NYU's endowment topped $2.5 billion for the first time this year, buoyed by a strong fund-raising drive even as market turmoil eroded university investments.
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The fund has grown roughly 160 percent over the past 10 years, increasing from $951 million in 1998 to about $2.5 billion today. In the past year alone, it grew almost $340 million.
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In 2008, NYU had the 31st largest endowment out of the 785 U.S. colleges reviewed by the National Association of College and University Business Officers.
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Martin Dorph, senior vice president for finance and the budget, said NYU has weathered the recent downturn on Wall Street well.
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'I think Debra LaMorte is doing a fantastic job of raising money for NYU,' he said, referring to NYU's senior vice president for development and alumni relations. 'And even though there will always be down years, I think our endowment investments, which balance prudence and risk, are well thought-out.'
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But NYU spokesman John Beckman noted that the endowment is not representative of how much money the university has to spend. In a line often echoed by university officials, Beckman said a fairer way to describe the size of NYU's endowment is to look at endowment per student.
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Ranking based on endowment per student moved NYU back to 202nd out of 516 independent colleges and universities the association surveyed.
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'That means we have significantly less financial flexibility than peer institutions and are far more tuition-dependent,' Beckman said.
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NYU's endowment, like those of most universities in the United States, is invested in stocks, bonds and cash accounts. NYU spends interest from those investments, not the endowment itself.
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According to Dorph, interest on the endowment provides about $3,000 per student per year, compared with $1,500 per student per year in 1998.
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'While those sums are nothing to sneeze at, neither figure provides NYU with a lot of financial wherewithal,' Dorph said.
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And not all of that money is available for NYU to spend as it wishes; most gifts are made with conditions about how they can be spent. About 87 percent of NYU's funds are restricted, Beckman said.
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Though the endowment increased, it only did so because of a large number of new donations. Previously invested funds actually decreased by 1.5 percent for the year.
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Dorph and Beckman blamed the decline on the stock market's poor performance. They also noted that compared to other universities and both the Dow Jones Industrial Average and S&P 500 indexes, NYU was outperforming other investors.
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'There has tended to be a degree of blindness to the fact that endowments go down as well as up,' Beckman said. 'I think it is unavoidable that the turmoil in the financial markets, and particularly their downward trend, will have some impact on our endowment.'
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The University of Pennsylvania was one school that saw its endowment suffer. In 2008, it dropped from $6.6 billion to $6.3 billion, according to The Daily Pennsylvanian, the university's daily student newspaper.
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Beckman said money from the endowment goes to a number of different programs, but added that not all of it could be used immediately to satisfy current students' needs.
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'The endowment is invested for the long-term, not the short-term,' he said. 'The endowment must serve the needs of those at NYU today and also those here generations from now.'
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Additional reporting by Vanessa Liu. Eric Platt is university editor. Prerana Swami is a contributing writer. E-mail them at university@nyunews.com.
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