While the smoke may have cleared from the skylines of New York and Washington, companies nationwide are still reeling from the negative economic repercussions of the Sept. 11 terrorist attacks. Universities across the United States, including Northwestern, are finding that they are not immune to the turmoil plaguing businesses.
Suddenly forced to rethink fund-raising campaigns, universities are realizing that donations they counted on in the past may instead be diverted towards relief efforts. And with a large portion of their endowments invested in the volatile stock market, many institutions are cautiously reanalyzing their investment strategies.
But even in these times of relative economic hardship, some schools are finding ways to aid the victims of the attacks.
In Evanston, university officials say that although the Campaign NU fund-raising drive continues on track to reach its $1.4 billion goal by August 2003, no one can predict how today’s economic conditions will affect tomorrow’s financial hopes.
FUND-RAISING STRUGGLE
Taking advantage of the strong market in the 1990s, 25 universities announced major fund-raising campaigns with goals of $1 billion or higher. According to The Chronicle of Higher Education, 12 universities, including NU, had yet to reach their designated totals before Sept. 11.
Ronald Vanden Dorpel, NU’s vice president for university development, said there are no current plans to postpone fund-raising efforts or the final date for Campaign NU, which has raised $1.175 billion for construction, renovations, endowments, professorships and scholarships.
“With the attacks and the downward economy, the market doesn’t lead to donor confidence,” Vanden Dorpel said. “We still don’t have enough data to make any kind of judgment on how the attacks have affected us, but we are monitoring these things.”
John Lippincott, vice president for communications at the Council for Advancement and Support of Education, said no institutions have decided to cancel fund-raising campaigns because of economic conditions or the attacks. But universities need to be sensitive in the way they approach donors, he said.
“Universities need to acknowledge to their donors that they realize this a difficult time,” Lippincott said. “There is no reason to expect that (the attacks) will lead to a significant downturn in charitable giving.”
Although overall donations may not decrease, Lippincott said donors now have a more prominent — and perhaps more pertinent — option for their funding.
“What is not clear is if most of the donor dollars will go the Sept. 11 charities, the Red Cross or university campaigns,” he said “We don’t know if the dollars going to the disaster relief charities are new dollars from new donors or redirected dollars from donors who previously donated to other causes.”
Officials at Stanford University admit their $1 billion Campaign for Undergraduate Education, currently 60 percent complete, may take longer than anticipated.
David Pringle, associate vice president and director of development marketing, said the university realizes many donors have changing priorities for where to give their money.
“We are recalibrating our expectations,” Pringle said. “It’s set to be a five-year campaign and right now we may need all five. All universities have seen a softening in the market during the last three to four months, and especially during the last three to four weeks.”
But Pringle also said alumni are rallying behind the university and wanting to reconnect with their alma mater during a time of national concern.
“Unanimously, the alums want the Stanford family there,” he said. “Now more than ever, they value what we do in terms of how we prepare our young people for leadership.”
STOCK MARKET RAMIFICATIONS
Like most universities with large endowments, NU is heavily invested in the stock market. Adhering to a policy of long-term investment, NU has not sold stock following the attacks.
David Wagner, NU’s chief investment officer, said the university controls $3.3 billion in investments, stock, real estate and venture capital.
“While we certainly could not have foreseen these terrible events, times with tremendous dislocations in the market are not when we should be making trades,” Wagner said. “It is unlikely we would sell under these conditions.”
Some of NU’s investments involve real estate holdings in southern Manhattan, including buildings and parking lots that were damaged in the attacks. These holdings are now an economic setback, Wagner said.
When donations pour in during fund-raising drives such as Campaign NU, the university turns the gifts into cash and then decides how to invest it. Because $440 million of the final $1.4 billion raised for Campaign NU will go to the endowment fund and be invested in the stock market, Wagner said NU advocates a “perpetual horizon” strategy.
“The kind of money we have in the endowment is designed to last forever,” he said. “We expect it to go up and down in the short term, but it doesn’t affect us long-term.”
Because NU’s portfolio remains diversified, Wagner said that although some holdings have been negatively affected, others have responded well.
“The last few weeks have been kind of mixed,” Wagner said. “Everyone has gone down some but we’ve been cautious all year. We’ve had less money in riskier things and more money in safer things.”
PITCHING IN TO HELP
Some universities may be facing financial hardships and curtailing excess spending, but others are working to help victims of the attacks and their families.
The higher education community has banded together to establish the Sept. 11 College Fund, administered by the Citizens’ Scholarship Foundation of America. The money donated to the fund will cover college expenses for family members of those lost in the attacks.
Harvard University has contributed $1 million to start the effort, which will be publicized by the American Council on Education.
NU has no plans to contribute to such a fund, said Eugene Sunshine, vice president for business and finance.
“We have not made a contribution on our own behalf, but many of our officials, faculty and staff have made personal contributions to help,” Sunshine said.
Lippincott, of the education council, said most universities do not have Harvard’s flexibility because Harvard’s endowment, at $18.3 billion, is by far the largest of any university.
“About 90 percent of the gifts universities receive are for a restricted purpose,” Lippincott said. “They can’t turn around and take the money to another fund.”
Public universities in New York state also have set up a program for family members of those killed in the attacks to attend their schools for free.
Private institutions have designed a fund to pick up the difference between their tuition and at public schools.
Stanford’s Pringle said his university acknowledges that the nation has more direct needs now than in the past. Although fewer donations affect university fund raising, now is not the time to be selfish, he said.
“If someone wants to take their discretionary income to the Red Cross instead of us, then that is absolutely appropriate,” Pringle said.
“If their gift to us this year is lower than in years past, we will make sure we celebrate the fact they are still supporting us in a difficult time.”
