The Michigan Daily - michigandaily.com
Tuesday, March 17, 2009 - 7
The Michigan Daily - michigandailycom Tuesday, March 17, 2009 - 7
From Page 1
In the letter, Baucus and Grass-
ley asked how tax policies, which
exempt endowment funds and
donations to the endowment from
being taxed, have affected the man-
agement and the use of endowment
Unlike universities and public
foundations, most private founda-
tions are required to pay out a min-
imum of 5 percent of their assets
each year toward their charitable
missions. At the time the Senate
Finance Committee sent out its
letter, there was much talk about
instituting a similar rule for uni-
versities and public foundations
to make them spend more of their
endowment each year.
DEFENSE OF CURRENT
In response to the Senate
Finance Committee letter, Uni-
versity President Mary Sue Cole-
man sent a 21-page response to the
Finance Committee in February
2008. In the University's response,
which was submitted by University
President Mary Sue Coleman, she
addressed 11 key points of concern
voiced by Baucus and Grassley.
The response said the Univer-
sity's endowment had grown 382
percent over the past 10 years as
of June 30. At the beginning of
1998, the endowment was valued
at $199 billion, but by the end of
the 2008 fiscal year, the endow-
ment had grown to approximately
$7.6 billion. As of December 31, the
endowment had lost 14.4 percent
of its 2008 value, dropping to $6.5
On the one hand, the University's
response also said total financial
aid awards from the University's
endowment had more than dou-
bled over roughly the same time
period. In the 1998 - 1999 academic
year, the University contributed
approximately $19.7 million to stu-
dent financial aid through grants
and scholarships. By the 2007-
2008 academic year, that figure had
increased to about $52.2 million.
hand, increased during that same
time period as well from $6,098
per term in the 1998-1999 academic
year to $10,447 in the 2007-2008
Responding to public pressure
as a result of congressional hear-
the michigan c
1 & 2 bdrm., modern, clean, quiet
5 min. walk MED, DENT, and Campus
Prime Student Housing
Call today to see your new Home!
344 S. Division
515 E. Lawrence
326 E. Madison-Reduced Rates
511 E. Hoover
1320 S. University
909 Church-Reduced Rates
1021 Vaughn-Reduced Rates
721 S. Forest-Reduced Rates
1320 S. University
411 High-Reduced Rates
*Fully Furnished apartment
* Free heat and water
(* At most locations)
OLD TOWN REALTY
612 Church St.
Houses Available for Fall 2009
All Prices Reduced!!
8 Bedroom House
428 Hamilton Pl. $4,400
7 Bedroom Houses
406 E. Jefferson $3,850
1220 Prospect $3,850
334 Catherine $3,850
6 Bedroom House
952 Greenwood $3,600
(May or Fall Lease)
4 Bedroom Houses
1116 Packard $2,300
942 Woodlawn $2,060
624 Church $2,995
Offering a $500.00 gift card to a store
of your choice with every signed lease
of these available houses!!
MAY-AUGUST SUBLEASE. 4
rooms available. Kingsley and State.
Call (248) 910-2286.
TIRED OF SEARCHING for your
apartment or house? Wilson White
Management offers One Stop Shopping
with hundreds of apartments and
houses on Central Campus. Our leasing
agents are ready to help you the perfect
place to call home on campus. Wilson
White Management 734-995-9200
ings, Harvard University, Yale
University and Dartmouth Col-
lege announced plans to increase
the amount of endowment money
spent on student financial aid. The
University did not make a similar
In a January 2009 interview,
Coleman said at the time she felt
the University was already doing a
good job with supporting students'
financial constraints with endow-
Finance Committee, the University
aims to meet 100 percent of dem-
onstrated financial need for Michi-
gan residents as determined by an
Coleman said in the January
2009 interview that although she
understood what Baucus and Grass-
ley were suggesting, she did not
agree that it was appropriate for the
government to place payout restric-
tions on colleges and universities.
students of tomorrow suffer. I
couldn't do that."
A CONSERVATIVE PAYOUT
Since University leaders don't
think it's appropriate for govern-
ment officials to interfere in deter-
mining the annual payout of the
endowment, the question then
becomes how exactlythe amount of
that payout is decided.
University Chief Investment
Officer Erik Lundberg said the
University uses a seven-year
rolling average to help protect
endowed funds, including those
endowed for scholarships, from
temporary swings of the market.
"We want to insulate the oper-
ations of the University -from
the volatility in the market," he
said, "and the way we do that is
through the averaging process."
Lundberg explained that by
taking the past 28 quarters of
endowment performance bal-
ances, which accounts for the
past seven years, and updating
them each quarter by replacing
the oldest quarter with the new-
est, the University is able to aver-
age its funds over. a long period
of time to stabilize market per-
formance that would otherwise
"By taking the value of the
endowment at multiple peri-
ods of time rather than at just
one, we get a much more stable
value," he said.
Lundberg said payouts from
the endowment are treated the
same for all endowed funds, and
that a formula determines the
annual payout. The payout is 5
Percent annualized over market
average, Lundberg said. This
means that 1.25 percent of earn-
ings on investments as calculat-
ed by the seven-year average are
dispersed from the endowment
each fiscal quarter. By doing this,
the four quarters of payouts will
result in a 5 percent annualized
Despite the recent volatil-
ity in the markets, the University's
recently finished fundraising cam-
paign - the Michigan Difference
- raised an unprecedented $3.2
billion from the time the campaign
went public in 2004.
Through the campaign, approxi-
mately $545 million were raised for
newly endowed scholarship funds.
As of the 2008 fiscal year, the new
funds have generated $10 million in
"Duringthe Michigan Difference
campaign, donors created 2,045
newendowedfunds for financialaid
in addition to providing expendable
funds for scholarships," University
spokeswoman Kelly Cunningham
wrote in an e-mail.
Despite the University's success-
ful Michigan Difference campaign,
Coleman said in the January 2009
interview that the University will
likely start another capital cam-
paign in the near future.
"(This) doesn't mean we stop
fundraising," she said. "There'll be
another campaign in a few years."
Coleman said private fundrais-
ing efforts are essential to the Uni-
versity's success and contribute to a
successful, growing endowment.
"We'll start another capital
campaign because getting that
philanthropic support is critical to
keeping the University at the high
level that it is," she said.
Coleman said that although the
University places a large emphasis
on fund development for student
support, it is often the donors who
ultimately decide for what their
donations should be used.
"Now a lot of (our fund develop-
ment) isdependent on what donors
want," she said. "Fortunately, in the
capital campaign that we just fin-
ished, we had put a huge emphasis
on financial aid."
Of the Michigan Difference cam-
paign's final fundraising total, Cole-
man said the University "got way
over our targets on the money we
had wanted to raise f'or financial
NEW DONATIONS CAN
CREATE NEW RESTRICTIONS
When a donor gives money to the
University, that person often has an
intended use in mind for that dona-
A donor interested in giving a
large gift to the University must
first enter into a gift agreement
with the University, said Gordon
Beeman, a University assistant gen-
"The purpose of the gift agree-
ment is to document the purpose,
restriction and intended use of the
donor's gift .. so that there is no
confusion or ambiguity at a later
time," he said.
Beeman said the gift agreement
also outlines that the donor's gift
will be subject to the University's
bylaws and policies and establishes
a payment schedule for the gift. Pay-
ment schedules are used to outline
how much donors will give over
what period of time, if they choose
not to donate the gift all at once.
More importantly, Beeman said
donors typically have a specific
purpose in mind for their gift.
"Certainly with larger gifts, the
donors typically have a specific
purpose in mind," he said. "Obvi-
ously so long as it's furthering the
University's mission, we're delight-
ed to document and apply the gift
funds in that way."
Outlining the purpose of the
gift can be more involved than it
sounds, as it is sometimes the case
that a gift may need secondary
specifications, if the primary need
cannot be met.
Beeman used a scholarship
fund at the School of Education to
explain why a secondary purpose
may be needed.
"The real purpose (of the gift)
was to benefit students from her
particular county, which is located
in central Illinois," he said, point-
ing out that it is very likely that at
any given year a student from that
county may not be enrolled in the
School of Education.
There is a tiered policy so stu-
dents from Illinois get the next pri-
ority, he said. Then, if no one from
Illinois qualifies for the scholarship,
then the studentbody at large in the
School of Education is eligible for
the scholarship, he said.
Additionally, a donor could also
specify a gift for cancer research,
but may put a secondary purpose in
the gift agreement in case a cure for
cancer is found, so that the money
does not go to waste, Beeman said.
Although donors can specify
some purposes or restrictions on
their gift, there are certain things
the University is not legally allowed
to distinguish, Beeman said.
"The University of course is sub-
ject to both federal and state law,"
he said. "As such we cannot dis-
criminate based on race or gender,
and we don't."
However, Beeman mentioned
a certain concept - the matching
pool concept - that does allow a
donor to specify some criteria indi-
rectly. Beeman used the example of
a donor wanting to benefit a certain
gender to illustrate the concept.
"It's possible for the Univer-
sity to go through its financial
aid process, determine the recipi-
ents - which of course would be
in my example would be male and
female - and then from that pool
match the donor's gift to someone
who is the gender the donor spec-
ified," he said. "So in that sense,
we can accommodate a donor
Beeman said it would also be
possible for a donor who wanted to
benefit underprivileged students to
specify a preference for students
from an inner city for a scholar-
"In that way we're not selecting
based on an impermissible class
and yet we may capture what the
donor truly has in mind," he said.
soucE: E IVERSITY OF MICHIGAN RESPONSE TO
"We always felt like we were
pretty exemplary when it came to
both the payout that we did and
the amount of money we had com-
mitted to financial aid," she said. "I
understand the Grassley criticism,
but I think the University of Michi-
gan was already in a position where
we were doing extremely well."
According to the University's
response last year to the Senate
She explained that if the University
were to provide a larger amount of
financial aid to current students,
then students in the future would
"What we objected to is the
notion that some government-run
agency should dictate what we do,"
she said. "We've got to plan forever,
and I didn't agree that it was appro-
priate to somehow spend down our
endowment for the today to make
FREE SUBLET FINDER. studio-3
bedrooms; 19 locations to choose
from. (734) 741-9300
MAY - AUG Sublet. 726 S. State. 2
bdrm 2-3 ppl. heat/H20/direct tv incl.
fully furn. Rent negotiable. Perfect lo-
cation for central campus right near bus
stop. 513-315-6273. email@example.com
HORSES TO LEASE/RIDING
Lessons. Dressage/pleasure. 995-0092.
DELIVERED - To order visit
NEED HELP WITH programming in
MATLAB and STATA. Will pay if I
can afford your rates. Please write to
THESIS EDITING- LANGUAGE,
organization, format. 25 yrs. U-M exp.
996-0566 or firstname.lastname@example.org
EARN EXTRA MONEY. Students
needed ASAP. Earn up $150 per day
being a mystery shopper. No experi-
ence required. Call 1-800-722-4791.
GET PAID CASH for taking online
GRILL SERVERS WANTED. Stone-
bridge Golf Club, A2. Apr. through
Oct. Call 734-429-8383.
ANN ARBOR BASED company,
Gold Star Financial, is looking to hire
individuals for our Manager Develop-
ment Training Program. Work hand-in-
hand with the #1 and #2 loan officers
in the state. We will be holding inter-
views weekly; please submit resumes
ONE YEAR INTERNSHIP with im-
migration law firm in Farmington
Hills, MI. Full Time. Outstanding op-
portunity for highly motivated and in-
telligent U of H pre-lawaor pre-gradu-
ate student taking a year off between
undergraduate andegraduate studies.
Please email resume, cover letter, and
transcript to email@example.com
FUNDRAISE FOR THE U! $9.25- From Page 1.
+/Hr. at Michigan Telefund. On cam-
pus, flexible hrs. Students, apply @ Baydoun agreed that tuition is
telefund.umich.edu or 763.4400. too high, but he said that in light of
PARTICIPANTS FOR A psychology the current economy, the Universi-
experiment on simple perceptual judg- ty should freeze tuition to ensure as
ments at U of M. One 2-hour 15 min. many students as possible are able
session, pays $25. To qualify, must be to have the "Michigan experience".
18+, a native English speaker, and have
vision correctable to 20/20. IRB #: "in the short-term, this is what
HUM00020435. Email Natasha at we have to do in the troubled econ-
firstname.lastname@example.org omy; we have to take on tuition," he
said. "And we should not be scared
tial, Age 18+ ok. No exp. necessary, about a repercussion that we don't
training provided. 800-965-6520 x 125. know."
Stenvig echoed each of the
PRO SHOP WORKERS needed. Golf other two candidates' sentiments.
knowledge required. Stonebridge Golf She said that students should take
Club, Anni Arbor. April through Oct.
Call 734-429-8383. action to push the administration to
increase financial aid and to freeze
SEASONAL GROUNDS CREW tuition.
workers needed for Stonebridge Golf .
Club, Ann Arbor. April-Sept. Call 734- "There is widespread agreement
323-8790. now for a tuition freeze," she said.
"How do we get that? We don't get
-m - 0y that just by having wide support for
it; we get it by organizing students'
The vice presidential candidates
from each party began the evening:
WORK ON MACKINAC Island this Defend Affirmative Action Party's
Summer - Make life long friends. The Alanna Owagbemi, a Kinesiol-
Island House Hotel and Ryba's Fudge ogy junior, Michigan Vision Party's
Shops are looking for seasonal help in
all areas: Front Desk, Bell Staff; Wait Michael Rorro, an LSA junior,
Staff, Sales Clerks, and Baristas. Hous- and reMichigan Campaign's Greg
ing, bonus, and discounted meals avail- Caplan, a Business sophomore. The
able. Call Ryan 1 (800)626 - 6304.
www.theislandhouse.com vice presidential candidates debut-
ed for about half an hour.
Because not all representative
candidates were able to debate,
ence outlining the platforms of each
representative running for MSA.
Among other questions, Page
asked the vice presidential candi-
from the others, what their primary
goals as vice president would be if
elected and how strong they think
their party's slate of candidates is.
Rorro said MVP's emphasis on
quality rather than quantity when
choosing candidates. makes it
unique from other parties. He also
said the party's commitment to.
making MSA more transparent and
accountable makes it different.
"I think that our party is distin-
guished specifically because of the
goals we set out to accomplish from
the beginning," he said. "The way
we're approaching student govern-
ment is different from the way any-
one hasin the past."
DAAP's Owagbemi said she
would want to make herself and her
party more available to students
than other parties.
"I see myself being an aid for stu-
dents," she said. "I want students to
actually be able to come to me and
to know that I'm listening and that
our party is actually listening to
everything they are saying."
Caplan said the diversity of
reMichigan's candidates makes its
slate especially strong.
"Every (reMichigan candidate)
that I have spent time with on this
campaign, which is all of them,
have truly impressed me," he said.
"They come from all parts of this
campus; they are the most diverse
group of people I've ever done any-
After the event, Election Direc-
tor Emily Winter, an LSA junior,
said she thought the debate went
"I think the candidates did a
really great job. They answered the
questions. They touched on a lot of
issues, a very broad range of top-
ics," she said. "And I think they did
a good job of answering the ques-
tions fully and giving their honest
MSA Vice President Arvind
Sohoni said he thought the debate
was positive for MSA, but that he
wished more students not involved
in student government had attend-
ed. He also said the debate was not
as heated as he expected.
"I wish we had more students at
large; you know, naturally you have
a lot of candidates show up,"he said.
"And it's great; everyone did pretty
well. I expected some fireworks,
but we didn't really get a whole lot
FREE WORKSHOP. FRIDAY,
March 20th, 4 to 6pm. U of M Michi-
gan League Kalamazoo Room. Dream
Experts share their secrets.
'The Dream Team" gives a powerful
and entertaining interview! The phone
lines were jammed! Lila Lazarus
FOX2 Topics include: A dream
technique to overcome in-somnia &
anxiety - No RX. Nightmares are good
for you! 3 steps tp make the right
WANT TO WORK FOR DAILY
E-MAIL DAVAZAD@UMICH. EDU
A BABY IS OUR DREAM.
Help fill our home with laughter and
love! We are young, happily married &
hoping tosbeparents. We care about
you, please call us anytime. Toll free
(877) 533-3817. Erin and Tim.
NOT TIRED OF FILLING OUT
JOIN THE DAILY'S POOL. CLICK ON THE LINK
AT MICHIGAN DAILY.COM