Bradley’s endowment decreased 26 percent in the last six months of 2008, as donors’ wallets pinched and stocks plummeted.
Vice President for Business Affairs Gary Anna said students shouldn’t see any immediate impact, but the drop has caused some belt-tightening and may cause more in the future.
“Going forward we have to be very careful,” he said. “Our endowment is kind of like a savings account, you don’t want to spend 5 percent if you’re only earning 1 percent.”
The endowment is now worth $170 million, down from $230 million, Anna said.
Bradley isn’t the only university watching its numbers sink. In December, The New York Times reported that Harvard’s endowment had dropped 22 percent, and many other schools have also reported significant decreases.
And while it’s not atypical for endowments to fluctuate from year-to-year, recent decreases are dramatically higher than usual.
Anna said a lot of universities have cut back on development plans, but as of now Bradley isn’t stalling the 15-year plan.
“There is still a lot of uncertainty, and there will be uncertainty for a period of time,” he said. “As [University President Joanne Glasser] has said, we need to focus on things in our control. We have to balance what’s fair and appropriate for students that are receiving their education today and for the future.”
Previously, about $9 to $10 million of endowment money was spent per year, directed toward financial assistance, buildings and faculty support, Anna said.
He said the university is attempting to cut nonessential spending such as holiday parties, faculty travel and copy machine costs, so it can keep money going to where the endowment funds were previously allocated. He said a large part of cutting costs will also help make the campus greener.
“If we had two sections of a class with 10 students, we may try to combine that into one section with 15 or 20 students. Most of these changes will be imperceptible if they’re done correctly,” Anna said. “They’re not earth-shattering changes, but you start to compound those and they make a difference.”
He said one thing that will not change is current students’ financial aid packages.
Anna also said Bradley’s endowment is good for its size, and is larger than many private universities its same size, such as Drake and Butler.
“The long-term perspective is still a positive one, I have hope that the improvements the government is trying to make will pay some dividends,” he said. “We’ll give the stimulus plan some time to work its way into the system. As is, most investment professionals would say the market has overreacted to the distress.”
Professionals from outside the university are responsible for investing endowment dollars, Anna said.
“About a year ago, we had a $250 million pool of funds invested in a variety of assets,” he said. “We still think the assets we’re invested in will also increase in value.”
Anna said the university can also rely on tuition money for expenses, but endowment is important.
“A university’s endowment is kind of a financial backbone,” he said. “It’s not the most important asset of a university, but it provides a wherewithal for continuing streams of income and helps generate additional income for things like buildings.”
