’s investments.

From time to time the Endowment will participate in a securities lending program. The Endowment loans certain investment securities for short periods of time in exchange for collateral, consisting mainly of cash and U.S. Government securities, equal to at least 102% of the fair value of the investment securities on loan. As of December 31, 2020, and 2019, there were no investment securities on loan.

As part of its investment strategy, the Endowment invests in certain derivative instruments, typically intended to economically hedge certain investment positions from fluctuations in market, rate, currency or other identified risks. During fiscal 2020 and 2019, the Endowment, or external investment managers on the Endowment’s behalf, entered into swap agreements, futures contracts or forward contracts, and acquired warrants or rights to increase, reduce or otherwise modify investment exposures.

The Endowment’s investment related derivative exposures, categorized by primary underlying risk, are as follows:

Primary underlying risk as of December 31, 2020:

Long Notional

Short Notional

Derivative Assets

Derivative Liabilities

(Loss)/ gain

Equity Price3 $ 1,105,406,479 $ 451,924,935 $ 35,524,321 $ (11,892,945) $ 15,075,948

Interest Rate4 493,912,146 125,542,739 1,377,125 (375,247) 26,556,520

Commodity Price5 668,322,862 40,052,699 1,900,417 (375,981) 6,480,569

Credit6 89,064,133 321,979,874 29,663,207 (4,518,253) (13,946,746)

Foreign Currency Exchange Rate7 101,308,913 5,980,732 3,282,013 (7,564,319) (9,897,493)

TOTAL $ 2,458,014,533 $ 945,480,979 $ 71,747,083 $ (24,726,745) $ 24,268,798

Primary underlying risk as of December 31, 2019:

Long Notional

Short Notional

Derivative Assets

Derivative Liabilities

(Loss)/ gain

Equity Price3 $ 561,327,924 $ 226,798,784 $ 30,607,286 $ (17,909,582) $ 31,356,446

Interest Rate4 885,075,350 131,115,084 3,529,512 (662,264) 1,446,877

Commodity Price5 158,600,962 56,110,880 5,833,163 (9,906,177) (1,813,323)

Credit6 1,167,457,597 883,562,219 86,678,139 (52,652,689) 2,533,837

Foreign Currency Exchange Rate7 97,641,658 362,679,737 3,089,632 (3,515,306) 1,179,695

TOTAL $ 2,870,103,491 $ 1,660,266,704 $ 129,737,732 $ (84,646,018) $ 34,703,532

3 Includes options, swaps, and futures contracts.4 Includes options, swaps, swaptions, and futures contracts.5 Includes options and futures contracts.6 Includes credit default swaps, swaptions, and credit total return swaps.7 Includes options, futures, and forward contracts.


As part of relative value strategies, the Endowment and investment managers on the Endowment’s behalf entered into credit default swap derivative transactions on investment grade and high yield securities which typically have terms of five years or less to buy and sell credit protection. At December 31, 2020 and 2019 the notional of protection sold was $1,082,012,043 and $976,925,516 and the notional of protection bought with identical underlying assets was $99,145,265 and $204,475,948, respectively. These instruments are included in the Credit line of the preceding table.

The Endowment’s investment related derivative assets and liabilities at December 31, by counterparty, are as follows:

2020 ASSETS LIABILITIESCASH COLLATERAL

PLEDGED (HELD)

Counterparty A $ 20,031,150 $ (3,928,078) $ (10,100,000)

Counterparty B 12,695,711 (1,600,089) 20,044,000

Counterparty C 7,960,845 (1,214,219) (6,390,000)

Counterparty D 7,445,599 (1,423,347) (2,945,982)

Counterparty E 11,747,909 (7,593,900) (3,691,938)

All Other Counterparties 11,865,868 (8,967,112) (5,172,137)

TOTAL $ 71,747,083 $ (24,726,745) $ (8,256,057)

2019 ASSETS LIABILITIESCASH COLLATERAL

PLEDGED (HELD)

Counterparty A $ 14,104,500 $ (4,548,135) $ (8,010,000)

Counterparty B 48,613,143 (38,895,223) 6,266,000

Counterparty C 3,566,280 (11,316,570) 7,630,000

Counterparty D 15,288,253 (4,023,135) (10,799,937)

Counterparty E 30,251,796 (12,238,805) (8,409,495)

All Other Counterparties 17,913,760 (13,624,150) 2,883,504

TOTAL $ 129,737,732 $ (84,646,018) $ (10,439,928)

(7) Land, Building, Furniture and EquipmentLand, buildings and equipment, net, are summarized as follows at December 31:

2020 2019

Land $ 4,303,101 $ 4,303,101

Building 38,004,760 37,973,476

Furniture 2,269,118 2,269,118

Technological equipment 1,575,573 1,497,921

Gross land, building, furniture and equipment $ 46,152,552 $ 46,043,616

Accumulated depreciation (9,084,265) (7,723,579)

NET LAND, BUILDING, FURNITURE AND EQUIPMENT $ 37,068,287 $ 38,320,037

There were no disposals in 2020 or 2019, respectively.


(8) IndebtednessOn October 31, 2012, the Endowment (the “Issuer”) entered into a $40,000,000 note purchase agreement with Massachusetts Mutual Life Insurance Company, MassMutual Asia Limited, and C.M. Life Insurance Company (collectively the “Purchasers”), whereby the Endowment authorized the issue and sale of $40,000,000 aggregate principal amount of its 3.85% senior notes due October 31, 2037. The Endowment applied the proceeds of the sale of the notes to the construction of its headquarters located at 800 East Morehead Street, Charlotte, North Carolina and for other general organizational purposes.

The Endowment is required to make payments of principal, in the amounts specified in the note purchase agreement, on the unpaid balance thereof at the rate of 3.85% per annum, payable semiannually on the last day of April and October in each year commencing 2013. As of December 31, 2020, and December 31, 2019, the principal balance of the notes payable was $31,050,545 and $32,324,092, respectively, which approximates fair value.

Future maturities of the principal note payments are as follows:

AMOUNT

2021 1,323,051

2022 1,374,479

2023 1,427,905

2024 1,483,409

2025 1,541,070

Thereafter 23,900,631

$ 31,050,545

The note purchase agreement contains financial covenants customary for such transactions, including limits on minimum total net assets, maximum total indebtedness to total net assets and priority indebtedness. The Endowment was in compliance with its covenants as of December 31, 2020.

To supplement working capital and investment commitments the Endowment has a line of credit agreement totaling $30,000,000 as of December 31, 2020 with Morgan Stanley Bank, N.A. The total borrowing rate charged by Morgan Stanley Bank, N.A. is comprised of the variable LIBOR Market Index Rate determined by market conditions at the time of borrowing plus .75%. At December 31, 2020, there were no outstanding borrowings under these agreements. The line of credit agreement expires November 2022.


(9) Contribution ReceivedOn August 28, 2018, the Endowment entered into an agreement with Blue Meridian Partners, Inc. (BMPI), a 501(c)(3) public charity. Pursuant to the terms of the agreement, BMPI will invest up to $32.5 million for a period of up to 39 months in the Endowment’s regional strategy — Get Ready Guilford Initiative. Because the Endowment is a Regional General Partner of BMPI, the Endowment’s funding requirement is one half or $16.25 million of the total amount. The remaining funding requirement of $16.25 million will be funded by other partners of BMPI. In October 2019, the Endowment received its first contribution from BMPI totaling $6.45 million. These funds along with the Endowment’s $6.45 million totals $12.9 million and will be used on the Get Ready Guilford Initiative, a strategy to break the cycle of intergenerational poverty in Guilford County, North Carolina. The Endowment received the remaining contribution of $9.8 million in 2020 from BMPI. These funds along with the Endowment’s $9.8 million totals $19.6 million, the remaining balance in the $32.5 million investment.

(10) Net Assets with Donor RestrictionsDonor restricted net assets with a purpose restriction consist of the following at December 31:

2020 2019

Duke University under Original Corpus, CorpusItem VIII and Corpus Item XI

$ 958,794,429 $ 794,638,292

Other charitable purposes 3,371,509,444 2,749,809,745

DONOR RESTRICTED NET ASSETS — PURPOSE RESTRICTION $ 4,330,303,873 $ 3,544,448,037

Donor restricted net assets that are restricted in perpetuity consist of the following at December 31:

2020 2019

Duke University under Original Corpus, CorpusItem VIII and Corpus Item XI

$ 54,244,354 $ 54,244,354

Other charitable purposes 205,436,724 205,436,724

DONOR RESTRICTED NET ASSETS — RESTRICTED IN PERPETUITY $ 259,681,078 $ 259,681,078


(11) Functional Expenses The cost of program activities and administrative services have been summarized on a functional basis on the statement of activities. The statement of functional expense presents expenses by function and natural classification. Expenses directly attributable to a specific functional area are reported within that functional area. Indirect expenses that benefit multiple functional areas have been allocated by the Endowment based upon square footage and headcount.

Expenses are reported on the statement of activities in natural categories. Functional expenses were categorized as follows:

2020

Type Administrative Services Program Activities Total

Staffing $ 2,987,189 $ 3,697,447 $ 6,684,636

Retirement plans and employee benefits 1,921,010 1,762,341 3,683,352

Professional fees 1,586,985 2,539,995 4,126,980

Office operations 803,030 617,676 1,420,706

Travel and conferences 22,717 59,676 82,393

Communications 687,454 — 687,454

Other expenses 337,344 262,026 599,370

Interest expense 1,232,337 — 1,232,337

Depreciation 1,360,686 — 1,360,686

$ 10,938,752 $ 8,939,162 $ 19,877,914

2019

Type Administrative Services Program Activities Total

Staffing $ 2,816,396 $ 3,198,555 $ 6,014,951

Retirement plans and employee benefits 4,469,688 1,570,473 6,040,161

Professional fees 1,563,920 2,829,614 4,393,534

Office operations 865,050 398,656 1,263,706

Travel and conferences 102,157 222,279 324,436

Communications 555,697 — 555,697

Other expenses 452,332 446,510 898,842

Interest expense 1,290,026 — 1,290,026

Depreciation 1,577,662 — 1,577,662

$ 13,692,928 $ 8,666,087 $ 22,359,015

For 2020 and 2019, investment expenses of $12,694,006 and $12,135,746, respectively are netted against dividends and interest income within the accompanying Statement of Activities.


(12) Pension and Other Postretirement PlansThe Endowment sponsors a noncontributory defined benefit pension plan covering all eligible employees, as defined under the plan. The benefits are based on years of service and the employee’s average final creditable compensation. Contributions totaling $1,365,845 and $1,300,000 were made to the plan during 2020 and 2019, respectively. The benefit obligation as of December 31, 2020 and 2019 was $35,020,126 and $29,095,857, respectively, and the net pension liability, included in the other liabilities in the statements of financial position, was $16,860,378 and $12,976,310, respectively, based on actuarial assumptions at December 31, 2020 and 2019.

The Endowment also sponsors a defined contribution plan with the Endowment providing matching contributions equal to 100% of employee contributions up to 3% and 50% of employee contributions between 3% and 5%. All full-time employees are eligible after a three-month waiting period. Total Endowment contributions in 2020 and 2019 were $251,525 and $240,049, respectively.

The Endowment provides certain health care and life insurance benefits to retired employees. The accumulated postretirement benefit obligation at the latest measurement date of December 31, 2019 was $3,900,000. It was included in Other Liabilities on the Statement of Financial Position. At December 31, 2020, the Endowment determined that any additional liability for unfunded retirement benefits extended to retirees and to employees upon their retirement since the latest measurement date would not be material to its net assets.

(13) Subsequent EventsThe Endowment has evaluated its December 31, 2020 financial statements for subsequent events through June 11, 2021, the date the financial statements were available to be issued. The Endowment is not aware of any other subsequent events which would require recognition or disclosure in the financial statements.



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