<p>
</p>
<p>And how might one go about doing that? And better still, how does a magazine like Forbes NOT do it that way and call itself credible?</p>
<p>MIT was not included in the survey-don’t know why. Their endowment is at $8B with $1.8B in debt.</p>
<p>Thanks for the catch on MIT. I pulled my data from the NACUBO report and never even considered that a major like MIT would have been omitted. BARD COLLEGE is missing every year, but I think that is for different reasons.</p>
<p>Modadunn:</p>
<p>I wish I had an easy answer. To find out the extent and nature of the cost-cutting, you really are dependent on each school’s transparency. Some have made the information easy to find. Others? Not so much.</p>
<p>All I can really suggest is to pick the schools of interest and a reasonable selection of peers and start digging into their websites. Some, like Middlebury, are doing a terrific job of presenting the information. Almost all schools are in the middle of finalizing their permanent, sustainable cuts for the next three years, largely replacing temporary stop-gap measures taken for this fiscal year (like salary freezes and so forth).</p>
<p>To be honest what I have seen is the major endowment colleges backing away from making any serious cuts. Their budgets continue to increase in the high single digit low double digit. They are simply borrowing what they need and hoping the problem goes away. The ones that are cutting-like Dartmouth-are doing so because they don’t have much more borrowing power left.</p>
<p>Seems to me that Swensen has done pretty well for Yale compared to some of his peers.</p>
<p>One example</p>
<p>Endowment 1990 2009</p>
<p>Yale 2.3 B 16.3 B
Swarthmore 336 M 1.1 B</p>
<p>^^This is a good point. If a strategy works well for several years and then leads to a 20% draw down, that might not be so bad.</p>
<p>Is there any easy way to look at the longer term data for the endowments? Otherwise we’re just cherry picking.</p>
<p>It depends on how disruptive the cuts are. If they’re severe enough to put the brakes on important plans, then, the strategy isn’t working.</p>
<p>NJdad, I would also add that he has also piled up $5.5B in debt. And, just about all their endowment is tied up in assets that have no public market, whose value is determined by the people who sold him those assets, and he cannot sell those assets. If it was my money I know I wouldn’t be sleeping too well at night under that scenario.</p>
<p>
Let me clarify.</p>
<p>If someone manages a college’s endowment and takes it from $100 million in 2000 to $10 billion in 2008 and then loses 40% by 2009 I don’t think it’s fair to just point out that they lost $4 billion in one year without the whole story.</p>
<p>If someone decides to spend $2 billion a year of that money in 2008, that’s pretty dumb.</p>
<p>I think jumping on the bandwagon of severely risky and little understood markets is what made some of these endowments SEEM to make those huge leaps in growth, when in reality (and now most certainly) they were difficult to value at best.</p>
<p>sm74, Yale has increased debt $5.8 billion over the last 20 years? What are the donations to Yale’s endowment in the last 20 years? How much of the endowment was spent?</p>
<p>How large is Swat’s debt?</p>
<p>bird rock wrote:
</p>
<p>And, if 50% of your budget depends on your endowment never losing money, then, yea that’s pretty dumb.</p>
<p>Swarthmore had 180M in debt in 2009. They did not issue new debt in 2009. They have managed their endowment more conservatively than the big guys and currently have about 50% of their assets in Tier 3 assets.</p>
<p>[Ivy</a> League Endowment Meltdown - Forbes.com](<a href=“Ivy League Endowment Meltdown”>Ivy League Endowment Meltdown)</p>
<p>Nice summary of the Ivys. Slide show at end is entertaining for those of us with Ivy Envy.</p>
<p>Swarthmore did actually have a bond issue in July 2009. They replaced a 1998 bond issue (that had reached the date it could be bought back at the height of the credit freeze in fall 2008 when doing any kind of bond issue was a nightmare). It wasn’t new debt; it was simply refinancing old debt at more favorable terms.</p>
<p>As to endowment growth, I have no doubt that Yale has banked much larger gifts to the endowment than Swarthmore has (even proportionally to their size). Harvard, Yale, and Princeton are pretty much in a class of their own as far as alumni giving. </p>
<p>I have no doubt Yale has also probably achieves higher actual rates of investment return over a ten or twenty year period (but not as much higher as the simple dollar values suggest). I mean, they should. They’ve leveraged the institution to invest borrowed money, invested in riskier instruments, and traded massive amounts of liquidity for higher return. In addition, their size allows them access to some private equity investments not open to an mere $1+ billion dollar endowment. On the other hand, they also had to borrow to meet payroll this year, whch is not, IMO, a feather in the cap of an investment manager starting the year with a $20+ million endowment. I was a little surprised to see that Yale has not posted its 2009 Finanancial Reports.</p>
<p>Two more examples.</p>
<p>Endowment 1990 2009</p>
<p>Yale 2.3 B 16.3 B
Harvard 4.8 B 26 B
Princeton 2.5 B 12.6 B</p>
<p>Still seems to me that Swensen has done well for Yale. He’s done better than the big rich guys and much, much better than the small rich guys like Swat.</p>
<p>I guess it depends what you mean by “better”. </p>
<p>If “better” is the size of the endowment on paper, like it would be if you were rating hedge funds, then Yale has done a “better” job.</p>
<p>If “better” means counting on the endowment to provide sufficient cash to keep the lights turned on and paychecks going out each and every year in perpetuity, then Yale has not done a “better” job.</p>
<p>Call me when the lights go out at Yale. I will get someone to turn them back on.</p>
<p>[Fair</a> Game - Private Equity and All Those Little Stuyvesant Towns - NYTimes.com](<a href=“http://www.nytimes.com/2010/01/31/business/31gret.html?ref=business]Fair”>http://www.nytimes.com/2010/01/31/business/31gret.html?ref=business)</p>
<p>Good example of the wonderful behavior of the PE community. Also find it interesting that there is one small problem with the winter olympics-the PE company that bought the ski resort is putting the resort into bankruptcy.</p>