The Oct. 3, 2008, Lincoln Journal Star accurately reported that $4.3 million of Doane College's assets were frozen as a result of the termination of a fund by the trustee, Wachovia Bank, and offered through Commonfund. Doane is fortunate to maintain such a strong financial profile that permits it to weather the ups and downs of any market crisis. No doubt, the freeze on a Commonfund investment reflects the overall turmoil and instability of the greater U.S. market. Customers - all of us - are aware of this crisis and are more inclined to withdraw our cash as a safety measure. To prevent any "runs" on the fund, so to speak, trustees associated with Commonfund protected themselves (and all of us collectively) by freezing the assets and planning to liquidate the fund in an orderly manner to maximize asset protection and minimize any loss to the principal. It is worth noting that, though the assets are at risk, as of today, nothing has defaulted in the fund.
Although not widely known outside of the nonprofit world, Commonfund, which was created almost 40 years ago, was intended to provide another strong investment vehicle to help nonprofit institutions - such as within higher education and the healthcare sector - grow their endowments, meeting both their short-term cash needs as well as their long-term growth aspirations. Over the course of the last 37 years, over 1,800 institutions have joined Commonfund funds and ventures, which have been widely considered strong investment opportunities.
Thanks to our Board's strong oversight and stewardship, we maintain one of the strongest financial profiles among small colleges, particularly within Nebraska. And, that has not changed today. Our endowment and similar funds of $89 million (as of June 30, 2008), though affected by the market (like other institutions), remains strong and secure, both to meet our short-term obligations and achieve our long-term plans. Within this context, the $4.3 million currently frozen through Commonfund is a small percentage of Doane's assets.
To be sure, the current short-term crisis of Commonfund indicates that all institutions must remain vigilant and prepare for further financial challenges. This will require that we remain abreast of financial results in the marketplace as well as strengthen internal processes that ensure adequate financial flexibility going forward. This is simply good, fundamental planning, which is particularly vital in this environment. The Doane College Board of Trustees is confident that its long-term approach, which contemplates a diversified portfolio, provides the financial resources for Doane to thrive today and in the future.
President, Doane College