Economy Slams U. Maryland Endowment

This story was written by Kevin Robillard, The Diamondback

The recent economic slump may have caused your wallet to be a few dollars lighter - but that's nothing compared to the University of Maryland's endowment, which has lost about $63 million since the beginning of the year.

The value of the endowment has fallen 15 percent from its $420 million value on Jan. 1, said Vice President for University Relations Brodie Remington, who oversees the University of Maryland College Park Foundation and the university's fundraising operations.

Still, the endowment is beating the market, he said - at the end of trading yesterday, the Dow Jones Industrial Average was down 30.1 percent in the same time period.

"Comparatively, we're doing OK," Remington said.

Although the endowment has taken a hit, fundraising is relatively smooth, Remington and university President Dan Mote said, and the Great Expectations campaign is progressing slightly ahead of schedule toward its goal of raising $1 billion by 2011. The university is holding a celebration of reaching the halfway point of the campaign Thursday.

Still, so far, the university has raised about $15 million this fiscal year, compared to about $20 million at the same point last year.

Both the slowdown in donations and the drop in the value of the endowment are signs of how the economic crisis is impacting the university in unexpected ways.

The endowment was valued at $420 million last January, making its current value about $357 million. But Remington said the university is confident in its long-term investment strategy.

"You build a little cushion," he said. "So when you drop, you don't like it, but it's OK."

The value of the endowment has been varying almost as much as the stock market has in recent days, but Remington pinpointed one date as the most critical: Jan. 1. The endowment's value on that day determines how much the University of Maryland College Park Foundation will spend from the endowment in a year.

In terms of fundraising, Remington said most of the drop will likely come from a declining number of major gifts in the $50,000 to $250,000 range. The university has seen the number of gifts in that range increase from 236 three years ago to 327 last year, Remington said.

But unlike the wealthiest donors, who can still afford to give multimillion-dollar gifts, well-off but not incredibly rich donors have been more affected by the recent downturn.

"I think that's where we're going to get hurt," Remington said.

Remington said the decline in major gifts means the university will have to rely more on a small number of donors giving even larger amounts of money.

Yet Mote was relatively unconcerned about the downturn. He said philanthropic giving has remained relatively stable since 1935, regardless of the economy and world events.

"History has shown you can maintain philanthropic giving, even in rough times," Mote said.

But Mote did acknowledge many donors may be holding off until the economy turns around and uncertainty disappears.

"Instability tends to make everyone ... more conservative," he said.

Once the economy has clearly hit bottom, Remington said he expects people who are currently holding off will resume donating because there will be more certainty in the econmic situation. However, no one has any idea where the bottom is, Remington said.

"No one seems to know when it will end," he said.

The downturn caused the university to shift some of its strategies, Remington added. For example, alumni who worked at Bear Stearns and Lehman Brothers who may have been reliable donors in the past are now out of work.

"Now is not a good time to ask [them] for money," Remington said.

The university was about a decade late to the fundraising game. The university is currently in the middle of its first billion-dollar fundraising campaign, while Mote ran a $1.4 billion campaign at the University of California, Berkeley in the 1990s.