While Rutgers University had a banner year for fundraising, some New Jersey's colleges and universities say they are still feeling the fallout of the economic troubles of the past decade.
Many alumni and other donors cut back or stopped sending donations to their favorite schools when the recession began to eat away at Americans’ bank accounts in 2007.
Some colleges, especially those with multi-billion-dollar endowments, also lost huge chunks of their bank accounts when their investments tanked.
Nearly all the state’s schools with large endowments are posting healthy returns again, according to an annual survey by the National Association of College and University Business Officers, an industry group representing 2,500 institutions. Some, though, have yet to fully recover.
“With the economic situation being what it is, fundraising remains a challenge,” said John Shannon, Montclair State University’s vice president for advancement. “State universities are pretty late to the game.”
Princeton University, with an $18.2 billion endowment, remains the wealthiest school in New Jersey and the fifth richest college in the nation. The Ivy League school — which boasts that more than 60 percent of alumni sent it donations last year — has an endowment larger than the gross national product of many small nations, including Cambodia, Iceland, Jamaica and Honduras.
Only Harvard ($32.3 billion), Yale ($20.8 billion), the University of Texas System ($20.4 billion) and Stanford ($18.7 billion) have larger endowments than Princeton, according to the 2013 ranking by NACUBO and the Commonfund Institute.
At the other end of the scale, Centenary College, a private college in Hackettstown, has one of the smallest endowments among New Jersey colleges with $3 million in the bank.
Princeton Theological Seminary, a private college that trains Christian ministers, ranks second in the state with a $931 million endowment, according to the 2013 survey. It is followed by Rutgers University ($783 million), Seton Hall University ($240 million), Drew University ($203 million), Stevens Institute of Technology ($153 million) and Rowan University ($151 million).
Rutgers' endowment is under the spotlight as it begins play this month in the Big Ten. In comparison to the other schools in the league, such as Ohio State, Penn State and the University of Michigan, its endowment ranks dead last.
An endowment — the money, investments and other financial assets donated to a school — is a piggy bank for the future. Schools typically invest their endowments and spend a small percentage, usually between 4 and 5 percent, each year on scholarships, building projects and other university expenses.
And big endowments can mean big payoffs for colleges.
Transforming an institution
A giant endowment, like Princeton’s, can literally transform an institution. In 2001, Princeton officials announced they would eliminate loans from their financial aid awards and replace them with grants that students don’t have to pay back. The Ivy League school was able to make the costly “no loan” promise to its students largely because it had a multi-billion endowment to cover the costs.
Other schools can only dream of getting close to the size of Princeton’s endowment.
Montclair State, with nearly 20,000 students, is one of the state’s largest universities, although the school’s endowment is relatively paltry compared to other schools its size. In recent years, however, the university has been one of the state’s endowment success stories.
Between 2006 and 2013, Montclair State increased its endowment from $30 million to $56 million, an 87 percent increase despite the recession. Shannon credits the school’s conservative investment strategy and aggressive fundraising, including the university’s first-even capital campaign, with the dramatic jump.
Montclair State also recently expanded the school’s fundraising staff to 13 to help solicit more large donations.
Montclair State gave some of the new money to students by boosting its spending rate from its endowment from 3 percent to 4.25 percent to provide more financial aid and make up for some of the state funding cuts that have cut into the budgets at all of New Jersey’s colleges in recent years, Shannon said.
"These dollars are really important for the students who receive them," Shannon said.
Other New Jersey schools have also seen big boosts in their endowments despite the recession.
Monmouth University increased its endowment by nearly 66 percent, jumping from $40 million in 2006 to $66 million last year.
“Monmouth University’s endowment, like that of most other institutions, was seriously affected by the recession,” said Jason Kroll, Monmouth’s vice president for external affairs. “While the rebound of our endowment was certainly aided by a conservative approach to investment and spending, the 66 percent increase reflects strongest upon the growing investment that our alumni, friends, corporations, and foundations continue to make in Monmouth University in the form of philanthropic gifts.”
Rutgers, New Jersey Institute of Technology and Princeton also all saw their endowments grow by more than 40 percent since 2006 through a combination of good investments and aggressive fundraising.
Other colleges, though, were not as lucky. Both Drew University and the College of Saint Elizabeth have watched their endowments drop since the start of the recession.
Drew, a private university in Madison, fell nearly 16 percent from $241 million to $203 million between 2006 and 2013. The College of Saint Elizabeth, a Catholic college in Morris County, lost more than 20 percent of its endowment, which dipped to less than $19 million last year.
Drew officials blamed the school’s “underperformance” on the recession and upheaval within the university. School officials switched investment consultants twice in the past 10 years.
Like many colleges, Drew also dipped into its endowment during the recession to help needy students.
“The university agreed to increase scholarship support for deserving students admitted to or already matriculating at Drew so they could attend the university. Spending from the endowment consequently increased during that time,” university officials said in a statement.
Kelly Heyboer may be reached at kheyboer@njadvancemedia.com. Follow her on Twitter @KellyHeyboer. Find NJ.com on Facebook.
Ted Sherman may be reached at tsherman@njadvancemedia.com. Follow him on Twitter @TedShermanSL. Find NJ.com on Facebook.