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Endowments of Crown and Schusterman Centers down
by Alana Abramson
Staff writer
News | 2/10/09
Posted online at 5:43 AM EST on 2/10/09
The endowments of the Crown Center for Middle East Studies and the Schusterman Center for Middle East Studies are currently "under the water," according to Provost Marty Krauss, which means that the current market value of the endowment is less than the original amount.
The centers cannot spend any money from their endowments and must seek alternative funds for their programming.
The Uniform Management of Institutional Funds Act, which Massachussetts adopted in 1975, states that endowments that are underwater cannot be used for operating expenses. The current market value of the investments that make up the Crown Center and Schusterman Center endowments are below the initial amount of the endowments, Krauss said. She did not reveal the current endowment figures of either center but said that neither of the endowments have any interest left to spend and that only principle remains. She said that the centers cannot use that principle endowment for spending purposes and thus have to seek alternative funds.
Krauss said that the fact that the centers are so new is a major factor in their financial troubles. "Both of these centers were created in the last five years, so their endowments have not had much time to grow. Since their endowments are directly tied into that of the University's, the 25 percent drop in the University endowments have particularly affected them, as their endowments have dropped 25 percent," she said.
Both Prof. Shai Feldman, director of the Crown Center, and Krauss said that neither center would close, though she acknowledged that the centers would have to make "pragramatic reductions."
"We may have to make major budget reductions for these centers, but nothing is closing," Krauss said.
"In theory, if we failed to raise the funds required then the [Crown Center] would have to close," Feldman said. "But I have confidence that we will raise the funds required to make the center successful."
While Krauss said that the centers are ultimately responsible for their operating expenses, the University is collaborating with the centers to seek alternative funds. She met with the heads of the centers in January to discuss financial strategies "that will allow them to continue to perform the work they want to do."
The centers cannot spend any money from their endowments and must seek alternative funds for their programming.
The Uniform Management of Institutional Funds Act, which Massachussetts adopted in 1975, states that endowments that are underwater cannot be used for operating expenses. The current market value of the investments that make up the Crown Center and Schusterman Center endowments are below the initial amount of the endowments, Krauss said. She did not reveal the current endowment figures of either center but said that neither of the endowments have any interest left to spend and that only principle remains. She said that the centers cannot use that principle endowment for spending purposes and thus have to seek alternative funds.
Krauss said that the fact that the centers are so new is a major factor in their financial troubles. "Both of these centers were created in the last five years, so their endowments have not had much time to grow. Since their endowments are directly tied into that of the University's, the 25 percent drop in the University endowments have particularly affected them, as their endowments have dropped 25 percent," she said.
Both Prof. Shai Feldman, director of the Crown Center, and Krauss said that neither center would close, though she acknowledged that the centers would have to make "pragramatic reductions."
"We may have to make major budget reductions for these centers, but nothing is closing," Krauss said.
"In theory, if we failed to raise the funds required then the [Crown Center] would have to close," Feldman said. "But I have confidence that we will raise the funds required to make the center successful."
While Krauss said that the centers are ultimately responsible for their operating expenses, the University is collaborating with the centers to seek alternative funds. She met with the heads of the centers in January to discuss financial strategies "that will allow them to continue to perform the work they want to do."
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