A recently released study by the National
Association of College and University Business Officers and Commonfund
found that university endowments dropped an average of 18.7 percent
over the last fiscal year. As noted in the New York Times, that drop-off is the worst of its kind since the Great Depression.
Part of the explanation for the steep decline stems from college
endowment managers shifting from typical stocks or â€œfixed-income
instrumentsâ€ to private equities, venture capital and private-equity
real estate. With all of those investments suffering in 2009,
endowments had no choice but to follow suit.
In a surprising twist, the schools with the largest endowments saw the
largest hit. Harvard, Yale and Stanford each endured losses of over 26
percent of their 2008 value. Debt was revealed to be increasing while
the amount of gits fell off.
Despite these setbacks, the spending of endowments increased slightly from 4.3 percent in 2008 to 4.4 percent last year. The New York Times goes on to explain that
since universities base their endowment spending levels on the previous
three yearâ€™s endowment values, schools wonâ€™t start to cut back on that
spending any time soon.
You can view the list in its entirety here. (PDF)
Following the freezes or returning of executive salaries, as well as
the multitude of disheartening departmental budget cuts, this endowment
study comes as another junk shot to the nationâ€™s universities. With the
financial shackles still not lifted from America, companies and
individuals simply do not have the same ability to donate with which
they are accustomed.
Endowments are instrumental in helping a university continues over the
long-term, so this next year of donations will be crucial after 2008â€™s
slight loss and 2009â€™s significant drop. Letâ€™s hope this gets back on
track so schools wonâ€™t be forced to cut back on their spending even
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