Unable to remain insulated from the nation’s financial crisis, Georgetown University saw its endowment fall 12.5 percent from the beginning of 2008 to September 30, according to a statement by Christopher Augostini, the University’s Senior Vice President, Chief Financial Officer and Treasurer.
The loss brought the endowment below the $1 billion mark to $964 million, but the implications for the University’s overall budget are unclear, according to University Spokesperson Julie Green Bataille.
“We conduct our financial planning conservatively [over] five year cycles in order to allow for market fluctuations but we are closely monitoring the current situation and will make adjustments as appropriate,” she said. “No final decisions have been made for next year’s budget in terms of tuition or other projects.”
James Angel, an associate professor in the McDonough School of Business, said that although the loss is unsurprising given the current economic downturn, Georgetown’s Chief Investment Officer Larry Kochard has managed to dampen the impact of the financial crisis with savvy investment decisions.
“He steered clear of a lot of the credit risks that blew up in the last year,” Angel said.
The crisis has affected the University’s finances in other ways. Most notably, it may limit access to student loans. In a letter addressed to staff and faculty at the beginning of November, University President John J. DeGioia said that the University has been developing the capacity to provide loans directly to students.
Much of the University’s debt had also been held in the auction market, where interest rates have been rising since the market froze last winter. DeGioia said in the letter that the University has been restructuring its debt portfolio in order to move away from the auction market, but Angel said that high interest rates have slowed the progress of some of Georgetown’s projects, such as the construction of the new science center.
Angel also said that the economic downturn could signal declines in donations and federal grants, leading to further losses in the future.
“Future philanthropy may not be quite as generous,” he said, but he added that universities are fairly well-protected from the volatility of the market.
“This is probably one of the safest places to be right now,” he said.
