Home News Concordia endowment drops over $20 million in under nine months

Concordia endowment drops over $20 million in under nine months

by Archives March 3, 2009

Concordia University’s endowment has fallen by over 20 per cent, from $113 million in May to just under $90 million.
The fund, managed by The Concordia University Foundation helps fund financial aid programs and scholarships, as well as research and chairs and professorships.
While the loss was severe, Kathy Assayag, president of the Foundation, maintains it could have been worse. With the majority of its funds in the stock market, Concordia has joined the growing number of institutions to lose millions in the global financial crisis.
The foundation has between 65 and 70 per cent of its assets in the stock market; with the rest in safer investments, such as fixed income bonds.
Assayag said the loss “is a terrible thing of course, but it compares positively to a lot of other non-profit organizations and endowment funds, some of which have taken losses up to 35 per cent, depending on what kind of investments they had.”
“We have a relatively conservative approach. We’re not involved in hedge funds, or funds of funds.” She said that Concordia’s portfolio had shown several years of strong growth despite staying away from riskier investments.
While long term investments have declined, Assayag said annual gifts, which fund scholarships and projects directly, were up 25 per cent as of Dec. 31.
Unlike annual gifts, endowments are invested, with only the profits being used. As a result, annual, or non-endowed, donations tend to be much smaller than endowment funds.
Assayag affirmed that the foundation was committed to maintaining their current scholarship pay-out. However, she acknowledged that if the economic slump was to worsen or last several years, student financial aid could be affected. “You can maintain your support to the scholarships and other areas this year, maybe next year too, but if the market doesn’t rebound, we may need to make a decision to reduce pay-out. We’re not considering that yet, [but] if things get a lot worse we may have to make that decision, which some universities have announced.”
She said if cuts are necessary, they will be made to non-essential programs, such as lecture series, before scholarships. But the prospect still has some students worried. “It would worry me if they cut it down,” said Lizna Lakahni, a human relations undergraduate currently seeking financial aid. Aisha Damji, a finance student seeking aid, expressed similar concerns. “Even now, they haven’t been able to help me out. That worries me. I think [student aid] is already at the bare minimum.”
Concordia is by no means alone. Universities across Canada and North America have been hit severely by the economic crisis. Schools such as Carleton, York, UBC, Simon Fraser University, and McGill, have announced heavy losses of 20 to 25 per cent. In many cases, these losses were announced in December or January, but stock markets have declined considerably since then. In the United States, the outlook is even bleaker, with Harvard University facing a possible endowment shrinkage of over 30 per cent by June. Many schools, including Concordia, have begun lobbying the government to make up some of the shortfall, but Assayag concedes this won’t be easy, “it’s going to be a real challenge to convince them to give more.”
Concordia’s loss is reasonable, said Sergey Isaenko, an associate professor in Concordia’s department of finance with expertise in financial markets. It’s “about within average. Better than some of the major corporations.” But when it comes to protecting itself he said that Concordia is at the mercy of the market. “You can’t really do much. In the short run, you can hedge some of the risk. But there’s no way you can fully protect yourself.”
For now the main question the Concordia University Foundation faces is what to do with the remainder of the endowment fund. Its board of directors is debating whether assets should be shifted away from the stock market and into more secure bonds, a move that would mean accepting their current losses. A smaller endowment fund would mean less profits and force cutbacks.

Related Articles

Leave a Comment