Ryan Stagg ’04, a biology major and pre-med student, was named the Gehres Scholar this past year.
In the late 1990s, more than 100 of Janet
Gehres's (professor emerita of biology) former students got together to
honor her for the role she
played in their lives. They created the Janet Gehres Endowed Scholarship.
“‘People
understand that in order to compete in today’s world, we need a
substantial endowment.’ I think Albright alumni are beginning to
understand that
as well.”
– Tom Weik, president of
Weik Investment Services
and chairman of the investment subcommittee of the Board of Trustees
ndowment
funds keep “touching people forever.” There is no more fitting
way to describe them. Certainly, Ryan Stagg ’04, of Douglassville,
Pa., believes so. Stagg, a biology major and pre-med student, was named
the Gehres Scholar this past year.
“The Gehres Scholarship gives me the opportunity to get a great education at Albright,” Stagg says simply. “Because of it, I’m pursuing my goals to attend medical school and become a doctor.”
Stagg thinks he may want to specialize in pathology or internal medicine, but he is also interested in family medicine. He is just one of many Albright students who is able to achieve his dreams because other Albrightians who went before him believed in his future and offered a hand, even before he needed it, by setting up an endowment.
But what is endowment? How does it work? And why is it so important to everyone connected to Albright – students, faculty, staff, alumni and community?
A safety net: how the Albright endowment works
Endowment serves as a kind of safety net for Albright or any organization. Endowment funds are invested, and money becomes available for use, according to the spending rule adopted by the organization. Albright’s spending rule is the same one used by many colleges and universities. It mandates that the amount of money available to spend in any given year is equal to five percent of the average market value of the endowment over the previous three years.
While some schools got caught up in the excitement of the late 1990s and invested endowment funds in high tech and Internet stocks, for the most part endowments are invested conservatively. Money is spent out of earnings on principal, and the principal amount is left untouched so that it can grow and earn more in perpetuity. In this way, the organization has a base or foundation of funds – a safety net – that it can depend on to contribute a certain amount to the budget each year. In colleges, endowment funds available for spending may be unrestricted (to support operations), or restricted (for scholarships, specific programs, faculty positions, usually called “chairs,” etc.)
The economy affects college endowments
Just as the falling stock market over the past few years may have affected you, perhaps giving you the sensation that your wallet has grown thinner, these economic down times have hit college endowments hard.
In fact, the average college and university endowment lost six percent of its value in fiscal year 2002 (ending June 30), according to a study of endowments at 654 institutions published earlier this year by the National Association of College and University Business Officers (NACUBO). That followed 2001, when college endowments decreased an average of 3.6 percent. The fiscal year 2001 overall loss broke a streak of continued endowment investment gains that began in fiscal year 1985. In fact, the past two years marked the first time since 1974, when NACUBO began publishing its annual review, that college endowments overall declined two years in a row.
Albright endowment outperforms peer institutions
The good news is that the Albright endowment lost 6.1 percent of its value in fiscal year 2002 – right in line with the study’s findings.
Why good news? Because at the same time, the Standard & Poor’s 500, a common benchmark, lost 18 percent. And because, compared with neighboring institutions, the Albright endowment held up well. The group comprising Bucknell, Dickinson, Elizabethtown, Franklin & Marshall, Gettysburg, Moravian, Muhlenberg, Susquehanna and Ursinus averaged a 9.49 percent loss in endowment in fiscal year 2002.
The Albright endowment picture looked even brighter by the end of the calendar year. Over the 18 months ending in December 2002, Albright lost just 4.9 percent on endowment, compared to a 22 percent loss in the value of the S&P 500.
The short of it is, the Albright endowment has maintained its value admirably in a difficult market. The challenge is that Albright’s endowment is extremely modest.