Endowment continues to struggle

Large donations to universities across the country dramatically decreased in the last fiscal year, according to a survey released this week, and officials say this university has lost even more than the national average.

University endowments  nationally decreased 22.3 percent in market value, due to poor investment performance and a decline in new contributions, according to the Council for Aid to Education's study, which studied endowment values for 973 institutions from 2008 to 2009. This university saw a 24.5 percent decrease in endowment returns — the amount of money the university receives from its endowment each year — Assistant Vice President for University Relations Michael King wrote in an e-mail.

"The market value of endowments decreased significantly in [fiscal year 2009] along with a recession around the world, as did every major investment," King said.

In response to such a dramatic decrease in market value, King said the university has taken extensive steps to maintain programs and scholarships that are funded by endowment money. In order to continue certain scholarship programs, the university has created a special campaign to fund them: The university works with current and prospective donors and asks them to split gifts between endowment donations and other essential funds.

Since the recession began, universities nationally have seen a dip in their endowment returns, and this university isn't immune to the worst economic climate in decades.

"The economy has been weak to say the least, and that's affected the funding of every kind of institution in the country, including colleges and universities," said Ann Kaplan, who directed the study. "Giving was one of the many factors that was in decline."

As individual universities suffered from the economic decline, so did larger entities.
In the University System of Maryland, which encompasses 11 degree-granting state colleges and universities, market value on endowments decreased 27.9 percent in the last year, said Leonard Raley, president of the University System of Maryland Foundation Inc.

Although both the university and the university system suffered through 2009, university officials said that the preliminary numbers for 2010 are looking up.
Since this fiscal year began in July, the university's endowment portfolio has grown by 10 percent, and King said that number seems to be steadily increasing as the year continues.

"Endowments are a long term investment, and there will be years with losses, but over a longer period of time, say five to 10 years, endowments should grow and provide spendable income to support scholarships, faculty research and operating funds," King wrote.

While preliminary numbers are promising, officials said overall recovery will take longer than six months.

"I think we are bottoming out of the recession but the recovery will be longer than normal, perhaps several years, and rocky as we claw our way forward," King wrote. "I do believe returns for the endowment pool will be positive but modest, and that fundraising will get back to more normal levels as the economy recovers and we near the end of the campaign and generate more excitement about reaching the $1 billion mark."

Kaplan also expects the numbers to rise nationally as the economy stabilizes.

"Looking at historical patterns, giving should be better in fiscal year 2010," she said. "When the economy is better, giving to higher education is better."

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