Columbia’s endowment fund rebounded strongly in 2010, standing at $93 million after dipping to $57.3 million in February 2009,  its lowest point in a decade,  according to Mike DeSalle, vice president of Business Affairs and chief financial officer.

The endowment, which has risen by 62 percent since that ebb, is still short of its value on June 30, 2007, when it stood at $112.3 million, as reported by The Chronicle of Higher Education.

An endowment is a fund colleges and universities maintain to provide steady growth in their financial reserves, as well as pay for a portion of their annual operating expenses, such as salaries, utility costs, maintenance costs and scholarships. Made up of gifts and bequests, mostly from alumni, the endowment is generally invested in such instruments as stocks, bonds and real estate, with the institution required to keep the principal intact in perpetuity and only use the investment income to pay for expenses.

Because the endowment is invested, it can rise or fall depending on the economy. When the markets started to decline as the recession began about two and a half years ago,  Columbia’s endowment followed downward. Though the markets are starting to recover and Columbia’s endowment is growing again, it will be awhile before the fund can be as high as it was in mid-2007.

“No one is a genius and foresaw the crash,” said Len Strazewski, acting chair of the Journalism Department and faculty representative on the Board of Trustees. “When the stock market lost a third of its value, everyone lost a third of their value.”

Columbia was no exception to this downturn in endowment value, as area colleges saw the same trend. According to a report published by The Chronicle of Higher Education, which used June 30 to end fiscal years rather than August 31, Columbia lost 31 percent of endowment while neighboring institutions lost about the same: Roosevelt University lost 8.9 percent, DePaul University lost 22 percent, Loyola University lost 25.1 percent and Northwestern University lost 24.8 percent. Harvard University, which sat at the top with $25.6 billion in endowment in the report, saw a 29.8 percent decline in those same years.

Strazewski said the endowment and fundraising is a tricky issue for Columbia, mainly because of the college’s unique disciplines and curricula.

“If you’re at Northwestern and you’re graduating doctors, lawyers, people with business management degrees, alumni giving is going to be high,” Strazewski said.

Because Columbia graduates are artists whose careers aren’t as predictably lucrative as doctors, lawyers and businessmen, it is more difficult for the college to find donors than institutions such as Harvard, Yale or Northwestern, which have big law, medical and business schools.

“It is the rare Columbia grad who becomes a zillionaire and gives back,” Strazewski said.

Columbia’s endowment comprises three different sections: unrestricted funds, permanently restricted funds and temporarily restricted funds. According to DeSalle, unrestricted funds are composed of money that was, in the past, allocated toward the college’s budget, but was put back into the endowment fund.

“We’ve been running a positive budget each year at the college,” DeSalle said. “Generally, when we get to the end of the year and we don’t need [money from the endowment], we don’t ask for it.” These funds make up the majority of the endowment, and there is no limit on how they may be used.

Restricted funds, which come from outside donors, make up approximately 10 percent of Columbia’s endowment and have limits on how they may be spent. When Columbia receives a gift, which must total a minimum of $25,000, the donor can choose whether to put it in temporarily restricted funds or permanently restricted funds.

In a permanently restricted fund, none of the money can be spent besides the income made in the market. Principal amounts of donations given to the permanently restricted funds can never be touched by the college. Temporarily restricted funds, however, allow for both the income and the principal amount to be spent.

At the end of each fiscal year, which concludes on Aug. 31, Columbia disperses 5 percent of the unrestricted funds from its endowment to pay a small amount of the college’s operational expenses. DeSalle said Columbia’s operational expenses in 2009 came to approximately $246 million and 2 percent of it—$4,920,000—was covered by endowment. The amount dispersed is a figure that is based on a three-year rolling average of the fund’s amount.

“Let’s say there’s an endowment of $100 million one year, $110 million the next and $120 million the third year,” DeSalle said. “The average would be $110 million and we would pay 5 percent of that number.”

At the time of publication, Columbia’s endowment is currently $93 million, a rebound for the college after fiscal year 2009. The fiscal year that reflects these funds concluded on Aug. 31, 2009, when the endowment amount stood at $88.4 million, according to DeSalle.

At the end of fiscal year 2008, the fund stood at $97 million, but began to decline at the beginning of fiscal year 2009, which started on Sept. 1, 2008.

According to Bill Britt, director of advancement services in the Office of Institutional Advancement, Columbia received no new donations for fiscal year 2009, after five were made during fiscal year 2008.

“Endowment [gifts], because they come at a minimum of $25,000, don’t happen every day,” said Britt.

Britt said Columbia is starting to see a turnaround in fundraising in fiscal 2010. DeSalle said as a result of the endowment declining, fewer scholarships were offered from the fund and the college cut corners in operational expenses. Though scholarships are expected to double in the 2010-2011 academic year, the money allocated from that is from tuition funds, not endowment.

“Because we have that 5 percent spending policy, it resulted in a lower number because the market value went down,” DeSalle said.

Because Columbia received less support from endowment than usual, the college has imposed reductions in operational expenses to stay under budget.

DeSalle said the college is working to preserve jobs while aggressively cutting operational expenses, while travel, catering, entertainment and printing costs have been reduced.

DeSalle expects the market to remain steady between now and the end of fiscal 2010.

“Our portfolio is up, close to 4 percent for the first quarter [through March] of 2010,” DeSalle said. “I can’t, nor can anybody, forecast where it’s going to be, but everything I read tells me the market’s going to be fairly sound. It’s going to be positive for the year, but not double-digit positive.”