Endowment value, gift prospects fall with stock market

The University, along with the rest of the world, has paid the price for this year's economic downturn. Officials stress, however, that short-term challenges will not significantly affect long-term planning.

Last year the endowment stayed in the black because of a diversified investment strategy, said Andrew Golden, president of the Princeton University Investment Company. "Again this year against the background of bad fiscal markets we're doing a little bit better than breaking even," Golden said.

In today's financial world, breaking even marks success, but over the last 24 years the average return on University endowment investments has been 15 percent.

During the 2000 to 2001 fiscal year income from investments made up more than one third of the University's operating budget, compared to 26 percent from student fees and 11 percent from gifts to the University.

But in contrast to recent years, the University expects a deficit for the next fiscal year, according to the Priorities Committee report released Jan. 17. To meet this year's budget needs, which increased because of unexpected factors like energy costs, the University spent half the energy reserves accumulated during the last 30 years and unrestricted alumni funds.

To balance next year's projected deficit, the committee proposed increasing undergraduate tuition and fees by 3.9 percent, the largest increase in the last four years, and slowing the rate of increase in University salaries.

In addition to its endowment, the slow economy has affected outside gifts. Traditionally, donations from alumni, parents, corporations and foundations make up roughly 10 percent of the operating budget.

Brian McDonald '83, the new vice president for development, remained optimistic about this year's fund-raising prospects. "We expect to raise more money this year than we did last year," he said, adding that many alumni provide strong support regardless of the financial situation.

But according to Mary Baum, director of corporate and foundation relations, this years corporate fund-raising remains "quite a bit behind . . . where we were last year."

The economy's effect on alumni giving remains to be seen. Many alumni are holding off on donations to see if the stock market improves, said Bill Hart, who works with of Annual Giving.

Right now, however, the totals for giving stand below average, though the level of giving for classes not in a reunion year remains steady. With four months remaining in this fiscal year, and Reunions coming up, Hart was cautiously optimistic.