Northwestern’s endowment has decreased about 20 percent since it peaked at the end of August, University President Henry Bienen said Tuesday.
The figure is a rough estimate because NU will not learn the extent of its losses in private equity investments for another month. When these are taken into account, Bienen said the final decline could be up to 25 percent.
NU’s endowment, which Bienen said reached $7.3 billion at the end of August, was the 11th largest among national colleges and universities in 2007.
Aside from the drastic drop in the endowment’s total, Bienen said the university is also struggling to liquidate the money it still has.
“They’re not making profits in these funds, so there’s no money flowing back to us,” Bienen said.
NU’s financial troubles have forced changes in spending. The university has opted out of some building projects, including a new information center for the Office of Undergraduate Admissions, and cut back on hiring new employees, Bienen said.
“We didn’t freeze hiring,” he said. “But both for staff and for faculty we forced a different set of justifications on hiring, and we were extremely reluctant to approve new positions.”
Although Bienen said he expects a “big hit on the budget” to come from an increase in the number of students who qualify for financial aid, NU will not retract its guarantee to meet 100 percent of its students’ demonstrated financial need.
“According to the formulas we’ve been using, there’s going to be more need,” he said. “We will meet that need.”
Despite these concerns, Bienen said NU is in better shape than many comparable universities because a smaller portion of its financial aid budget comes directly from the endowment. For instance, Princeton University’s endowment funds about 80 percent of its financial aid, whereas NU’s only funds around 15 percent.
“When the markets imploded so quickly and so deeply, it gave an adjustment problem to places whose current budgets were being funded 40 to 50 percent out of endowment compared to Northwestern,” he said. “We have an easier adjustment.”
Looking forward, Bienen said the most difficult issue facing future University President Morton Schapiro is the economic climate, although he is not worried that his successor will be unprepared.
“We’ve worked it out for him in terms of the budget and what we need to do,” he said. “He’ll come to his own conclusions, obviously, but he’s not going to face a crisis.”
