Re: Re: Re: Re: Re: From Today's NYTimes


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Posted by Rick Denney on May 15, 2003 at 15:06:37:

In Reply to: Re: Re: Re: Re: From Today's NYTimes posted by Jason Ladd on May 15, 2003 at 08:32:50:

But this is an example of what I'm complaining about.

What they should have done is recognize that the market is flighty, and not spend the income generated by the extra capital growth, but rather feed it back into the endowment.

There is no reason why their endowment should be any smaller than it was in 1996 or 1997--the market is where it was at those times. If they had maintained their expenses at 1997 levels with a very conservative attitude about expansion, they would be able to weather the downturn. They shouldn't build the expectation of spending the extra endowment income until that income has been tested in the market. (Perhaps Pittsburgh has done this--I don't know.)

The point is this: Endowments should grow. If they are not big enough to support the orchestra in the first place, then the orchestra should funnel a percentage of their donations to build it rather than drawing it down by too aggressively expanding their activities. Their activities should be scaled to make that possible. If the endowment is big enough to support the orchestra in normal times, they should add to the endowment from endowment income during the good times, so that they can afford to draw it down in the bad times.

Rick "who thinks ambition for orchestra expansion is a bad trait in an endowment manager" Denney


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