Sagging economy saps funding for scholarships

As the national economy declines, so are scholarship opportunities for students across the nation, including those at the University of Montana.
At UM, the director of financial aid, the adviser for external scholarships, college deans, professors and students all agree – scholarships at UM are going to be affected by the economy.
They just don’t know how profoundly – even those who are investing $119.95 million of UM’s scholarship funds don’t know.
“Some scholarship funds will be affected, but we don’t know at this point if they will be lost or not,” said Jamie Stanton, the UM Foundation controller.
The UM Foundation, which handles donations, invested nearly $120 million in the stock market in the last fiscal year, ending June 30. Now, as the market heads downward, the foundation’s investments seem to be doing the same. 

The money has been invested into five different categories of firms. The table below shows the percentage of donations that was invested in each category, gives an example of one of the holdings from each category, and shows the holding’s year-to-date totals.
This table offers a partial view and is not fully representative of the Foundation’s overall holdings.
However, though holdings in the stock market all differ, most of them are down by about 40 percent. In this example, all but one of the holdings are down by 40 percent or more.
The UM Foundation has invested the largest chunk of its money – 24.2 percent – in international equities. Artisan International, one fund it invested in, is currently down by 47.9 percent.
But the loss of invested money is a reality that universities across the nation are facing, including Harvard.
A recent article written by Daniel Gross and published on slate.com, an online magazine produced by the Washington Post, exposed the bleak state of Harvard’s investments.
Moody’s, a research service, projected “a 30 percent decline in the value of college and university endowments in the current fiscal year,” according to the article. Last week, this prompted Harvard President Drew Gilpin Faust to tell stakeholders that Harvard needs “to be prepared to absorb unprecedented endowment losses and plan for a period of greater financial constraint.”
If UM lost 30 percent of the $119.95 million that was invested, it would be a loss of $35.9 million.
But that’s not the only way the UM Foundation could be hurting in the future. As donors cope with the loss of their own funds, they are likely to give less.
Paul Alaback, a forestry professor at UM who donated funds last year, said his own investments have been affected.
“I try not to check on a daily basis,” he said. “It’s depressing.”
Alaback donated money last year to help set up a scholarship for forestry students to do international work, especially in South America.
Alaback said he wouldn’t donate more money this year because the scholarship funds are complete. However, if he had been planning to donate, he said he would give less because of the economy.
“I think we’re beginning to find out all the ways the stock market affects people’s lives,” he said. “It’s quite a big deal.”
Dana Wier, the vice president for marketing and communications at the UM Foundation, said she doesn’t think the amount of donors or donations will decrease in the future.
“Not if you look at statistics,” she said. “Since 1980 the country has been through five recessions and philanthropy continues to grow. We’re on pace to have another good year.”
carly.flandro@umontana.edu