By Michael Kennedy
The stock market’s incredible volatility over the past few years has caused headaches for any fund manager. The University of Louisville’s endowment fund is no different.
Joe Gahlinger, director of investment and financial management for the University of Louisville Foundation, said the current balance of U of L’s endowment is increasing.
“We’re worse off than we were at our peak, but we’re a lot better off than we were at our lows,” Gahlinger said. “We’ve come back nicely.”
At its peak, the endowment was valued at $777.6 million, in May 2008. According to Gahlinger, it fell 21.2 percent in the fiscal year ending June 30, 2009. U of L still did better than the S&P 500 over this period though, with that index dropping 26.2 percent.
“We had a good strategy coming into the down market,” Gahlinger said. “We diversified to try to weather any type of market. And it worked to any degree that any diversified portfolio worked.”
The U of L Foundation averages the market value of its investment pool over three years. It then spends 5.5 percent of that average on endowment-sponsored programs, such as scholarships and endowed chairs. So a drop in the pool’s value causes a drop in endowment-sponsored programs.
While the investment pool may have shrunk over the past few years, donations to the U of L Foundation have actually been increasing.
“All giving has not been recession-proof, but our end of the year number has gone up,” said Keith Inman, vice president of university advancement.
Inman said that ACT scores, enrollment and philanthropic support are indicators of a university’s performance, and all three have been increasing at U of L.
“[Giving] is yet another indicator that people are feeling good about what the University of Louisville is doing,” Inman said.
According to Inman, last year U of L received $96 million in donations, including their two largest donations in history. The largest donation came from Henry and Rebecca Conn, who donated $20 million for the creation of a renewable energy research program.
The university has received criticism after a recent article, published in the Lexington Herald-Leader, reported that the U of L Foundation paid President Dr. James R. Ramsey $1.9 million in 2007, to compensate him for retirement benefits he gave up to work for U of L. The one-time payment was part of an arrangement between the U of L Board of Trustees and Ramsey, to lure him away from a state job and to the university. In 2007, Ramsey was paid a total of $2.5 million. For this year he is expected to earn $456,000 from the foundation and the university.
But for some, that may have been money well earned.
“People feel strong about Dr. Ramsey and his leadership, they feel strong about our deans and their leadership, and they’re looking to help us meet our goals,” said Inman.
