Endowment hit hard by economy
Written by The Flat Hat|
March 20, 2009
The College of William and Mary’s endowment decreased by 17.2 percent from $580 million to approximately $480.3 million between July and December of last year.
Vice President of Finance Sam Jones said the endowment’s declining value was caused by the current economic crisis.
“What we’re experiencing is what all markets are experiencing. We really had no place to hide because the decline was so severe and so broad. It goes back to the decrease in the national and global economy because that’s where peoples’ money is invested,” Jones said.
Jones said there is no way to tell how long the decline will continue.
“It all depends on what happens with the economy,” Jones said. “A lot is being done on the national level, but the question is when and if that will take hold. It’s anybody’s guess as to if we’ve hit the bottom yet.”
Jones said that donations to can be restricted by donors who specify the use of the funds.
“Some areas will be more affected than others, but the two areas that we’ll use other money for is for financial aid and faculty salary support,” Jones said.
The college recently received a stimulus package of $3.8 million to ease the effects of the recent $3.9 million budget cut from the state. According to Jones, the stimulus money will help offset the decrease in endowment funds.
“If the stimulus helps ameliorate the recession, then that may help to increase endowment,” Jones said. “But the stimulus money won’t directly replace the endowment money.”
Jones said universities are experiencing a decrease in donations. A study by the Common Fund Benchmark examining the endowments of 235 universities from July-Dec. 2008 found an average 2 percent decrease.
The College relies on the endowment for a portion of its annual budget, and depends on state funding, Jones said.
“Our endowment and annual gifts total to about only 12 percent of our finances, whereas some private universities rely on almost 45 percent for endowment,” Jones said. “We’re feeling it more on state funding reduction because that money is disappearing. So we’re pinched in a different kind of way.”