Correction appended
The University’s nearly $500 million endowment has taken a hit from the recent crisis on Wall Street. It’s unclear, though, how the stock market crash will affect the University’s budget next year, officials at the UO Foundation said.
The UO Foundation is the private non-profit organization that handles the University’s investments.
Preliminary numbers indicate that this year, the decline in the stock market has shrunk the University’s endowment, which is essentially a collection of donated funds that have been invested by as much as 11 percent, according to Jay Namyet, chief investment officer of the UO Foundation.
Namyet said the foundation’s endowments have not plummeted as much as the national stock market index, which is down roughly 35 percent. This is because the foundation invests in a variety of areas, said Renee Irvin, a professor in the University’s Planning, Public and Policy Management program.
Endowments made to the University generally fund building improvements, academic and athletic programs, student scholarships, and faculty support, according to the UO Foundation’s most recent annual report. Individual donors typically stipulate what their private donation is to be used for, said Michael Green, Oregon University System associate vice chancellor for finance and administration.
In addition to investing in the stock market, the foundation “might invest in real estate, bonds and they might hold (some of the funds) in cash,” Irvin said. So the overall national decline in stocks will be greater than the dip the foundation experiences.
In brief
| Despite the precipitous stock market drop this month, the athletic department’s $100 million Oregon Athletics Legacy Fund has remained unscathed – but only because not a single dime has been invested. The legacy fund, which was established by Nike co-founder Phil Knight’s $100 million donation, is being handed to the University in five $20 million installments. The first is scheduled for Jan. 31, 2009. “So there’s nothing to have been lost,” University President Dave Frohnmayer told the Emerald on Tuesday. Frohnmayer also said that pledged donations to the legacy fund have not slowed because of the financial crisis. And they’re lucky. Even though the University generally only makes safe investments, the legacy fund, which is needed to fund operations once the new basketball arena is finished, could have taken a real hit in the recent crash. The $200 million bond the University secured from the Oregon State Legislature is also in good shape, University General Counsel Melinda Grier said. “They are fixed-rate bonds so they are unaffected by the financial crisis,” Grier wrote in an e-mail. “The proceeds are held by the state treasurer until we need them.” Grier also said that the University of Oregon Foundation, the non-profit that manages the University’s investments, has earned better returns in the last 10 years than most investment groups. “If the market over the next five to 10 years mirrored the market over the last month, that would not be good,” Grier said. “But the legacy fund is envisioned as a long term investment and will be invested to reflect that.” [email protected] |
Namyet said because fund distribution for this academic year has already been established, the recent dip in funds will not affect the foundation’s monetary distribution to the University until the 2009-10 academic year.
The foundation “distributes four percent of the annual investment return to be used in accordance with donor intent,” according to an annual foundation report.
Prior to the recent market dips, the UO Foundation was steadily increasing.
During the 2006-07 fiscal year, the foundation’s total assets increased from $554 million to $646 million, according to its annual report.
Funding from the University comes from four main sources: private donations managed by the UO Foundation, private donations managed by OUS, money from the state, and tuition dollars.
The vast majority of private donations to the University are managed by the UO Foundation, which oversees more than $500 million dollars in assets, according to its Web site.
The foundation invests the University’s privately donated funds, then distributes four percent of the interest those funds procure back to the University for a variety of uses.
Nearly all large gifts of $100,000 or more given to the University are managed as endowments, which means the principle donation is invested and the institution spends the interest earned from those investments, Green said.
“(The foundation) is the fundraising arm of the University,” Green said. “Every now and then we get something from a will that hasn’t been updated.”
[email protected]
Due to a reporter’s error, the decrease in market value for the University endowment managed by the UO Foundation may have been inaccurately estimated (ODE, “Fund Freeze: Stock market crash shrinks endowment,” Oct. 9). The University endowment could be down as much as 11 percent, said Jay Namyet, the chief investment officer of the UO Foundation.
“Extrapolating information from our consultant, the median university endowment could be down about 17 (percent). We were down about 11 (percent),” Namyet said in an e-mail. The Emerald regrets the error.
