Duke University President Richard Brodhead sent an email to students, faculty and staff Wednesday evening letting them know some unsettling news about how the financial crisis has affected the university: Its endowment is worth 19 percent less than it was on July 1.

It could be worse. Just ask Yeshiva University.

Below is a copy of Brodhead’s email.

Date: Wednesday, December 17, 2008 5:21 PM -0500

From: President’s Office

To: Duke Community

Subject: Message to Duke Community From President Brodhead

Dear Faculty and Staff Colleagues,

As the year comes to an end, I want to update you on the impact of the

global economic situation on Duke.

By many measures, Duke continues to enjoy great strength and stability.

With help from generous supporters, we crossed the goal line of our $300

million Financial Aid Initiative, which will help ensure that a Duke

education will remain affordable for all. Last month, a Duke student won

the Rhodes Scholarship, and two others were selected as Marshall Scholars.

And student interest in Duke has never been higher, with a 23% increase in

early decision applications this fall.

At the same time, Duke is not immune from the powerful forces that are

buffeting the economy. Duke’s endowment, like virtually every other

investment fund, has declined over the past few months. In addition,

research universities such as Duke are also uncertain about the future of

other funding sources, including federal research support.

As of early December, the market value of the endowment was approximately

19% lower than it was on July 1. This is a serious concern, but the news

could be worse. First, Duke’s investments have been skillfully managed.

Over the past ten years, only one university endowment has outperformed

Duke’s, and the decline we have experienced this fall has not been as sharp

as many of our peers have reported. Second, it is important to remember

that spending from the endowment has historically made up about 15% of the

University’s annual operating budget ? again, a lower proportion than many

of our peer institutions. And finally, the impact of this decline on our

activities will be tempered by our spending policy, which calls for paying

out 5.5% of the average value of the endowment over a three-year period.

This policy has kept us from overspending in years when the endowment

earned large returns, and lessens our exposure to a sharp downturn now.

(For more information about Duke’ s endowment and investments, visit


Duke is fortunate to have responsible, prudent and creative leadership of

both our investments and operations, which has shielded us from some of the

worst aspects of this crisis and makes it possible to continue our forward

momentum. We need to draw on those same virtues now to face the new facts

around us.

While we will have a clearer picture of the future as the winter

progresses, I have asked the university’s senior administrators and deans

to plan for various scenarios as we develop the budget for the next fiscal

year. The specifics will vary by school and program, but our overarching

approach includes:

* Identifying cost reductions, savings and efficiencies in all school and

administrative budgets;

* Recognizing that the current downturn may be of sustained duration and

that we must look for both one-time and more durable interventions;

* Reviewing and potentially delaying proposed capital projects until

funding sources are clearly defined; and

* Seeking resources for our most strategic priorities while continuing to

protect our core commitments, including faculty excellence and student

financial aid.

We need to regard this as a time of challenge, not of retreat. All of us

have been through a mix of better times and leaner times. When leaner days

come, a family cuts back on less essential expenses and concentrates on

what matters most. That is what Duke must do now, and I ask for your

cooperation as we do it. If we do it right, I’m confident that we can make

this a time of opportunity, a chance to further strengthen this great


Duke’s strong sense of community is its most valuable asset, and this

source of wealth continues intact. With deepest thanks for all that you do

for Duke and the community, I send my best wishes for the holiday season,

Richard H. Brodhead