University endowments continue to struggle
Donor gifts are down, and endowments are still recovering from the economic downturn.
And if that wasn't bad enough, schools are seeing a decline in gifts and having to spend more endowment money just to get through hard times. They are spending more than they're earning.
Schools with the largest endowments (of more than $1 billion) withdrew 4.6% of their assets in the year. That's higher than average.
Harvard continues to be one of the biggest endowment train wrecks, with its endowment falling by 30% in the year to $25.7 billion, BusinessWeek reported. No other endowment had that kind of staggering loss, although Yale was in second place with a 28.6% drop to $16.3 billion.
Both of those schools relied on, oh, shall we say, "creative" investment instruments such as derivatives, managed futures and distressed debt. They made some nice coin in the good years, but lost big when the economy went sour.
But some endowments actually posted gains for the year, and experts say those are the ones who made conservative fixed-income investments.
Experts tell BusinessWeek that most endowments should recover in this fiscal year, which ends in June, particularly given the market rally in recent months.
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Investors are anxious to see if hiring can maintain its strong pace in the second half of the year.
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