(Updated, 11:45 a.m.)
PROVIDENCE – The total value of Brown University’s endowment plunged 26.6 percent to $2.04 billion in the fiscal year that ended June 30, President Ruth Simmons announced at a faculty meeting yesterday, the first day of fall classes at Brown.
The $740 million loss led Simmons to describe 2008-2009 as “a horrendous year” for the school’s finances, The Brown Daily Herald reported.
The university’s real assets declined nearly 40 percent and its investment holdings fell 23.1 percent in the 12-month period, Simmons said, according to the Daily Herald. The school said it pulled $132 million from the endowment during the fiscal year to pay for operations and added $44 million in new gifts to the fund.
“The fiscal year 2009 results tell only part of the story,” Elizabeth “Beppie” Huidekoper, the school’s executive vice president for finance and administration, said in a statement. “During the full two years of the bear market, global equity markets fell 37.0 percent and the Standard & Poor’s 500 was down 35.9 percent, but the Brown endowment fell half that — 18.3 percent.”
The school raised a record total of $193.4 million in the fiscal year, according to the Daily Herald. New donations were off 25 percent from the previous year, but a spokeswoman told the campus newspaper that was a smaller decline than Brown’s peer institutions saw.
Last month, Brown sold $125 million in bonds to fund renovations and a cash reserve. In June, the school said it expects to have to cut its $758.7 million budget for the current fiscal year by an additional $30 million next year. The university eliminated 67 jobs last summer, a bit more than half of which were cut through layoffs.
Simmons emphasized yesterday that “things are going very well,” with the worst of the financial crisis appearing to be over for both Brown and the world economy. Administrators are continuing to move forward with an operational review that will lead to suggested spending cuts this winter, she said.
Brown’s endowment is the smallest in the eight-member Ivy League, according to the National Association of College & University Business Officers. Harvard University said its endowment fell 30 percent to about $25.8 billion in the 2009 fiscal year. Yale University reported a 25 percent decline to about $16 billion.
As of June 30, Brown’s endowment was invested 32 percent in hedged strategies; 17 percent in private equity; 15 percent in public equity; 12 percent in real assets; 10 percent in Treasury bonds; 9 percent in credit; and 5 percent in cash.
As of March 31, Brown’s $2.1 billion pool of long-term investments, which includes the endowment and other funds, had earned an average annual compound return of 7.4 percent over the preceding decade, according to the university’s investment office.
Additional information is available at Brown.edu.
