This Just In: Massive Hit to Endowment "Harder than Average"

The Stanford Daily website, now showing the spiffy new look that new editor-in-chief Kamil Dada promised before his election, is reporting that:

A study by the National Association of College and University Business Officers (NACUBO) and the Commonfund indicates that Stanford’s endowment took a significantly greater hit than the national average in fiscal year 2009.

Although it boggles the mind as to why it takes a study of 842 colleges to realize that the school that posted the second largest loss of major institutions took a “significantly greater hit than the national average” in FY 2009, I suppose it’s good to hear that it’s official. More interesting than that fact is the silver lining to this disaster: John Powers, CEO of the Stanford Management Company, reported that in fact the venture capital fund shares that were nearly sold in last year’s “fire sale” did not drastically underperform as had been reported. Instead, as was discussed in the Review and in this blog (twice), the issue was about liquidity: the capital calls of the VC funds simply represented a dangerous loss of liquidity until those levels could be restored.

Furthermore, it was also reported that Stanford remains the leader in university fund-raising, raking in $640 million this year, outpacing second place Harvard by $39 million. Fund-raising efforts will clearly continue to remain important if Stanford is to speed its recovery from this financial crisis without suffering too heavily from cuts to its operations.

And, a last note of optimism. It seems as though Stanford didn’t miss out on the stock market’s major gains since its trough in March of last year. Said Powers:

[T]he endowment is in better shape [than it was at the end of FY 2009]

Well, it’s not a ringing endorsement, but we can only hope that he’s being understated. After all we need him: to recover from a 27 percent loss, Stanford needs a 37 percent return. That’s a tall order, but we know it’s only a matter of time.

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