Colleges and Universities Face Reduced Funding

Posted by on October 18, 2002

[Philanthropy News Digest]

Colleges and Universities Face Reduced Funding

Colleges and universities across the country are struggling with shrinking endowments, dim fundraising prospects, and state budget cuts, putting administrators and trustees under pressure to raise tuition fees, cut spending, and reduce financial aid, the Boston Globe reports.

After three decades of steady growth, college and university endowments fell 3.6 percent in 2001 and are expected to fall at least 5 percent this year. A survey of six hundred colleges by the Commonfund Group ( http://www.commonfund.org/ ), which manages investments for 1,400 educational institutions, found that endowment values had dropped an average of 5.4 percent this year. A spokesman for the National Association of College and University Business Officers ( http://www.nacubo.org/ ) said the conventional wisdom is that the average loss may be closer to 10 percent by the time all its members have reported.

The fundraising environment is also looking tough, with individuals, corporations, and foundations facing their own shrinking investment portfolios. While private giving to colleges rose 4.3 percent in 2001 from a year earlier, studies show that almost all the increase was due to grants from foundations. According to Steven Lawrence, director of research at the Foundation Center ( http://fdncenter.org/ ), foundation giving will be flat this year and is projected to decline in 2003.

"Funding, funding, funding, it’s all you hear," John Lippincott, spokesman for the Council for Advancement and Support of Education ( http://www.case.org/ ), told the Globe. "For public institutions, it’s cutbacks because they’re getting less from state budgets. For private institutions, it is the decline in the value of their endowment and the serious erosion in the payout from the endowment."

Leonard, Mary. "College Endowments Lose Billions in Market Squeeze." Boston Globe 10/13/02.
http://fdncenter.org/pnd/news/story.jhtml?id=14800017