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How one U.S. university avoided the great recession

School dodged “Yale model” in favour of conservative investing and a secure cash flow


 

cooperThe Wall Street Journal is reporting on the curious case of one U.S. university that has avoided the crushing losses to its endowment fund suffered by other schools like Harvard and Yale. (And Canadian universities, too.)

That school is the 150-year-old Cooper Union for the Advancement of Science and Art, which charges no tuition, and is headquartered in New York City’s East Village neighbourhood.

From the sounds of it, the recent financial meltdown hasn’t made much of a dent — the school has nearly finished construction on a new $150-million academic building, is hiring for a new biology program, is launching an environmental-design institute and will soon debut a master’s degree program in architecture.

More: Endowments for Dummies

Three years ago, particularly keeping in mind the tech bust and 9/11, the university’s administration decided to reduce the risks in their endowment fund. They renegotiated a property lease to ensure an steady income, sold some land, raised some money and hired some conservative investment managers. The school’s $600-million endowment has subsequently stayed about the same — and may even be up a bit at the end of the school’s fiscal year.

Those results are markedly different from schools that used what a Cooper spokesman calls the “Yale model,” in which schools eschew stocks in favour of alternative investments like private equity, commodities and timber.

In comparison, most Canadian and U.S. universities are dealing with endowment losses between 20 to 30 per cent.

For more on this story, including more information on Cooper’s high-profile land holdings, click here.


 

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