Big Ten Suffers Big Losses
We’ve spent countless hours thinking about the effect of the economic downturn on Penn State. Our recent thoughts, and some older ones, have focused on the Penn State endowment. Recently, the scope of our endowment queries has expanded to include the Big Ten’s eleven schools. By compiling data from several sources, we have aggregated Big Ten endowment information from before and during the recession and have drawn some interesting conclusions.
The data is represented graphically below. There are two graphs because the size of the endowments at the University of Michigan and Northwestern University made the scale too large.
At first glance, it appears as though Michigan and Northwestern were the hardest hit, but that’s only because they had the most to lose. Percentage losses from the end of the 2008 fiscal year to the end of actual 2008 are:
By the numbers, we see that, in fact, Iowa was the hardest hit by the financial crisis. They have the smallest Big Ten endowment and took the biggest hit in recent months.
Conversely, Northwestern was the best at weathering the crisis. A 14% decline is well under the 20-22% average loss sustained by most university endowments.
Compared to our fellow Big Ten schools, Penn State did very well for itself. If you see those suited individuals from the Office of Investment, give them a pat on the back for keeping our losses to a minimum.
Investment strategy does not take into account short-term economic problems. Instead, the Office has a five or ten year plan in mind when it invests. As such, the investment offices at all these universities could do nothing in the face of this downturn, except weather it as they have previous crises.
Data from fiscal years 2004 through 2008 was obtained from the yearly National Association of College and University Business Officers (NACUBO) Endowment Study. The hard data in .pdf form for those years can be found here: 2004 and 2005, 2006, 2007 and 2008
Data from after the economic decline was collected from various sources, mostly Big Ten college newspapers. The various articles can be found here: Purdue University, Michigan State University, University of Michigan, Ohio State University, Northwestern University, Penn State University, University of Wisconsin, and University of Illinois.
Note: Current data for the University of Iowa was acquired via email from Susan M. Shullaw of the UI Foundation. Current data from the University of Minnesota was unavailable at this time, but the percent decline of the endowment was disclosed in an email. From that information and previous NACUBO data, the current endowment figure was estimated. Current data from Indiana University was unavailable, but a percent decline was. From that information and previous NACUBO data, the current endowment figure was estimated.