Economy affects availability of many private scholarships

cameron.witbeck

The NMU Foundation has experienced a reduction in privately funded scholarships and programs this year, largely due to the economic recession.

The NMU Foundation is a nonprofit organization separate from the university which is responsible for both fundraising and accepting private gifts to the university. This year, the Foundation has suffered a substantial drop in their overall funding, said Kathy Frazier, the Foundation’s director of finance. Overall, the endowment dropped nearly 14 percent in market value from the last fiscal year. Frazier said that the endowment is a collection of monetary donations that are earmarked for long-term investment.

“They are gifts that are earning an investment,” said Frazier. “The endowment is our investment fund or principal fund.”
The Foundation offers approximately 180 privately funded scholarships, of which almost 125 did not have enough funds to be awarded in the 2009-2010 school year. Frazier said that the privately funded scholarships are generally established by an initial gift endowed by a donor. The Foundation creates a scholarship in the name of that donor and then invests those original funds in an investment portfolio, consisting of stocks, bonds and other investments, which is managed by financial agents. The interest garnered by the investment is put back into the scholarship fund which is then dispensed to students in an award.

Frazier said that investing the funds helps the award meet increases in tuition and inflation for students.

“In real terms, ‘How much does this award help to support your tuition?” she said.
Frazier said that the downturn in the economy was not completely unexpected and is an inherent risk in investing.

“We try to do the best we can to make investment earnings,” she said, “With our investments we don’t have a magic crystal ball.”

Frazier said that other programs like the Devos Art Museum, and the Beaumier Heritage Center, which receive a large portion of their funding from private donor gifts, have also experienced the effects of the recession.

“Because the market is down, they are both affected adversely,” said Frazier. “We have had meetings with both of them trying to figure out what is next.”

Robyn Stille, director of donor relations, said that a decrease in the market value of an endowment has been experienced by universities across the country. Harvard University lost nearly 30 percent of its endowments market value compared to NMU’s 14 percent decrease.

“Overall our endowment performed very well this year compared to others,” Stille said. “Across the country we were in the top third of public universities. Even though we lost we still lost less than most.”

Stille said that because of the nature of the scholarships and donations that the Foundation facilitates, it has had an opportunity to ask donors to provide addition funds so that some scholarship awards could be given.

“To date, several donors whose endowments were impacted have stepped forward by making a bridge gift so their scholarship could be awarded this year” Stille said.

When a student receives a scholarship, the Foundation asks them to write a letter of thanks to the donor, Stille said.

“The donors feel like they are thanked,” she said, “and that helps the process.”

Frazier said that even though the Foundation is continuing to work with donors, it will take several years for the endowment to return to previous levels.

“Right now, I think it’s going to take us a couple of years to get through this. We have to earn our way back up. My expectation is that hopefully we will continue to move upwards,” she said.

Ray Ventre, the interim head of the English department, said that even beyond the financial help, the scholarships are important for students.

“The way the [English department] looks at it, even being nominated for the award is still an honor,” said Ventre.

The English department receives projected amounts for scholarships available from the Foundation, they then recommend students for the awards, like the Karla Bester English scholarship.

From there, those nominees are evaluated by financial aid before being informed of their award, said Ventre. Last year, a student was informally notified of their nomination by a professor before the award was finalized.

“In this case, what happened was that we were asked to rank the scholarships on the basis of how much money was expected to be in the scholarship,” said Ventre, “and then the economy tanked.”

Ventre said that the English department is working closely with the Foundation so that such a miscommunication doesn’t happen in the future.

“We had a system that had some gaps in it,” said Ventre.

“We talked to the endowment office and we will have a better system now. When we do the ranking we will know the amount in the account at that point.”