With the economic downturn, business students may worry about finding jobs?but many of them will be affected well before they enter the workforce.
Administrators are scrambling to come up with money for scholarships and programs.
“I’m hoping that the level of what we’re able to award won’t go down a huge amount,” said Michelle Hill, School of Business corporate and foundation giving director. “But we are anticipating it, obviously, because of the economy and the way endowments are invested.”
Endowment funds are invested in the stock market. The annual interest earned on these funds finance university programs, such as scholarships.
“The goal of the university is to protect the corpus [the original amount] of the endowment,” said Ronald Tremea, assistant vice president of financial and accounting services.
In order to protect that money, the U has cut the distribution percentage from 5 percent to 4 percent.
The business school has tried to compensate for the 1 percent loss with annual gifts.
Annual gifts are donations that the business school uses directly, instead of the interest. However, annual gifts only make up a relatively small percentage of scholarship money.
The business school receives a combination of annual gifts and endowments that comprise a yearly scholarship package of about $600,000, Hill said. Only about $200,000 of that total comes from annual gifts.
The problem with annual gifts, Hill said, is they are not dependable. The school has no way of knowing how much money people will donate.
“Are annual gifts going to be enough to offset the decrease? Can we raise that money? I don’t know,” Hill said.
The business school has two major endowments, one specifically for the school, and the other is held in a pool with the other U endowments, said Jennifer Stevens, business school assistant dean of external relations.
“The economic downturn will affect our endowment average,” Stevens said “We will definitely take a hit from both.”
The U endowments have also decreased significantly.
In the 2000 fiscal year, the U had $273.8 million, while in 2001, the U had $260.5 million. The estimated amount for November 2001 was only $251.8 million, Tremea said.
However, some of the money is being recovered.
“In the latest quarter, we’ve recovered about three-fourths of the loss in 2001,” Tremea said.
“We hope to gain back a lot of what we lost this quarter by Dec. 31,” said David Heaps, U investment manager.
The business school will not know how big of a hit it has taken until January or February, because most of their annual gifts come in December, Hill said.