The Associated Press is out tonight with an intriguing report about the effect of a little noticed North Carolina law on endowments held by universities and other institutions. While Duke is not mentioned, there is the possibility -- which we of course will check out -- that virtually all of the endowment money raised by the Financial Aid Initiative is off limits, that none can be used at this time for scholarships.
The state law prohibits trustees from spending if the value of an endowment fund dips below its "historic dollar value" -- which means the amount of the original gift. The purpose of course is to preserve the endowment for perpetuity, not just current use.
During the world-wide financial meltdown, money that Duke raised for the Initiative has lost value along with other university assets; Executive Vice President Trask put the loss "in the mid 20's" percent. So if a donor gave $100,000 two years ago, that fund is now down to $75,000 and -- beneath its original value -- cannot pay out any money.
Gifts that were given a long time ago have grown beyond their original size, because Duke spends only part of each year's dividends, interest and capital gain. These older funds are not endangered by the NC law.
Duke maintains thousands and thousands of individual accounts for gifts -- so determining the latest value is easy.
Before Duke became such a secret place -- back when faculty, students, parents and alumni were informed and were recognized as stakeholders -- Duke issued an annual report detailing the value of each fund.
However, Duke moved in new directions. It started selling professorships, for example, far cheaper than peer schools. Thus the Campaign for Duke conducted by President Nan Keohane was able to boast of 132 new endowed faculty positions -- but not one of them backed by enough money to create such a chair at our peer schools.
A listing of individual accounts would reveal this sham. Our attempts to get details of the value of each part of the endowment were repeatedly denied by former VP for Public Affairs and Government Relations John Burness in the past two years.