The American University in Cairo:
Alternatives for U.S. Government Support
ID-78-20: Published: Feb 17, 1978. Publicly Released: Feb 17, 1978.
- Full Report:
The University Educational Endowment Fund of the American University in Cairo, Egypt, was established in 1976 by the Agency for International Development (AID) with a local currency grant equivalent to $36 million. The Endowment Fund was intended to earn income to support the University by investing in Egyptian enterprises and business ventures. An audit by AID in July 1976 revealed serious management, financial, and operational deficiencies in the Fund's administration and questioned whether such investment was feasible given the uncertain economic climate in Egypt.
U.S. officials in Egypt strongly support continued financial assistance for the American University in Cairo and believe that the University contributes greatly to United States-Egypt relations. Although AID's severe criticisms of the Endowment Fund administration were valid, circumstances in Egypt appear to have changed since the Fund's original investments were made, and the investment climate is greatly improved. Many of the managerial and administrative shortcomings have been corrected or improved. To be successful, the Fund needs good investment criteria and adequate supervision by the University's Board of Trustees. It also needs to gear investment goals toward income-producing investments which will provide needed cash revenues. Alternative considerations involve liquidation of the fund, replenishment of the fund, and a long-term loan.
Matter for Congressional Consideration
Comments: Please call 202/512-6100 for additional information.
Matter: The Administrator of AID should consider the alternatives, especially a loan and, in consultation with appropriate congressional committees, implement a strategy for financial assistance that will satisfy the long-term needs of the University at an acceptable level of cost and risk to the U.S. Government. He should also: see that the University's Board of Trustees adopts and uses investment criteria for potential Fund investments, see that the Board of Trustees has established an adequate system for supervising the activities of the Fund managers, and monitor Fund operations through periodic audits and reviews.