U.S./world – Endowment blues – Warning to universities

Worries are growing about the impact of the economic slide, terrorism and war on foundation and university endowments, according to news reports.

A survey of 563 nonprofits conducted by Commonfund in Wilton, Conn., found three of every four endowments and foundations posted negative or flat earnings for the fiscal year ended June 30, the Associated Press reported Oct. 7.

A few clients of Commonfund, which manages $30 billion in assets for 1,500 nonprofits, are worried and might reconsider their spending policies, John Griswold, the firm’s senior vice president.

In the year ended June 30, for example, Harvard lost $800 million on its endowment, which fell 2.7 percent to $18.3 billion from a year earlier, the Associated Press said.

Yale, however, bucked the trend, posting a 9.2 percent increase in its endowment for the same period, The Economist reported in its Oct. 6 edition.

Yale generally avoided investing in publicly traded shares and instead opted to invest in high-risk assets such as venture capital, junk bonds and emerging-market securities, the magazine said.

Phillips Academy, the boarding school in Andover, Mass., attended by President Bush, saw its endowment fall to $500 million from a peak of nearly $600 million in recent years, AP said.

In a warning last month to private universities, Moody’s Investors Service warned of a “serious concern that fundraising will suffer due to further declines in the already-sluggish financial markets, economic uncertainty, and the disturbance caused by recent events,” The Wall Street Journal reported Oct. 8.

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