Endowment loses nearly $6 million

As the stock market experiences some of its largest single-day drops in history, the College of William and Mary’s endowment cannot hide from the downward trend of the current financial market.

The College’s endowment dropped almost $5.9 million this year, from $585,903,962 in 2007 to $580,037,127 this June — approximately a 1 percent loss.

“In the long-term, the endowment definitely needs to be increased,” Vice President for Development Sean Pieri said. “We’re disappointed the endowment is down, but it’s all from the influence of the market. In the long term, we have a well-diversified portfolio, a solid investment strategy, and hope that in the long run the markets will increase.”

Although most other universities, including the University of Virginia and Virginia Tech, have yet to release their endowment figures, the schools that have showed a mix of growth and loss.

The University of Pennsylvania lost 3.9 percent of its endowment this year, but Harvard University, Yale University and the Massachusetts Institute of Technology posted gains of 8.6, 4.5 and 3.2 percent, respectively.

The College’s endowment is comprised of seven organizations, including the William and Mary Foundation, the Board of Visitors endowment and foundations at the Marshall-Wythe School of Law and the Mason School of Business.

The endowment also grows through private donations. Of the funds raised through the Campaign for William and Mary, 45.5 percent, or $235,516,223, was specified for endowments.

The drop in figures may appear ominous, but the cuts from the state pose a greater threat.

“The impact of day-to-day living from [the drop] is going to be small compared to [cuts from the state budget],” economics professor Robert Archibald said. “To give you a sense of the magnitude, we spend roughly 5 percent of the endowment [annually]. So, if the endowment went down by $5 million, the amount we could spend went down by $250,000, about a tenth of the 5 percent cut we’re taking from the state.”

Countering the drop is projected to be difficult for the College.

“The way you counterbalance a decrease in your endowments is by wrapping up, successfully, your private funds,” Archibald said. “Significant pools of private funds exist with people who have a big stock of savings currently in the stock market, … so asking to get a lot more from them just when they took a big hit is not a prospect that’s very rosy.”

Another solution proposed by Archibald is a mid-year tuition increase to keep the College afloat.
“Students want to stay informed, but this is happening at a level above us,” Archibald said. “This is just a storm we’re going to have to get through.”

Brian Hiestand, William and Mary Foundation spokesman, declined to comment.


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