CORRECTION: Due to a reporting error, this story mischaracterized Izaak Earnhardt. His quote “We’ve felt the effects of the recession” reflected the way he sees how the foundation assesses some student proposals. Funding for gap years and stop-out years were cut due to administrative reasons, not economic ones like the story implied. Although these changes affected the timing of his plans, Earnhardt is still taking time off, which he said is for personal reasons.
Sophomore Izaak Earnhardt always knew he wanted to take a gap year during college.
As a Morehead-Cain scholar, Earnhardt expected to have his travel fully funded by the Morehead-Cain Foundation. But his plans changed when he learned the foundation could no longer afford his year of exploration.
“I can definitely say we’ve felt the effects of the recession,” he said.
Facing increased tuition and a turbulent economy, the foundation, which gives out tens of thousands of dollars to more than 200 UNC students each year, had a difficult decision to make.
It could either scale back on the money it provided students or decrease the size of incoming classes of scholars.
Ultimately, the program opted to decrease class size. In 2010, the foundation accepted 64 students. Last year, it only accepted 48.
“Our business model has essentially flipped,” said Chuck Lovelace, executive director of the Morehead-Cain Foundation.
“We went 50 years without doing serious fundraising because inflation was low and income was high.
“Now, we have to rely on support from our alumni and friends to return to a place where we can have 60 scholars.”
Like the University, the Morehead-Cain Foundation and its endowment took a huge hit during the economic downturn.
In 2008, the foundation’s balance sheet was hit hard, losing nearly $12 million, according to its 990 tax form for that year.
In 2007, a year before the recession hit, the Cain family made a $100 million donation to the scholarship that doubled the foundation’s endowment, enabling the program take on more scholars.
As the economy begins to recover, the foundation has followed suit.
In 2009, its net assets were valued close to $196 million, but the endowment still remains about $20 million short of where it stood before 2008.
The Morehead-Cain Scholarship is the oldest merit-based scholarship in the nation, combining a full scholarship with summer enrichment programs and opportunities to study abroad.
Professor Doug Shackelford, associate dean of the online masters of business administration program in the Kenan-Flagler Business School, said the foundation’s losses mirror trends found throughout the rest of the business world.
“They’re like everyone else, at the bottom of the market they had a loss of a lot of money,” he said.
“And we do know they recovered a good bit of it, much in the same way other investors have recovered after they hit the bottom.”
Morehead-Cain scholar and junior Molly Hrudka said the smaller class sizes and budget cuts won’t change the regard people have for the scholarship.
“I haven’t felt the difference,” she said. “If anything, I’ve felt more supported because they’re concentrating on making sure our experience is still wonderful despite the cutbacks.”
Her scholarship has funded her travels to Maine, Uganda, the Pacific Northwest, Scandinavia, California and Sydney, Australia.
Earnhardt said despite his inability to have his gap year funded, he is still satisfied.
“The essence of the scholarship and the amazing group of people they bring together hasn’t diminished.”
He added that it’s the intangible resources that make the program invaluable, and they haven’t been affected by the recession.
“It’s the human resources, in terms of both the advising they give you and the advising you’re able to get from other students in the program that mean so much,” he said.
“It’s just an enhancement of the already vibrant student body that you can already find on Carolina’s campus.”
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