Endowments at Harvard University, Yale University and Stanford University have been among the most seriously impacted, with each losing roughly 30 percent of its value over the last fiscal year.
Some institutions have fared better than expected. Administrators at Princeton University expected to see a similar 30-percent drop in endowment value, but experienced an actual decline of 22.7 percent, according to a university press release. Unlike many other colleges and universities, Princeton decided not to draw funds from its endowment to cover operating expenses, according to the release.
Dartmouth put $227 million from its endowment toward operating expenditures, according to Kim's statement.
Columbia University's endowment shrunk by only 19.7 percent, while Williams College lost 22 percent of its endowment.
The largest endowment losses have occurred at colleges and universities that are heavily invested in illiquid assets, which includes holdings in private companies, according to William Jarvis, managing director of the non-profit Commonfund Institute, an endowment research firm.
A number of colleges and universities like Harvard and Yale invested much of their endowment funds in private companies, only to have their values decline significantly during the recession, Jarvis said. Economic conditions made it very difficult for private companies to make an initial public offering, or to sell out to larger companies because of a lack of demand.
Other institutions, in contrast, had more assets in liquid investments or cash on hand, limiting the impact of declines in the economy. They also had less difficulty extracting funds from their assets to use for operating expenses, he said.
"That says to me, not that private capital programs are bad, but that education institutions need to have given consideration to where cash can be obtained, where liquidity can come from, in the event that a liquidity crisis occurs," Jarvis said.
While Jarvis said he has not seen Dartmouth's specific mix of investments, the College's relatively limited endowment loss is likely due to a comparatively smaller investment in these types of illiquid assets.
"Dartmouth had positive investment results over the past decade, but it was making different choices in asset allocation," Jarvis said.
Almost all colleges and universities plan to offset their shrinking endowments by cutting budget items, reducing spending or issuing debt to improve liquidity, he said.
Administrators at Dartmouth will work to make reductions to the College budget while also seeking to expand charitable giving to the College and set up new programs to produce revenue, Kim said in an interview with The Dartmouth on Friday. No definitive plans will be formulated, however, until after the College Board of Trustees meets in November, and until the administration has had time to discuss proposals with the Dartmouth community and affected departments.
"We felt that we had done enough work on both the endowment returns, the percentages, what it means that we felt that we had to get the information out," Kim said. "We are a little bit behind most of our peers, not yet at the point where we have decided specifically how to respond."
Amherst College's losses mirrored Dartmouth's over the last fiscal year. Its $1.3-billion endowment fell 23.5 percent from its value at the start of the last fiscal year, according to The Amherst Student, compared to a 23 percent overall loss for Dartmouth's $2.8-billion endowment. Endowment income also covered roughly 35 percent of Amherst's operating expenses, while 32 percent of Dartmouth's operating revenue came from its endowment.
To meet its budget constraints, Amherst plans to cut approximately 40 positions, according to a statement issued by Amherst President Anthony Marx in August. This will largely accomplished by relying on staff attrition or retirement, which will add to staff reductions made during Amherst's last round of budget cuts.
Reductions in departmental expenditures and a freeze on salary increases for all but the lowest-income staff members will also be required, according to the statement. Amherst was also forced to defer the construction of new facilities and to scale back several maintenance projects.
Dartmouth will leave "no stone unturned" in searching for ways to make the College run more efficiently, on top of previous efforts to streamline operations last year, and to expand the College's funding sources, Kim said in the interview. The best way forward will be to creatively take advantage of Dartmouth's strengths and approach budgetary changes.
"Every single one of our peer institutions are facing exactly this kind of problem, so I think part of it is going to be which among all the competitors can be the most creative in attacking this problem," Kim said. "I think we should see this as a fundamental challenge to our ability to work together and be creative."
Staff writer Greg Berger contributed to the reporting of this article.
