The University of Minnesota Foundation is changing the way it disburses money, while the Minnesota Medical Foundation is fighting to keep its disbursements unchanged.

Because of the poor market, the University of Minnesota Foundation is dropping its payouts to scholarships, endowed chairs and research from 5.5 percent to 5 percent.

It is also switching the way payouts are calculated. The foundation will begin computing averages based on 20 quarters instead of 12.

That way, it can continue to include quarters in which the fund was worth more because of the booming economy.

“We’re extending the quarter averaging in a way so we’re not dropping those larger-value quarters,” said Gerald Fischer, University of Minnesota Foundation president and CEO.

The stock market peaked in early 2000, and keeping the endowment’s value during that period as part of the average will keep disbursements higher, despite lowering the percent paid out.

“The motivation of the board in doing it that way was to minimize the pain on the faculty and students of the University,” Fischer said.

In the short run, this method will pull more money out of the endowment as a ratio of its current total value.

“We had many years of fabulous performance and we built up some reserves. And now we can draw on those reserves to smooth the payout,” Fischer said.

The Minnesota Medical Foundation is also trying to keep its payouts from falling.

After strong growth in the economic boom years, the Minnesota Medical Foundation has seen its endowment value drop from $259 million in 2000 to $181 million in 2002.

To stop the endowment’s decline in value, it might have to decrease its disbursement percentage.

“We’re fighting pretty hard to keep that 5.5 percent in place,” said Cindy Kaiser, vice president of finance for the Minnesota Medical Foundation.

Nathan Halverson welcomes comments at [email protected]