Proud - Youngstown State University

Foundation
FOUNDATION GOAL:
Keeping
Endowments
“Significant” for Generations
Reid Schmutz
Howard W. Jones set some
ground rules when he and 37 other
community leaders established the
Youngstown State University Foundation
in 1967. Jones, YSU’s first
president, charged the foundation
with making sure that its endowments
remained “significant” for
future generations.
Financial experts have a name
for that principle today – they call
it “intergenerational equity” – and it means endowments
should provide at least the same value 20 years or 40 years
down the road as they did starting out.
YSU Foundation president Reid Schmutz said that
goal is still a priority. “We have scholarship endowments
that date back to our Youngstown College days,” he said,
“and we want to make sure that those
scholarships are still significant.”
But intergenerational equity is
tougher to achieve these days, he said,
for the same reasons that many households
are finding it difficult to get ahead:
investment earnings on stocks and bonds
have declined, and tuition has increased,
even though YSU has been recognized as
one of the most cost efficient universities
in Ohio.
“How can you achieve an historic
payout and still minimize risk with the
foundation’s investments?” Schmutz
asked. “We’re asking that question all the
time. How much risk do we want to take?”
With assets of $170 million, the YSU Foundation
invests its funds in government securities, corporate bonds,
common and preferred stocks. It administers between 350
and 360 endowment funds and distributes more than $5
million annually, income generated from the principal,
most of it in the form of scholarships.
The foundation’s board of trustees, with an eye toward
declines in the value of financial standards such as the Dow
and the S&P 500, gave the foundation staff permission in
February to look into investing one percent of its assets
in “alternative assets,” funds with more growth potential
coupled with increased risk.
If we lose money,
that means
some students
won’t get their
scholarships, and
we take that
very seriously.
- Reid Schmutz
Larger university foundations, such as Harvard, Yale
and Stanford, have been investing millions of endowment
dollars in hedge funds and other high risk investments for
years, Schmutz noted, and some have lost millions on the
gamble. The YSU Foundation is moving very cautiously.
“You have to consider that 83 percent of our budget is
scholarships, unlike other foundations that pay into things
like building and improvements, so our tolerance for risk
is probably less than some other college foundations,” he
said. “If we lose money, that means some students won’t
get their scholarships, and we take that very seriously.”
On average, foundation-funded scholarships and
programs affect 3,500 to 3,800 students each year. Students
must apply for assistance through YSU’s Office of
Financial Aid and Scholarships.
Looking toward the YSU Foundation’s future,
Schmutz said one of his primary goals is communicating
to potential donors the great need for
scholarship funds. “One of the hardest
parts is making people understand
what today’s students go through,”
he related. “I see kids who work two
jobs and go to school, parents who
work two jobs to send their kids to
school. I think people would be more
generous if they realized the sacrifices
that some of our students make
to get an education.”
Most charitable gifts come to the
YSU Foundation in the form of cash,
but there are several other options.
Donors can realize a tax advantage
by donating securities, or they can make a planned gift
by including the Foundation in their will, by purchasing a
charitable gift annuity, or by creating a trust.
Donors can establish a named scholarship with a
gift of $10,000 or more, or a named University Scholar
scholarship for a gift of $200,000. Naming opportunities
are also available for department chairs, colleges and
buildings. For more information, visit the YSU Foundation
at www.ysu.edu/ysufoundation/index.shtml or call
330-941-3211.
Summer 2008 41