2008 - 2009: Yale University Finance Annual Financial Report

Yale University has had a longstanding policy of need-blind admission and generous financial aid support. This year’s Financial Report reviews the history of financial aid at Yale and highlights the recent significant enhancements the University has made to this program. Recognizing the serious impact of these difficult financial times on students and their families, Yale College has reaffirmed its commitment to making the College accessible to the best and brightest applicants without regard to their ability to pay. Also, the Graduate School of Arts and Sciences and virtually all of the professional schools have been able to increase their financial support for students over the last six years. I think you will enjoy reading the powerful stories about how Yale’s financial aid has had a profound influence on our students. This year posed numerous challenges to the University’s financial plans and budgets. The financial and capital market disruption resulted in the endowment value falling by 29.1% to $16.3 billion, the net of negative 24.6% endowment returns, 0.7% endowment giving and endowment spending of 5.2%. In response, the University immediately began reducing expenses including the deferral of much of our capital building and renovation projects. Building construction and renovation projects already underway will continue until completion, including the renovation of Morse and Ezra Stiles Colleges, completing our decade-long plan to refurbish all undergraduate residences. Essential utilities projects will also remain on schedule. But we will postpone work on all other previously approved projects until market conditions improve or until gift funding is received. While new construction and major renovations will be delayed, steady investment in capital maintenance of existing buildings is a key priority and therefore will continue. Endowment spending is typically determined based on the previous year’s beginning market value; as such the drop in endowment value we experienced in 2009 would not be felt until fiscal year 2011. However, Yale decided, as did many of our peers, to reflect the impact of the lower endowment beginning in fiscal year 2010 rather than face several sequential years of declining distributions. Therefore, the fiscal year 2010 budget was prepared with significantly less endowment income available to the operating budget. Departments and schools responded with appropriate expense reductions including some elimination of positions. Capital deferrals and other prudent spending adjustments will continue to be implemented as we manage through these challenging times. The University’s “Yale Tomorrow” fund raising campaign has now completed the fifth year of its seven-year plan and has received $2.72 billion in gifts and documented commitments, surpassing the 75% mark toward the campaign goal of $3.5 billion (which was increased in June 2008 from the original goal of $3 billion). The $434 million in gifts and new pledges recorded during the fiscal year exceeded the goal of $400 million required to keep the campaign on track to reach $3.5 billion by June 2011. As would be expected during a period of significant national and international economic turmoil, new gifts and payments on prior commitments dropped in fiscal year 2009 when compared to the results for fiscal year 2008, a year when Yale set an all-time record for donations received. Nonetheless, the $368 million received during the last fiscal year came close to equaling the receipts for fiscal year 2007 ($395.7 million) and surpassed any year prior to fiscal year 2006. Such outstanding donor support is critical if the University is to achieve its strategic goals while mitigating the effects of the downturn in the economy on the endowment. 

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