The College's endowment has dropped nearly $100 million in the last three months -- mainly due to drops in a bullish and volatile stock market.
The drop of approximately 6.5 percent from its last publicly released size of $1.52 billion on June 30 would have been enough to fund the Berry Library and the Moore Psychology Hall projects combined.
The endowment is money the College invests for the purpose of earning interest, and these generated revenues finance expenditures without cutting into the endowment.
The Dow Jones Industrial Average, Wall Street's best known indicator, has performed even worse than the College's endowment however, declining by approximately 12.4 percent since the end of June.
Despite the large decrease in funds, Director of Investments Jonathon King said the College has little to be concerned about.
"We are a long-term investor. We've had an incredibly powerful run up, earning returns long in excess of our expectations," King said. "This is correcting some of the excess."
The College has earned a 16 percent return on its investments over the three-year period ending Sept. 30, down from over 20 percent in the three years ending June 30.
King said the College's spending levels will not be immediately impacted because of the endowment drop.
Endowment spending is determined using an average three-year endowment value so momentary fluctuations do not drastically affect spending rates.
"In the short run it has no impact," King said.
The College did not match the endowment's previous growth with correspondingly high spending, "building a cushion," King said, so even with the current downturn it can still afford to increase spending.
Despite the prospect of continued downturns in the stock market, King said the College has no plans to reduce its equity investments.
Approximately half of the endowment is currently invested in publicly traded stocks. Twenty percent is invested in publicly traded bonds and the remaining 30 percent is invested elsewhere, including venture capital firms which are ultimately tied to market success or failure.
"We don't feel we can time markets," he said. "We try to keep the asset allocation within its ranges ... you don't want to fool with the allocation."
King said the goal of the disbursement is to see a 10 percent rate of return. He said continued market troubles could lead to more dire consequences for the College. "I think we'd have to have a year or two of flat or marginally down markets before we'd have to think of anything."
King said market downturns also lead to less endowment giving.
"I think a logical person would have to infer it can't help," King said. "People don't feel as wealthy as they did months ago and giving is tied to how wealthy people feel."
At the end of the 1997 fiscal year, Dartmouth's endowment ranked 20th in the nation and seventh in the Ivy League, ahead of only Brown University. Its endowment per student ranked 29th in the nation.
