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Davis, California

Tuesday, November 30, 2021

Endowment funds drop nationwide, study says

UC Davis donors have limited their giving, according to lower endowment funds for the 2009 fiscal year.

The UC Davis Foundation lost 12.6 percent of its value between 2008 and 2009, according to the annual NACUBO Commonfund Study of Endowments from the National Association of College and University Business Officers.

The general University of California endowment, which UC Davis utilizes, dropped 19 percent.

The report, released at the end of January, recorded changes in over 860 colleges and universities nationwide. The average decline was 18.7 percent. UC ranked as the 12th highest university endowment decline, while the UC Davis Foundation was further down the list at 290. Harvard’s endowment was hit the hardest with almost a 30 percent drop, bringing their endowment to just over $25 billion.

NACUBO Director of Research and Policy Analysis Kenneth Redd said in an e-mail interview this decline is the largest seen in 39 years. Previously, the biggest decline was in 1974, with an 11.4 percent average decline.

Despite the bad news, things are starting to look up, Redd said.

“2010 is looking a little better for endowments,” he said. “The [Standard & Poor’s 500] is up 22 percent during the first six months of the fiscal year, and it is likely that endowments were increasing during this rise.”

Redd said endowments can provide up to 15 percent of a university’s operating budget. Financial aid and endowed faculty chairs commonly use endowment funding.

A representative from the Treasurer’s Office of the UC Regents said 2009 was a bump in the road. Over the past five years, the average amount in the UC endowment has stayed fairly constant.

“[In 2009,] everyone had a disappointing performance,” said the staffer, who asked to remain unnamed because he is not an official spokesperson. “UC [took a] big hit, but this year we’ve recouped a lot of it. We’ve had a big turn around here at the university.”

The general UC endowment is over $4.9 billion, though in 2008 it was over $6.2 billion. A full report about the 2009 UC endowment will be released at the end of February, said the UC treasury representative.

UC Davis’ total endowment has declined, but less than the national average, said Associate Vice Chancellor of Development Cheryl Brown Lohsé and UC Davis Foundation and Executive Director of Administrative Services for the Office of University Relations Bella Corbin. In 2009, the total UC Davis endowment was valued at $538 million. UCD gets endowment funds from their own foundation and from the UC-wide endowment.

“Investment strategies are designed to protect the endowment optimally, even in severely down markets,” Lohsé and Corbin said in an e-mail interview.

Of the total UC Davis endowment, about 20 percent goes toward student support.

“Student financial aid is indeed one area that donors support and have long supported with endowment gifts,” Lohsé said. “UC Davis works to raise gifts for student support continually and we are grateful to many generous donors who are making gifts for student support each year.”

Universities with even bigger endowments may depend more on donor-based money.

Large institutions with over $1 billion endowments tend to be more heavily dependent on donor funds. Up to 40 percent of some institutions’ budgets depend endowment revenue, Redd said.

“The declines these institutions saw in their market values would have a adverse impact on their funding,” he said.

SASHA LEKACH can be reached at city@theaggie.org.

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