Market Slump Not Projected to Affect School Endowments

Angela Januzzi

August 15, 2007 

The first weeks of August have seen major fluctuation in the stock market. The uncertain daily outcomes of recent stocks, though, leave school administrators to wonder: how will the recent late-summer slump affect their prospective endowments? 

Not too badly, says a report released Tuesday by Moody’s Investors Service. The recent downturn, says the report, should not hurt most schools' endowment funds. However, some colleges or universities with poor diversification or inadequate investment management could end up suffering substantially if the market trends continue. 

Schools with inadequate diversification, ironically, are often schools without large endowment funds. Still, rather than assume plummeting endowment would not affect a low-endowment school’s financial status, the recent capricious market should serve as a warning to schools who are not sufficiently managing investment.  

Source: Petrie, Matt. “A Slump on Wall Street Should Not Significantly Hurt Most College Endowments, Report Says.” www.chronicle.com. Posted: Wednesday, August 15.