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Investment at LSE - an overview

Investment purpose 

LSE holds sizeable investment and financing portfolios, for both short term and long-term goals to benefit the School and its community. The different types of investment LSE holds serve different purposes:

Operational funds

  • Short-term operational needs, including day-to-day activities and major capital/construction projects, are covered by our working capital and current asset investments. The proceeds of green financing raised under our Sustainable Finance Framework are also invested here until they are utilised – for example, until funding is needed during a construction project. ​

Endowments

  • Longer term needs are partly covered by our endowment portfolios. Endowed funds have been generously donated to support our educational and research activities, and can only be used to support these charitable objectives as explicitly requested by the donors​.

School reserves

  • The remainder of LSE's long-term needs are covered by a portion of the School’s reserves, which have been set aside and invested to cover future large or infrequent expenditure, such as the repayment of debt or as a buffer in a financial crisis – for example, a future pandemic or some other major disruption to the School's operations.

Investment practices

  • LSE’s Environmental, Social and Governance policy guides our investment practices and ensures we hold ourselves accountable for investing responsibly. The policy was first developed in 2022 and was reviewed again by Council in 2024/25 as part of their wider ESG review. 
  • Please refer to our Investment Principles below for further information​.
  • Student fee income is not channeled into LSE’s endowment.

What types of investment portfolios does the School have?​

Further information is available here.

What is an endowment and what are LSE’s used to fund?​

An endowment refers to a sum of money (usually a grant or donation) which has been invested, rather than simply held in a bank account, with the intention that it will attract investment returns and therefore grow in value, so that it can support charitable activities over a longer period of time. Endowments are common among charities and not for profit organisations, as they are a way for supporters to make a sustainable contribution to the organisation’s future.​ 

Not all of LSE's investments are our endowments; some are our School reserves and Operational funds​. 

LSE’s endowments, in line with the donors’ wishes, are used to support important charitable activities across the School community, such as:​ 

  • Named chairs and lectureships​
  • Scholarships and bursaries​
  • Research​
  • LSE Library​
  • Widening Participation​
  • Support for academic activities​​

Investment principles for endowments

LSE's approach to the ESG strategy for our endowments is based on three tenets:

1. Respect of the endowment’s purpose as a resource to support the education of present and future students and university research programmes, not as an instrument to lobby for political change. ​

2. Recognition of the legal constraints imposed by the fiduciary duties of Council as trustees in the management of charitable funds.

3. A determination to optimise corporate behaviour through positive manager engagement. 

Seen a term you don’t understand?​

Some of the concepts and terminology relating to investments and endowments used throughout LSE’s webpages and financial statements may be unfamiliar. Use these explainers to learn more about each topic​. 

What types of investment portfolios does LSE have?

What types of funds is LSE invested in?​

What types of endowment are there?​

What are investment returns?​

Communication and working with the LSE community

LSE is committed to the highest possible degree of transparency and understanding about our investments and strategies. As well as updating these publicly available pages with the latest information, LSE will also from the 2025/26 academic year: 

  • Distribute an induction package of materials to help incoming staff and students understand the endowment and ESG Policy.
  • Hold an Annual General Meeting for LSE’s endowment., open to students and staff.
  • Provide a regular opportunity for the LSE community to share research related to investment.

More information on these opportunities will be shared via LSE internal communications.  

 


 

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