Columbia’s endowment may be more than one billion dollars down, but officials say they are “pleased.”
The University released its Consolidated Financial Statement for the 2009 fiscal year ending June 30 on the morning of October 30 on the University’s Web site.
While the University suffered significant losses as a result of the economic downturn—noted in the statement is the endowment, listed as “investments, at fair value,” whose value dropped from $7.1 billion in 2008 to $5.7 billion in 2009—not all the reported figures were cause for concern. As reflected in the University statement, “The 2009 financial report reflects the solid position of the University, that has been noted by the ratings agencies and in the press. We are pleased.”
The University’s positive outlook on its finances in the past fiscal year may have to do with the fact that its operating income in 2009—indicated as “change in net assets from operating activities” in the Financial Statement—exceeded that of the fiscal year of 2008—$139,193,000 in 2008 compared to $160,506,000 in 2009.
Among the reported losses, the Financial Statement indicated that there has been a decrease of $20.7 million in net cash provided by operating activities from 2008 to 2009.
“The primary driver in the decrease in net cash provided by operating activities,” Director of Media Relations Robert Hornsby said in an e-mail correspondence, “is a decrease in investment income and distributions from partnerships in which the University’s endowment is invested, which is not surprising given the environment last year.”
Columbia’s optimistic assessment of its finances despite such losses can be attributed to its comparatively strong stance among its peer institutions, such as other universities with multi-billion dollar endowments.
“The University is weathering the economic downturn reasonably well,” Hornsby said. “Our investment losses, although significant, are not as great as many of our peers.”
While Columbia has suffered a 16.1 percent decline in returns from its endowment, now valued at $5.7 billion, other universities have fared much worse. Harvard University, the nation’s richest university with an endowment now valued at $26 billion, comparatively fell 27 percent in endowment investment returns. Cornell, with an endowment of $3.97 billion, similarly slid 26 percent in returns, and Yale, with an endowment of $16.3 billion, fell 25 percent.
“Equity exposure hurt results, diversification failed to protect asset values and illiquidity further detracted from performance,” Yale said in the statement in September. “Performance suffered in an environment characterized by widespread declines in marketable and nonmarketable equity values.”
In May, Columbia’s endowment was reported to be down 22 percent for the first nine months of the fiscal year ending March 31, but in September it was announced that Columbia’s losses were down to 16.1 percent, which Senior Executive Vice President Robert Kasdin attributed to “stronger market conditions” in an interview.
“The investment team produced very successful returns when the market was strong, and relative success when it was weak,” Kasdin said.
Hornsby also noted that, among the indicators in the statement that Columbia’s finances are in good shape, the University’s “major revenue streams held up well through fiscal year 2009.” Sources of revenue include tuition and fees, patient care revenue, research activities, and private gifts.