(U-WIRE) LUBBOCK, Texas — According to a 2002 survey conducted by the National Association of College and University Business Officers, the average United States college or university endowment lost value in fiscal year 2002 largely because of the declining investment markets and a poor economy.
The association, which conducts the survey annually, documented about 600 universities throughout the United States. The results showed a 6 percent decline in endowments for universities whose fiscal years ended June 30, 2002.
Last year’s decrease is almost twice that of 2001, when the survey showed a 3.6 percent decrease in endowments.
Texas Tech University’s endowments are decreasing along with those of other universities across the nation, but the decline at Tech has not been as severe as most, Interim President Donald Haragan said. “Our endowments have not suffered to the extent others across the nation have.”
A large percentage of the endowment is invested, which he said is the risk universities take to make money. The administration does not want the endowment to sit there and do nothing when it could be invested and making money for the university. It is a risk, he said, but the greater return helps the university.
“In the long run, it’s a very wise decision,” he said. “But in the short term, that adds up to some loss.”
Tech’s endowments go to scholarships, faculty support and various university activities, Haragan said.
Tech Chancellor Dr. David Smith said the university’s endowments actually increased last year. The university raised almost $44 million, which was its second-best year for fundraising.
In addition to the diversified portfolio that keeps Tech from losing more money in stock, he said the university does not use endowments for operations, nor does it use the principal. Only a percentage of the interest is used every year for research, scholarships and professorships.
Jenny James, development officer for the College of Engineering, said there are several factors that explain the decrease in endowments for universities. Because the stock market is not performing well, high-tech companies that normally contribute large sums of money are curbing their gifts or merely not doling them out at all.
“On the whole, we’ve seen the difference,” she said. “The economy’s always going to affect that.”
James said the university identifies individuals or companies that are capable of donating money and targets them, but recently, because of the stagnant economy short on dollars for corporations to throw around, the administration is not asking for as much money from donors.
The university is still getting plenty of donations, she said. The oil companies are doing well, although most oil companies base their donations on the number of people they hire at Tech’s job fairs. The fairs have not been as successful recently because fewer companies are coming, and those that do come are not hiring as many people.
“It’s been really hard across the board,” she said.
Scholarships have not been affected as of yet, James said. However, because the endowments the college has are not earning as much as in past years, they have to be careful when giving out scholarships.
“It’s not just what we have, but it’s what we have coming in,” she said.
Dean Gary Bell of the Honors College also experiences this dilemma. He distributes about $4.5 million a year in merit scholarships, and the amount of scholarship money given could change if endowments drop.
However, the administration has made a commitment for the time being to continue disbursing scholarships, even if it becomes necessary to use general funds, he said.
“The endowment fund has certainly gone down, but scholarships have not, at least at this point,” Bell said.
Linda Hoover, dean of the College of Human Sciences, said the diminishing endowments could adversely affect the students. Most of the endowments for the college go to scholarships and covering costs that state appropriations do not cover.
“We have more students that are in need of assistance,” she said. “The importance of [the endowments] can’t be emphasized enough.”