Tuesday, March 10, 2009

Nonprofit Financial Troubles Part II: When a Small Endowment Is a Good Thing

The Grand Rapids News reports that college officials in that part of Michigan have so far been able to avoid significant spending cuts because of a relatively low dependence on endowment income, which constitutes only five percent or less of total income for the half dozen schools in and around Grand Rapids, as compared with the national average of 13 percent.  For example, Hope College had the largest reported endowment of the area schools - still $126 million as of the end of 2008 - but only relies on that endowment for one percent of its annual budget.  So while these schools have seen similar drops in their endowment values as have colleges and universities nationwide, they do not as of yet face the hard budget decisions of schools that rely more heavily on endowment income.

LHM

http://lawprofessors.typepad.com/nonprofit/2009/03/nonprofit-finan.html

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