OU bouncing back from economic downturn

by Brittany Yingling and Colleen Schmidt
Staff Writers

Although Ohio University did not escape the effects of the faltering economy last fiscal year, it was not as hard hit as other state universities.

Total endowments, which are donations made to the OU Foundation and then invested, dropped from $225 million to $199 million last year. The OU Foundation is the university’s fundraising arm.

OU’s return on its endowment was down 11 percent for the 2000-01 fiscal year. The nationwide estimate of return was down 14.8 percent, according to the Standard and Poors’ 500 Rate of Return.

“This is a very challenging year for fundraising efforts I think — not just for OU, but for many universities,” said Leonard Raley, OU vice president for university advancement.

The economic recession and the Sept. 11 events are the main reasons for the downturn, said Richard Siemer, OU treasurer and vice president for finance. But now that the economy is recovering, the university should not be far behind.

“We should get back to ($225 million), but we’re not expecting much more,” Siemer said. “It’s not going to be a fast bounce back.”

Interest earned from the investments contributes to student scholarships, grants for faculty members, professorships, academic programs and other projects.

But because of an OU spending policy, the negative return will not affect funding for programs on campus, Raley said.

To protect students’ interests, the university has a policy that keeps money available for scholarships and academic programs in the event of a short-term economic downturn, Raley said. This year, as much as $11.52 million is available.

Last year, about $9.9 million of the endowment’s spendable income was used.

“Now we’re living (an economic recession), and the policy works,” Raley said.

OU also has implemented a policy to increase returns this year by placing money in alternative investments, which are investments that are more long-term than traditional ones, Raley said. The OU Foundation has 3 percent, or $6 million, of its total investments in this type of market.

“It’s a very small amount,” Siemer said. “You feed that in a little bit at a time.”

OU officials said they want to continue a conservative approach with investments and would not exceed 10 percent of total endowments invested in alternative markets.

OU officials said they are projecting a 5 percent increase for this fiscal year, which would set the number of donors at about 29,000 by June 30.

“This year we’re trying to sustain the increase and also build on it,” Raley said. “We’re able to build a base of support now, which will be important for the long run.”

Although donors probably will be more conservative in their gifts this year, Raley said he expects the number of donors to swell. Donor participation rose 17.02 percent last year, an increase of 4,033 patrons.

OU President Robert Glidden said he also has witnessed a donor increase.

“In giving, we haven’t noticed as much of a downturn as one might think,” he said. “People who are giving us big gifts are still coming.”