An endowment at the University of Wisconsin School of Medicine and Public Health is cutting its grants by 15 and 20 percent after the value of its endowment declined due to the economic downturn.
“All the grants that we have made to date are being affected, with the exception of those that are concluding within the next six months,” said Eileen Smith, fund director and UW School of Medicine and Public Health Assistant Dean. “That means our community grants to community organizations and also the grants to the faculty.”
The fund came to the medical school in 2004 as a result of Blue Cross and Blue Shield United of Wisconsin converting to a for-profit entity.
It was created with the exclusive purpose of improving the health of the public and included grants to community groups and medical researchers, according to Smith.
The decision to decrease the grants came after the value of the endowment sunk to $272 million at the end of last year, down from a high in 2007 of $358 million.
“It has been a very difficult decision-making process,” Smith said. “We have no alternative but to reduce budgets. It was a very hard decision, but we must ensure the financial integrity of our program and we are trying to make the most responsible decision in that regard.”
Endowments across the UW system shrank in 2008, including those of the UW Foundation, which is the main fiscal supporter of UW.
UW Foundation Chief Investment Officer David Erickson said the fund saw a 19 percent decrease in the six-month period leading up to December.
“The market really tipped over starting in July, and all the way through January it has been a really difficult period,” Erickson said. “It’s a complicated situation that’s happening. It’s really an extraordinary market that we’re in right now.”
Erickson noted the foundation’s investment strategies are very cautious, saying investments are made for the future, which means looking five or 10 years ahead.
This makes the ups and downs of the economy less extreme but also more difficult to react to, he said.
“We invest for the long term, so I think of the endowment as a kind of supertanker. Investing for five years, 10 years so even if we see a downturn coming it’s hard to change quickly,” Erickson said.
A survey conducted by the National Association of College and University Business Officers and Commonfund Inc. released Tuesday indicated donations to the UW Foundation’s endowment fund increased 5.5 percent from 2007 to 2008, which earned it the rank of 28th in the country.
Overall, higher education endowments reported a decrease of 3.3 percent nationally.
“I think that almost everyone is down. Not that I am enjoying other people’s pain, but this is an opportunity for donors to see that they can be comfortable giving a gift because we have gone up in a period when a lot of others have gone down,” Erickson said. “The way we have it set up, hopefully we can live through this.”
