The endowments of the Crown Center for Middle East Studies and the Schusterman Center for Middle East Studies are currently "under the water," according to Provost Marty Krauss, which means that the current market value of the endowment is less than the original amount.
The centers cannot spend any money from their endowments and must seek alternative funds for their programming.
The Uniform Management of Institutional Funds Act, which Massachussetts adopted in 1975, states that endowments that are underwater cannot be used for operating expenses. The current market value of the investments that make up the Crown Center and Schusterman Center endowments are below the initial amount of the endowments, Krauss said. She did not reveal the current endowment figures of either center but said that neither of the endowments have any interest left to spend and that only principle remains. She said that the centers cannot use that principle endowment for spending purposes and thus have to seek alternative funds.
Krauss said that the fact that the centers are so new is a major factor in their financial troubles. "Both of these centers were created in the last five years, so their endowments have not had much time to grow. Since their endowments are directly tied into that of the University's, the 25 percent drop in the University endowments have particularly affected them, as their endowments have dropped 25 percent," she said.
Both Prof. Shai Feldman, director of the Crown Center, and Krauss said that neither center would close, though she acknowledged that the centers would have to make "pragramatic reductions."
"We may have to make major budget reductions for these centers, but nothing is closing," Krauss said.
"In theory, if we failed to raise the funds required then the [Crown Center] would have to close," Feldman said. "But I have confidence that we will raise the funds required to make the center successful."
While Krauss said that the centers are ultimately responsible for their operating expenses, the University is collaborating with the centers to seek alternative funds. She met with the heads of the centers in January to discuss financial strategies "that will allow them to continue to perform the work they want to do."
Krauss said that ideas for seeking alternative funds involve "multiple strategies of working with donors in creative ways," but would not to expand on the specifics of these projects.
Like Krauss, Feldman would provide neither monetary figures about the endowment nor any information about the potential alternative funds. "It is all a work in progress," he said.
Feldman said that in order to deal with the financial crisis the center has cut its travel budget, reduced its publication budget and canceled the conference it was supposed to hold in March to analyze the Middle East from 1979 to 2009. Feldman said this year's budget cuts are somewhat minimal because the crisis erupted halfway through the fiscal year. "There are only so many budget cuts we can make when we were so shocked by this crisis," he said. He said, for example, that they hired the post-doctoral fellows before the crisis occurred and thus will still pay the fellows their stipends.
Feldman said the budget cuts for next year "depend on how many funds the [Crown Center] receives," but that they could potentially range from "minimal budget cuts to paralyzing the center." He said he would not be able to determine specific budget cuts until he had a clearer picture of the center's financial state and that he would know the amount of financial resources the center would be able to raise within the next few months. "We don't have figures for next year, but we will cut according to the amount of money we have raised," he said.
Prof. Ilan Troen (NEJS), the director of the Schusterman Center, wrote in an e-mail to the Justice that because the Schusterman Center's endowment is shrinking, "we are therefore re-examining our priorities and aggressively seeking alternative funds," but "we do have operating funds beyond the underwater endowment that enable us to maintain our commitments and to continue with a significant program next year, and beyond." He would not expand on what the operating funds were but said that "we are raising some new funds from foundations that have resources and interested in our work."
"Our emphasis is primarily on supporting graduate students (Sociology, Politics, and NEJS) and bringing visiting faculty to campus," Troen wrote. "Next year, for example, there will be visiting professors in Anthropology who agreed to come long before the current crisis. There will be a post-doc in Politics who was similarly invited. We had hoped to do more, particularly bringing a visitor for Economics. We would hope to do so in the not distant future," he said.
Feldman expressed confidence that the Crown Center would raise the funds it needed to sustain itself. "I think there is a general appreciation for the [Crown Center's] work. The [Crown Center] has made huge imprints on Middle East Policy, especially our Middle East briefs, which provides analysis on various issues in the Middle East. I have high confidence that we will persuade individuals that it would be a loss for the center to be crippled by the financial crisis," he said.