Sliced: Endowment losses cut Jefferson Scholarships
In the wake of the University of Virginia's $1 billion-plus endowment losses, new casualties have emerged: the Jefferson Scholars Foundation will award fewer of the prestigious free rides it offers the best and brightest coming to UVA this fall.
At its peak last year, the foundation's endowment hovered at $245 million, according to the 2008 annual report. With last fall's market crash, it lost $50 million– 25 percent of the endowment, says foundation president Jimmy Wright– and will be unable to fund as many scholars as it did last year, when it awarded $7.65 million and added 33 undergrad and eight grad students to its 2008-2009 roster.
The Jefferson Scholars Foundation endowment is managed by the University Investment Management Company, which generated hefty returns for UVA by investing in riskier instruments, such as hedge funds and private equity, until losing $1 billion of the university's $5 billion endowment between July and November 2008. Under UVIMCO management, the largest allocations of Jefferson Scholars' assets also were put into hedge funds and private equity, according to its 2007 federal tax form 990.
The Jefferson Scholars Foundation peeled off as a separate entity under the Alumni Association in 1980 and became a nonprofit 501(c)(3) organization. In 1998, it had five staff members. Currently, 16 people are on the foundation's $1.48 million annual payroll.
"The [f]oundation has always been fiscally prudent and constantly evaluates all its programs and expenses," writes foundation president Wright via email to the Hook through the organization's spokeswoman, Pam Fitzgerald at the Ivy Group, when asked if there would be other cost-cutting measures besides reducing the number of scholarships. Wright, who was recruited from the John Motley Morehead Foundation at the University of North Carolina, earned $278,000 in 2007 to lead the Jefferson Scholars Foundation.
Wright declined to say how many scholarships would be cut, but stresses, "Students who are currently receiving funding from the Jefferson Scholars Foundation will experience no reduction in our scholarship commitment."
The foundation's directors receive no compensation for serving on its board, but one perk, at least for two directors, was that their offspring received scholarships, according to the 2007 tax filing.
Despite the economic downturn, the Jefferson Scholars Foundation is moving forward with a controversial capital expenditure, building a $21 million, 25,000-square-foot complex at 124 Maury Avenue.
The site was where architect Eugene Bradbury built the Compton House in 1913 that was later occupied by a fraternity and known as Beta House. When the foundation announced its plans for its new facility, preservationists beseeched the organization to save the historic house. Instead, in the dead of winter holidays on December 27, 2007, the structure was razed to make room for a swanky new LEED-certified compound– and the demolition inspired City Council to identify more than 100 properties it considered historic and in need of protection.
"The construction of this Center is financed by variable rate bonds; their performance has no relationship to the performance of the Foundation’s endowment portfolio," emails Wright. The Albemarle County Industrial Development Authority floated the $21 million in bonds, which will be paid, says Wright, by the "[g]enerous private support [that] funds all operations of the Foundation."
"I would love to see the calculation of savings if they'd kept that building," says former Preservation Piedmont president Aaron Wunsch, a critic of the Beta House razing, who points out the foundation's main job is to fund scholarships. "This is another example of where the interests of this organization lie."
Construction began last fall, and the new digs are expected to be complete by January 2010, although perhaps housing fewer scholars.