November 5, 2008
Many Colleges and Universities Face Shrinking Endowments
It seems only a little while ago that there were numerous calls for colleges and universities to spend more from their endowments on current activities. Now the newspapers are full of stories involving many of those same colleges and universities facing shrinking endowments and tough budget choices as a result. For example, the Kansas City Star reports that foundation supporting the Metropolitan Community College in Kansas City has seen its investments drop by half-a-million dollars, resulting in a decrease of $20,000 to $30,000 in scholarships it can offer to low-income students. The article also states that Kansas State University has seen a 11.5 percent drop in its endowment, which apparently is held by a separate foundation and includes hundreds of millions of investments. And it is not just smaller endowments that are hurting. The Fort-Worth Star Telegram published an AP report last weekend stating that the University of Texas at Austin's endowment is down almost $1 billion from its $7 billion level at the start of this year, a nearly 13 percent drop. Even Harvard University, while not repeating a decline in its $36.9 billion endowment (as of the June 2008) is reportedly looking to rebalance its portfolio by selling some of its private-equity holdings.
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