IU endowment up amid recession

IU’s endowment is on its way to recovery after feeling the effects of the economic recession.

The endowment rose 12.2 percent in the last quarter and is up 20 percent for the calendar year, said Barbara Coffman, IU Foundation executive director of strategic planning and communications.

The endowment fell 23 percent in the last fiscal year, declining from $1.5 billion on June 30, 2008, to $1.2 billion on June 30, 2009.

As a public university, IU has an advantage in maintaining its endowment, Coffman said. Many private universities use their endowments to pay employee salaries and operating expenses, so when the endowment falls, services that affect students are directly impacted.

At IU, the actual money in the endowment remains untouched, and the earnings made from interest are used to help the University smooth out the highs and lows of the market, she said.

“We invest in a way that will maintain the value of the endowment forever,” Coffman said.

IU Foundation President Eugene Tempel said the benchmark for endowment losses in public universities across the country is 20 to 25 percent; so IU was right in the middle at 23 percent.

He said the endowment does well because its managers see past the market highs and lows and manage for the long term.

“We look fairly typical for a Big Ten institution,” Tempel said.

The stock market’s improvement has also helped the endowment, Tempel said. Both Coffman and Tempel said the recession that began in 2008 affected the foundation but did not completely throw it off.

The IU Foundation pays out 5 percent of the endowment’s market value to the University each year. The endowment’s managers also use a “smoothing technique,” so the amount of money paid out each quarter reflects the endowment from three years ago. This way, if the economy is hurting, the University doesn’t feel it right away.

“Our goals are to maintain purchasing power of endowment and to maintain relatively consistent funding for the University,” Coffman said.

The University’s endowment is comprised mostly of large gifts, purposely invested in the endowment because the donors want them to be around for a long time. More than 6,000 separate funds make up the endowment.

Donors choose exactly how their gifts are used, so money is set aside for every campus, school and department and for special programs and institutes.

“A lot of money goes to scholarships because it’s important to a lot of donors who had to struggle through school,” Coffman said.

Donors also put money into major building projects through the endowment. Recent projects include Simon Hall, the IU Simon Cancer Center, the Indianapolis Eye Care Center near IU-Purdue University Indianapolis, McKinney Fountain, and many campus lecture series and equipment donations.

“Our goal is to maximize support, and to constantly look at how we’re performing and how that can go up over time,” Tempel said.