The nation’s economic downturn has caused the University’s endowment to decline — a similar dilemma many universities are facing.LSU’s 2007-08 endowment was reported at $319 million — down by $20 million from the previous year, according to Scott Madere, LSU Foundation public relations director. “No one who invests with regularity in the current market environment is experiencing record returns,” Madere said. “This is a down period for investors, and LSU’s endowment depends on investment to grow in size. However, the LSU Foundation will be at LSU as long as there is an LSU to support.”The University’s endowment is a fund in which people can invest. According to the LSU Foundation’s Web site, their goal is to earn at least 9 percent annually on an endowment’s principal. About half the earnings are used to support the program for which the endowed gift is designated, while the  remainder of the earnings are applied to the principal to keep it growing.A strong endowment can enable a university to attract and retain quality faculty, recruit students and help facilitate campus improvements. Forever LSU, the fundraising campaign for the LSU Foundation, has set a fundraising goal of $750 million by 2010. So far, Forever LSU has raised about $582 million through donations made to the LSU Foundation, TAF and the Alumni Association. Not all donations are made as endowments. A recent study by the Commonfund Institute, a financial management organization for educational institutions, measured endowments for the 2008 fiscal year, in which the 796 institutions polled saw a 0.5 percent increase in their endowment values. But another study found the value of university endowments fell by about 23 percent between July 1 and Nov. 30 of  2008. There were 435 universities polled for the second study. The recent drop in university endowment values is the largest since the 1970s, John S. Griswold Jr., executive director of the Commonfound Institute, told The New York Times on Jan. 27.Chancellor Michael Martin said the University’s endowment is negatively affected by the recession — which translates into less-than-stellar returns, a declining corpus value of the endowment and donors’ hesitation to invest. “The economy is so soft that donors are much more reluctant to give us money … to put into an endowment which is shrinking,” Martin said. Facing possibly large budget cuts of up to $71.9 million next year, the University may have to consider using some of the endowment money to supplement the reductions, Martin said. The endowment’s decrease, along with the possible budget cuts, could mean layoffs and a decrease in program offerings. “The support that the LSU Foundation provides to the University each year is important in LSU’s planning and budgetary process, but it is not intended to be a primary method of emergency funding to offset state budget cuts,” Madere said. The University can take money out of the corpus of the endowment down to the donor’s original amount. For example, if someone donated $100,000 to the LSU Foundation and $25,000 in interest was generated, only $25,000 can be spent. Beverly Major, Forever LSU director, said the University will continue its fundraising efforts, being extra sensitive to donors.”We treat donors as individuals on a case-by-case basis,” Major said. “Some people are doing great; some people are not doing so great. We’re very cognizant of the economy right now.”Martin said the extent of the cuts won’t be known until an estimated state budget is proposed by Gov. Bobby Jindal in mid-March.—-Contact Kyle Bove at [email protected]