The Sept. 11 attacks and the subsequent economic downturn capped a year of bad times for college endowments across the country. While the University of Oregon has not been hit as hard as some universities, it did post a negative return for the first time in years according to Jay Namyet, director of investment for the University Foundation.
College endowments hold money donated to colleges and universities and invest it for long-term use. Namyet said the return on the University’s investment portfolio was down 1.3 percent for the fiscal year 2000-01. But average national returns for college endowments were down 2.2 percent.
“Our performance last year was in about the 18th percentile of the 400 colleges in the National Association of College and University Business Officers,” Namyet said. “We’ve been in the 27th percentile for the last 10 years.”
As of June 30, the University’s total endowment was valued at $348.4 million — up $16.2 million from the previous fiscal year. However, that growth is significantly smaller than that of 1999-2000, when the endowment grew by $57.2 million.
Last year’s lack of growth could cause problems for those who have become used to the consistently high growth rate of recent years, explained Karen Kreft, executive director of the foundation .
“We’re looking at a short-term lack of funds,” she said. That lack of funds could mean that the University has less money to spend on campus maintenance, faculty hiring and student programs.
The foundation had 49 percent of its investments in domestic stocks in 2000-01, a fact that made the endowment particularly vulnerable to the economic problems of the past year.
So far, fiscal 2001-02 has been no better, Kreft said. In the first quarter of 2001-02, returns were down 7 percent — a fact that partly can be attributed to the Sept. 11 terrorist attacks and the ensuing economic nose dive.
“This has not been a fun couple of months,” she said. “After Sept. 11, things went haywire. October has seen things rebounding.”
Another problem facing the University in the wake of the attacks is the hesitancy among donors to contribute.
According to Allan Price, vice president of University Advancement, despite the growth in charitable feelings among many Americans, people are being more conservative with their money in light of recent economic performance.
Phil Romero, dean of the University’s business school, cautioned against making doomsday predictions in the wake of the attacks and said that if the Bush administration responded in a way that seemed competent to the public, things would start to return to normal.
“Historically a major crisis drives the market down five to 15 percent in the early weeks,” Romero said. “But after a month or so, the market will come back up.”
Six weeks after the attacks, Romero’s prediction seems to be coming true. Despite the present anthrax threat and what looks to be an increasingly involved conflict in Afghanistan, the Dow Jones Industrial Average and the NASDAQ have returned to pre-Sept. 11 levels.
But Namyet was quick to point out that things haven’t returned to normal yet.
“I think it’s changed everything, from any perspective you look at it,” he said of the attacks. “My concern now is that there are predictions for an upswing — what if it doesn’t materialize?”