JMU Changes: Financial Endowment

A financial endowment is a transfer of money or property donated to an institution, with the stipulation that it be invested, and the principal remain intact. This allows for the donation to have a much greater impact over a long period of time than if it were spent all at once, due to compound interest. Financial endowments are important because schools can use the money generated by donations to provide scholarships, pay professors, update facilities, and/or finance new facilities. Endowments are also important because they enable public universities to spend money without having to rely on their state governments to supply the funding.

Annually the National Association of College and University Business Officers (NACUBO) releases a list of the values of various endowments from universities and colleges across the United States. In the 2006 rankings JMU ranked 548 out of 765 institutions. In 2005 JMU had an endowment valued at $33.58 million, and in 2006 it was worth $39.07 million. In 2006 Harvard’s endowment was valued at $28.9 billion , and the University of Virginia’s was worth more than $3.6 billion.

So why is JMU’s endowment so small (relatively speaking)? JMU was founded in 1908 as the State Normal and Industrial School for Women at Harrisonburg – it was a school for women teachers. In 1946 men were first enrolled as regular day students, and in 1977 the school officially became James Madison University. The school’s endowment is minuscule compared to UVA’s because JMU hasn’t been open as long and it hasn’t produced the high-profile alumni. UVA opened in 1819 and it has produced U.S. Presidents, million-dollar athletes, and corporate CEOs.

JMU’s current goal is to have its endowment reach a value of $100 million by the year 2013. I think this goal is great, and I would like to see the endowment expand exponentially in the next couple of years. However, this entire process depends on the generosity and financial fortitude of the current alumni. If the current Alumni continue to give money, then JMU can use the endowment to attract highly qualified faculty members, provide scholarships to deserving students, and improve athletic facilities. These actions will in turn produce more high-profile alumni and increase the money being donated to the endowment.

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