Nonprofits Look to Change Rules on Endowments

Meltdown forces tough choice: present survival or future value?
By Jim O'Neill,  Newser Staff
Posted Feb 11, 2009 7:21 AM CST
Nonprofits Look to Change Rules on Endowments
Brandeis University is considering cutting 10% of its faculty and closing its art museum because its endowment fund has been hit hard by Wall Street's tumble.

Nonprofits reeling from the market meltdown's impact on their investments are pushing to be allowed to tap endowment funds, many of which are off-limits because they've lost value, reports the Wall Street Journal. At issue is the balance between surviving the current crisis and spending funds that can never be recovered. "There is a real danger that once you dip into principal you aren't going to get it back," says one expert.

Many states have laws that limit access to endowments if funds are "under water"—worth less than their initial value. But liquidity problems are forcing tough choices, such as Brandeis University's decision to sell off its art museum's entire collection and the Massachusetts SPCA's announcement that it will close three of its seven shelters. Asks a rep: "Is it possible to find an animal a home in this recession?"
(More financial crisis stories.)

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