Endowment funds are the savings accounts for colleges and universities and it appears they are going the way of individual’s savings accounts. As you consider long term viability of a college or university and perhaps financial aid opportunities, this might be an interesting issue to research. The excerpts below will give you some ideas of where to look for that information.
[Excerpts from an article entitled “Fortunes Falling” in January 27,2009 Inside Higher Ed.]
After a year of riding high, educational endowment investments began a downward spiral in the 2008 fiscal year, and the first half of 2009 was particularly brutal, according to two new reports released Tuesday.

In a joint survey, the Commonfund Institute and the National Association of College and University Business Officers found that college endowment returns dropped by 22.5 percent in the first six months of the 2009 fiscal year, which began July 1 at most institutions. Commonfund’s independent survey of the entire 2008 fiscal year showed losses of 2.7 percent, but the more up-to-date joint survey shows just how quickly things went from bad to worse.

“This is such an extraordinary fiscal year so far, hopefully not to get much worse, but we expect to see some further decline,” said John Griswold, executive director of Commonfund Institute.

Commonfund, which invests money for colleges, and NACUBO, a professional organization for college finance chiefs, have for years conducted annual independent studies of college endowments. The two groups had already planned to merge their surveys next year, but the decision to work together on a shorter-term project reflects a growing desire to examine the impact of the last few volatile months.

The joint survey included responses from 435 institutions, or about 55 percent of those asked to participate. NACUBO officials cautioned that responses constituted financial officers’ “rough estimates” of endowment performance, given the short time frame.

In a more comprehensive survey of the entire 2008 fiscal year, NACUBO and TIAA-CREF found the continuation of a long-term trend: The richest colleges performed best. Colleges with endowment assets of greater than $1 billion were the only colleges with positive investment returns — 0.6 percent – in 2008, the study found. Colleges with the smallest endowments, below $50 million, had the largest losses — 4.3 percent on average.

Even the wealthiest institutions, however, were unable to stave off double-digit investment losses in the first six months of the 2009 fiscal year. Colleges in every category saw average losses of more than 20 percent.

…for complete article go to Inside Higher Ed, January 27, 2008.