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