An update on our finances

Even for those of us who don’t closely follow Wall Street, it has been hard to miss the news of the past several months. What began as financial misfortune primarily afflicting homeowners with certain types of mortgages — and the companies that lend to them — has now spread and has come to affect nearly everyone who borrows and invests money.

This winter, Rockefeller University was a victim of the crisis. After some bad press about certain types of debt popular among nonprofit institutions, investors unexpectedly pulled out of the market for auction-rate bonds, a specific type of debt instrument popular among universities and other nonprofits. This caused the interest rates to increase, raising the university’s payments by about $85,000 per week. (See “Credit crisis forces Rockefeller to refinance $114 million in bonds,” left.)

Our finance office responded rapidly to this new situation, and we were able to convert our debt to a type that offers more favorable rates. The total cost to Rockefeller, including unanticipated interest and fees required for the conversion, was approximately half a million dollars, which obviously was not a planned expenditure for the present budget year.

Despite the worrying news in the press, our endowment remains secure. Our investments, though not bringing in the returns we have seen in the past few years, are holding steady. The rate of return on Rockefeller’s endowment since January is positive 0.3 percent: not what one might hope for in a strong market, of course, but actually quite good considering that the markets as a whole are down. Our financial model assumes that our average growth over any three-year period will be 9.3 percent. We are still meeting that goal, so there is no need for concern.

We are also continuing to do well with our fundraising. Gifts to the Campaign for Collaborative Science, our current fundraising campaign, are still ahead of target. In addition, changes we have instituted in the past several years, in terms of how we receive income from the endowment and how we allocate funds to labs and departments, have put us in a stable position. We are committed to continue funding our research and recruiting new faculty and to move forward in our building projects that are already well under way.