Tilghman: Endowment loss closer to 25 percent

The University estimates its endowment has lost closer to 25 percent of its value than the 30 percent previously projected, President Tilghman said in an interview Thursday evening.

Tilghman said officials won’t have exact figures for the endowment — valued at $16.3 billion on June 30, 2008 — until September. She added that they are budgeting for the value of the endowment to stay roughly the same over the next 12 months, but noted that “we could be surprised in either direction.”

This endowment news follows Tuesday’s announcement that Annual Giving raised $44.6 million in its 2008-09 campaign, more than $11 million shy of its goal. Tilghman called the fundraising drive a “remarkable achievement” given the ongoing economic recession.

Tilghman said the campaign’s $56 million goal was set last July, before the downturn became more severe.

“If you can bring your mind all the way back to last July — it was prior to the recession really hitting,” she said. “We have always been very ambitious. Last year, we raised $54 million, and we thought we should stretch ourselves and set an ambitious goal.”

The 2007-08 Annual Giving campaign raked in $54.1 million from 59.2 percent of alumni, while the 2006-07 campaign brought in $49 million with 58.5 percent of alumni participating. The 2005-06 drive raised $40.4 million from 58.2 percent of alumni.

Participation was high among the most recent classes of graduates. Of those who graduated last month, 90.7 percent pledged to support Annual Giving for the next four years. The Class of 2008 recorded 75.2 percent participation — the highest figure ever for a first Reunion. The Class of 2007 saw 73.7 participation, a record for the second Reunion.

“What it does is set in motion an expectation among our youngest alumni that one of the things you do every year is to give something to Annual Giving,” Tilghman explained. “We understand full well that the amount they’re going to give is going to be very, very modest compared to other classes. Getting in the habit of giving to Princeton will pay huge dividends in the years to come.”

University officials were mindful of the economic climate when planning Annual Giving’s contribution to the current operating budget, Tilghman noted.

“We understood that it would not make sense to plug a number like $56 million into the Annual Giving place, so we accounted for a year in which we would not meet our public goal,” she said. “The fact that we didn’t meet the goal won’t result in further cuts.”

She added that development officials are “definitely going to take this year’s experience into account” when they set the goal for the 2009-10 Annual Giving campaign.

Tilghman also said the University will have to “work harder” in its fundraising efforts during the volatile economic environment.

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“The case is an extra compelling one when we tell our parents that the financial aid budget is the only part of our budget that we will raise this year,” she explained. “We now give out more financial aid than we will take in [from] tuition.”

Fallout at Harvard unclear

Princeton is not the only Ivy League university to discuss its endowment losses in recent days. Vanity Fair reported on July 2 that a member of the Harvard Management Company, the firm that manages Harvard University’s endowment, said the endowment’s value would be off “between 23 and 25 percent” and not the 30 percent projected earlier this year.

But Harvard officials responded by insisting the institution has lost 30 percent of its endowment, which was valued at roughly $36.9 billion back in June 2008.

“Harvard Management Co. continues to actively manage the endowment portfolio and has been steadily investing in markets and strategies that offer significant opportunities for future growth,” Harvard President Drew Faust wrote in an e-mail to Vanity Fair. “However, the virtually unprecedented market conditions of the past year lead us to believe that, when the valuations on all of our illiquid investments come in and our year officially closes, our returns will be in line with our earlier projections of a 30 percent decline, and in line with our peers who are following similar investment strategies. Recently reported assertions about Harvard’s endowment performance are inaccurate.”