The turbulent economy that some experts and politicians argue is bound for a recession may present significant financial challenges for Brown, according to senior University administrators.
Recent pledges to improve undergraduate financial aid and plans for ambitious capital projects may strain the University's finances in the face of a staggering economy, but such stress would not affect Brown's commitment to those goals, administrators said.
Both fundraising and investment returns on Brown's endowment are down from record-setting performances last year, though administrators are hopeful that they will bounce back in the last quarter of the fiscal year, which ends in June.
But the Corporation, the University's highest governing body, is concerned about the bleak economic landscape, said Executive Vice President for Finance and Administration Elizabeth Huidekoper. She acknowledged several economic indicators of potential strains on the University's coffers, but maintained that the Corporation's concerns are at present "mostly speculative."
Nevertheless, the University must formulate contingency plans for any situation in which the economy might "fall off," Huidekoper said.
"We are trying to proceed with a bit of optimism," she said. "We believe the world is still going to turn. You gotta believe."
Huidekoper pointed to off-pace figures in fundraising and endowment returns - as well as rising food and energy prices - as signs of a struggling economy's effects on the University. Small, temporary fluctuations in these figures should present little concern to Brown, but larger trends of this sort would mean that the University could have "problems," she said.
Part of the reason University officials are in no rush to get upset that Brown's financial performance has not improved this year is that the University has seen such great success in the last several years. Donations to the annual fund last year reached an unprecedented amount. Brown's endowment also grew an unprecedented 21.7 percent.
"We're nowhere near that this year," Huidekoper said. But she also noted that the University's annual goal of 10 percent returns on its investments means that virtually any performance this year would keep returns on par with that goal for a two-year average.
The "biggest unknowns" for the University in the face of economic woes are its sources of revenue, Huidekoper said. The amount of federal funding Brown is receiving is "not where we'd hoped it would be," she said, citing a federal budget that is in "tough shape."
Another main source of revenue - donations and other fundraising - will likely be affected by an economy on the ropes, said Senior Vice President for Advancement Ron Vanden Dorpel, who also said he has raised money through several recessions.
While growth in fundraising efforts may slow in times of economic hardship, he said, any large institution of higher education with an "effective fundraising program" like Brown's should not experience absolute decreases in the revenue it generates from gifts.
Vanden Dorpel said that the annual fund is only 2 percent lower than last year's performance, which he called "tremendous." He said he has recognized no recent changes in the number of demurrals on his office's solicitations for donations, and that instances of demurrals by potential donors citing economic difficulty are "anecdotal and sparse."
Vanden Dorpel also noted the enduring financial success of the Plan for Academic Enrichment. That campaign has already raised 84 percent of its $1.4-billion goal even though only 68 percent of the campaign timeline has expired, he said.
But in the event that the economy falters, the University's fundraising efforts will have to become "more focused," Vanden Dorpel said.
"When it gets tougher, you have to run twice as hard to go the same distance that you would in easier times," he said. "So we'll have to do a few extraordinary things, but I think we're prepared to do that."
Because alumni's interests are more diverse than potential donors to other types of not-for-profits, said Vanden Dorpel, institutions of higher learning are better insulated from economic lulls. As part of a strategy for navigating a challenging economy, his office will be running "mini-campaigns," subdividing fundraising efforts into projects to bolster the undergraduate financial aid endowment and bankroll new buildings on campus. He feels that Brown has plenty of "momentum" to weather any setbacks in fundraising.
"We're all taking a kind of wait-and-see attitude," Vanden Dorpel said of a potential recession. "The one thing you don't want to do is have it become a self-fulfilling prophecy."
Rae Goldsmith, vice president for communications and marketing at the Council for Advancement and Support of Education, confirmed Vanden Dorpel's assessment of the limited threat a hurting economy poses to fundraising efforts. She said that in the recession that followed Sept. 11, private donations to institutions of higher education dipped by only 1.2 percent, and quickly rebounded. Universities often rely on this constancy of giving when returns on their investments don't pull through, she said.
As for the present economic landscape, Goldsmith said University administrators and education experts are watching and waiting.
"There is concern. It's not yet alarm," she said.
Both Vanden Dorpel and Huidekoper emphasized the importance of sticking to the priorities Brown has committed itself to as it navigates potential financial hardships. Among the most important of those is undergraduate financial aid, they said. Huidekoper noted that when families make less money in a stagnant economy, the University's commitments to providing financial aid - for which it has budgeted $68 million this year - might grow.
"We said we're need-blind. We will stay need-blind," Huidekoper said.
Demands on Brown's coffers will not likely decrease any time soon. Vanden Dorpel said that after the Corporation meeting this summer, the University will be "announcing something that is a pretty bold thing to do" in conjunction with the recent decision to increase undergraduate financial aid, but he would not specify what those plans were.
"The important thing is to keep going, keep asking for gifts, to keep stewarding those gifts properly, keep in contact with your alumni and friends," Vanden Dorpel said of how his office plans to proceed in the face of a potential recession.
"We're cautiously optimistic. We're not throwing in the towel," he said. "We're hanging in there."
