University on Stable Economic Ground; Five-Point Plan Provides Insulation
September 30, 2009 – President John J. DeGioia said the university’s response plan to the nation’s economic crisis has left Georgetown in good financial shape and pointed to hope on the horizon of the “great recession.”
“The combination of what we undertook, and the signs of the increasing stability in our national economy, now allow us to look toward the future,” DeGioia said during a Sept. 29 faculty town hall meeting.
Georgetown’s future includes a new capital campaign, which has been in the quiet stage for three years. The Office of Advancement has secured $525 million in commitments already for the campaign, which will focus on investing in financial aid, faculty and some facilities.
The capital campaign will include the new 1789 Scholarship Imperative, an effort to provide fundraising support for 1,789 undergraduate scholarships over five years.
“Another cornerstone of the campaign will be strengthening the resources and support for faculty,” DeGioia said, noting that senior leaders will work together “to position all three campuses for investment in faculty and research excellence.”
Five-Point Plan to Confront the Recession
There are signs the recession may be easing. Still, the recession does continue to affect Georgetown, the president said.
He recapped a five-point plan enacted early during the financial downturn to help insulate Georgetown from the economic storm. The plan includes:
• Limiting tuition increases to ensure access and affordability
• Delaying employee salary increases
• Adopting a conservative spending strategy
• Emphasizing philanthropy for operations
• Restructuring the university’s debt portfolio
DeGioia said the plan helped the university hold to $12.5 million in operating cost deficits instead of the projected $40 million for fiscal year 2009.
Science Center Update
As part of conservative spending, construction halted earlier this year on the new science building. When faced with the recession, Georgetown was not prepared to borrow the multimillions needed or take on additional operating costs, DeGioia said.
Fundraising has brought in $25 million thus far, and the university also has applied for a stimulus grant to aid with construction costs. The building is Georgetown’s highest infrastructure priority, the president said, and university administrators will make a judgment about when to proceed with construction once philanthropy and possible stimulus aid figures are known.
“The conditions for making a decision include securing either philanthropy or stimulus money in the range of $25-40 million and ensuring we can meet the extra operational costs,” DeGioia said. “If we achieve those things, we can move forward with the project.”
Endowment Continues to Recover
DeGioia also revisited the endowment, which took a hit from the recession and fell by about $100 million from its $1 billion high. The endowment now stands at $940 million, and its performance is in the top quarter of all institutional investors, DeGioia noted.
Georgetown has enjoyed several bond rating improvements that allow the university to pay less interest on its debts. The ratings are helping the endowment’s recovery.
This comes on the heels of fiscal year 2009 proving Georgetown’s best fundraising year. The university raised $186 million in campaign commitments and $182 million in cash. Totals were boosted by the $75 million McDevitt gift to support faculty research; however, “even without the McDevitt gift, we still surpassed the prior record for cash by $10 million,” DeGioia said.