Cornell Alumni Magazine has the scoop of the month, reporting that Cornell's endowment fell 27 percent from June month-end to year-end. Reports CAM: Skorton noted that Cornell’s operating budget is not as dependent on endowment earnings as that of some other institutions and expressed great confidence in the University’s financial managers and trustees as they deal with the current economic crisis.This is similar to losses that have been announced by Harvard, Yale, Princeton, and other institutions. The Cornell endowment was valued at $5.4 billion on June 30, so the decline translates to a loss of almost $1.5 billion.
It's important to note that this decline has not only mirrored that of the largest endowments --- Harvard, Yale, and Princeton -- but also schools with more Cornell-sized endowments. WUSTL has seen a 25 percent decline. And Duke's endowment has lost 20 percent as of the beginning of December. Expect similar declines at schools like Chicago, Northwestern, Hopkins, and Dartmouth.
Of course, it could always be worse. The S&P 500 is down 30 percent over the same period, while commodities like oil are down over 75 percent. If you recall, two years ago when we reported that Cornell's fiscal situation is "strong and strengthening", the new CIO, relatively underpaid James Walsh, was quoted as saying, “commodities are especially effective at diversifying a fund’s investments and counterbalancing equity volatility", so thankfully the entire endowment doesn't seem to be in the non-volatile energy market.
Skorton also correctly notes that Cornell is relatively sheltered to changes in its investment income. As we noted two months ago, some schools, like Dartmouth, lean on their endowment much more heavily for their operating revenues.
Here's to 2009 not being as bad as 2008.
