Most major U.S. higher education institutions took a major financial hit as a result of the coronavirus pandemic, the vast majority however won’t be able to turn to their endowments, no matter how large, to cover the losses caused by the pandemic.
Experts say that universities like FAMU with an endowment in the neighborhood of $114 million, or Harvard with an endowment of about $40 billion, will not be able to access their endowments to sustain financial losses throughout the pandemic due to a web of restrictions.
Jim Hundrieser, the vice president for consulting at the National Association of College and University Business Officers, said "most funds in those endowments are earmarked or designated."
"Let's say you or your family gave money, and you say that has to go to first-generation females from a certain city," he said. "Those dollars have been designated and a gift arrangement is often required."
"Rarely does a family/donor (provide a gift and) say if some random pandemic comes up feel free to use it however you wish," he added. "It’s usually a long-term gift for a very specific nature."
Hundrieser, added most institutions also have strict spending policies that say you can withdraw a certain percentage from the endowment "and it's those returns on those investment dollars that you can use."
Endowments are not set up to serve as “rainy day funds”.
“Schools could be sued if they misuse endowment funds for anything other than the intended purposes set out by their donors,” said Steven Bloom, at the American Council on Education.
Secondly, as with personal retirement accounts, most university endowments have likely taken a financial hit caused by the nearly month long national shutdown, brought on by COVID19.
The pandemic is having an "enormous, historic impact on higher education," Bloom said, calling it a "disaster of historic proportions."
1887 Strikes – Days of Giving
That’s why FAMU’s upcoming 1887 Strikes Days of Giving fundraising campaign is so important. On April 30-May 1, the University is asking those who can give to give, and to give generously to support FAMU Cares, the University’s emergency fund to support students affected by the COVID19 crisis.
Many students who have relied on part time jobs to put themselves through college have seen those jobs disappear.
Also, parents of students and potential students, in many cases have lost jobs, as nearly two million Floridians have filed for unemployment in the last month.
Many students who can’t afford to continue or begin their education will be relying on the generosity of alumni and the university for financial support.
The 1887 Strikes Day of Giving campaign will also support the FAMU National Alumni Association's Save Our Students Fund (NAA SOS), which provides "gap funding" to help students graduate, and the Rattler Athletic Fund.
All of areas of the University are like to be affected by the economic fallout caused by COVID19, as Florida grapples with an expected $8-10 billion budget shortfall later this summer.
It’s no secret that FAMU athletics finances were already on shaky ground pre-COVID19, the impending economic downturn and uncertainty will be another blow. So, that’s an area that will be counting on all of our support.
Sadly, as critical as this fundraising campaign is it isn’t mentioned anywhere on the University’s main webpage or athletics webpage.
Higher education adds value
"There will probably be some institutions that will not survive (COVID19)," Bloom said. "It's an existential threat. Smaller colleges that are tuition-driven, they have little or no endowment, if they lost 15 to 20% of their class, that is a huge budget crisis."
"I hope that we don't lose the value of higher education and the importance that it means for our society, for our economy," Bloom said. "We’re producing most of these front-line workers that we are applauding every day with great pride, those come from higher education doing its work and preparing doctors and nurses and teachers," he added. "I hope we don't forget about that when we think about the long picture of our recovery."