Although the university puts one-quarter of its endowment in the stock market, Northwestern’s Chief Financial Officer said the university has enough funding “so that students won’t be affected” by the latest market volatility sweeping the globe.
William McLean said that the university has reduced its financial risk and already possesses a diverse source of funds, but will still feel some repercussions from the recent financial upheaval.
After Congress rejected a $700 billion “bailout” plan for the ailing financial sector Monday, the Dow Jones Industrial Average fell more than 770 points, the worst one-day point drop in two decades. After government leaders promised to follow through on a new plan, stocks at the Dow went back up by 485 points.
“Obviously we’re concerned when there’s a market dislocation like this,” McLean said, but he added that “we’re well balanced and hopefully things will settle back down.”
As of the end of June, the university had $7.2 billion in its endowment, its financial safety cushion. McLean said 26 percent of the money was invested in the stock market, with 12 percent in the U.S. and 14 percent in foreign markets. All the money in the endowment is invested in some way, including in “stocks, bonds, hedge funds, private investments, et cetera.” The endowment is comprised of both investments and donations.
McLean said the university wouldn’t be getting rid of all its stock investments any time soon.
“In an economic crisis, the last thing you want to do is panic and sell,” he said.
In recent years, university officials have spoken of the endowment’s strength.
In the words of President Henry Bienen at his “State of the University” address in February: “Northwestern’s endowment has grown significantly in the past year and now totals approximately $7 billion.” At the time, he said “the result is that Northwestern is in excellent financial health.”
Independent reviews have put it on solid ground as well. A 2007 study said Northwestern had the 11th-highest endowment in the nation.
According to the university’s spending policy page, Northwestern aims to spend 4.35 percent of the market value of its endowment, adjusted annually.
University Career Services adapts to job market changes
With graduating seniors facing potential employment troubles, University Career Services said they are doing all they can to cope with the shaky economy.
“The suddenness and the uncertainty of where we are headed make it very difficult for students to assess options,” said Lonnie Dunlap, executive director of University Career Services in an email interview.
“For students who have been very directed, its hard to know how to re-evaluate goals,” she said, adding, “especially when employers are still unsure about hiring needs in the current climate.”
The career center has been returning to the basics, stressing even more the importance of thinking broadly. “Some students come in wanting only one particular industry, one particular job title, that perhaps in past years might have been more easily obtained,” said Dianne Siekmann, associate director for Employer Relations.
Students are responding to any anxiety responsibly, said Siekmann. “I think the students are [getting] much more engaged earlier,” citing high attendance at recent workshops. This is key to adapting to the current job market. “The uncertainty (ironically) means that students need to be even more proactive and [plan better] in their job search,” Dunlap said.
Indeed, Siekmann said, those with their heart set on investment banking are feeling a little “dissapointment and anxiety.” With headlines trumpeting a crashing market, such reactions are expected.
But, as Siekmann notes, whether the class of ’09 is feeling more anxious than past classes remains to be seen. “I must tell you, every year at this time, my email is flooded with people hyperventilating.”