SMU endowment fund affected by economy

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The devastating effects of the financial markets in 2009 are apparent in college endowments, according to a recent study that shows the numbers are down across the country.  

Nationally, the average drop for endowments was 18.7 percent, according to the study by the National Association of College and University Business Officers and Commonfund, an investment fund for educational and non-profit institutions.  

The study compared the change in endowment’s value at 842 public and private colleges and universities, foundations and community colleges during the last fiscal year. The last fiscal year is from June 2008 to June 2009.  

At SMU the endowment’s value declined 26.3 percent, from $1.4 billion to $1 billion in the last fiscal year.  

SMU’s losses are not as bad as some other schools.

Harvard University, which has the largest endowment of any college or university, saw its endowment decline 29.8 percent from $36.6 million to $25.7 million during the same period.

Yale was second as it’s endowment dropped from $22.9 billion to $16.3 billion.

In Texas other large drops came from state school systems.

The University of Texas System’s endowment, which is the fifth largest college or university system, fell from $16.2 billion in 2008 to $12.2 billion in 2009, as was reported by the Dallas Morning News.

The Texas A&M System also dropped, falling from $6.7 billion to $5.1 billion during the same period.

According to the study, it was the first time smaller school endowments outpaced larger school ones.  Although over the decade larger schools performed better, as their investments are often tied to market-related industries.

As financial markets have increased over the last six months, many endowments have begun to climb back from their lows.

SMU Director of Endowment Giving Linda Preece said SMU has held steady despite the economy.

“We are as well as most other schools, which are in the middle of the pack in terms of returns,” she said. “Things have been turning around and that includes our endowments.”  
Although the SMU endowment is down, donations at SMU have been bucking the trend and moving upwards.

According to the College of Aid for Education, donations at SMU jumped 37 percent from $75.6 million to $103.7 million in fiscal year 2009, which ended June 2009.

This is the fourth largest amount raised by a Texas school or college system.

The University of Texas at Austin leads the list of donations raised, with $238 million down 16 percent from $282.9 million.  Followed by Texas A&M, which raised $186.6 million down 10 percent from $206.7 million, and UT Southwest Medical Center at Dallas $114.9 million, which is down 21 percent from $145.3 million, a year ago.

Besides SMU, donations increased at Rice University 11 percent from 86.3 million in 2008 to 95.6 million in 2009 and the Dallas County Community College District who rose 93 percent from $1.2 million to $2.3 million.

Nationally, the CAE reported overall donations to colleges and universities declined 11.9 percent to $27.85 billion, which is the largest decline they have reported.

Preece said donations are an integral part of college funding.

“It’s the lifeblood of any non-profit organization,” she said. “Without that, a non-profit of any of kind including higher education is at the mercy of the economy.”

Donations serve a multitude of reasons for institutions of higher learning.

“The endowment touches every corner of the university: students, faculty, buildings among other things,” she said.  

In the endowment report, SMU President R. Gerald Turner writes “I am deeply grateful that we kicked off the public phase of the second century campaign last year, because it gave us an offense to help the institution push through challenging times.”

The Second Century Campaign is a five-year plan to raise $750 million dollars. It began in 2006.

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