With a $308.5 million haul, Duke's Financial Aid Initiative surpassed its widely-touted goal of $300 million as 2008 drew to a close.
But a less publicized optimal goal of the Initiative-to fund 50 percent of financial aid from the University's endowment-has yet to be realized.
Since 2005, the proportion of financial aid funded by the endowment has increased by 2.1 percent, to 21.4 percent in fiscal year 2008, according to numbers provided by Peter Vaughn, executive director of alumni and development communications. Comparable figures are not yet available for the current fiscal year.
In July 2005, the year the Initiative kicked off, Executive Vice President Tallman Trask told The Chronicle that the endowment would ideally cover half of the financial aid budget.
It is now unclear when Duke might reach that milestone. Asked about the goal Wednesday, Trask said, "I don't think we're going to get there any time soon."
Funding a higher proportion of financial aid from the endowment would give the University greater flexibility in how it spends its operating budget, said Michael Schoenfeld, vice president for public affairs and government relations.
Duke maintains an eight-figure reserve fund to ensure it can meet its financial aid commitments, and it would dip into the operating budget to cover any shortfalls, Trask said.
According to the Financial Aid Initiative Web site, the budget for this academic year includes $63 million for undergraduate financial aid, an $11 million increase from last year.
To keep pace with its 50 percent goal, the University would need to increase endowment spending on financial aid by about $2 million this year, according to Chronicle calculations. This figure uses the same percentage of financial aid that would be covered by the endowment as last year, at approximately 21 percent.
Duke's endowment paid out $245 million in fiscal year 2008 and was worth $6.1 billion as of June 30, according to 2007/2008 Financial Reports.
Since then, the endowment has lost more than a fifth of its value. But because the average endowment performance was strong over the past three years-the period used to calculate endowment spending-endowment payouts will not drop this year, Trask said.
If losses continue to mount, endowment spending will decline, but he said Duke will not cut financial aid spending.
If, however, Duke is forced to draw more aid funding from its operating budget, the percentage of aid spending from the endowment could shrink.
Trask said Duke's distance from the goal is in part a result of the recent poor performance of its investments.
"A lot of the money in the Financial Aid Initiative has come in late, and as a consequence, it is not generating any revenue because it is underwater," he said.
Despite the downturn, the University is still committed to reaching the 50 percent mark for aid funded by the endowment, Schoenfeld said. Schoenfeld did not say when Duke might reach its goal, explaining that it depends on the endowment's performance.
"The fact that the percentage of aid that is covered by the endowment continues to go up says we're making progress toward it," he said. "When the University said back at the beginning of the Initiative that our ultimate goal was to fund 50 percent of financial aid from the endowment, I don't think anybody realistically expected that would happen in a short amount of time."
David Graham contributed reporting.
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