The University of Montana Foundation is coming off an extremely challenging 2009 fiscal year with hope and confidence.

According to its newly released annual report, the UM Foundation reported a loss in its portfolio investments of 19.7 percent, or about $22.2 million.

Employees endured furloughs, and about two-thirds of the foundation’s endowments were suspended at the close of the fiscal year on June 30 when they dipped below their principal value.

However, there was also a bright side to a year defined by a recession.

The foundation recorded its second-best fundraising year ever in terms of new gifts and pledges, raising $22.6 million.

“Hard times bring people together,” said UM Foundation president and CEO Laura Brehm.

When thinking back on the past year, Brehm says: “It really is an overwhelming emotion of appreciation to not only the donors, but to the campus, and the incredible facility here, which is at a quality that is incredibly high for the financial circumstances of this university.”

While the foundation’s investment loss of 19.7 percent was significant and disrupted its funding operations, the amount was on par with losses experienced at other peer university foundations, according to the report.

“The market’s subsequent upturn (beginning in March) has reversed much, but not all, of the impact of last fiscal year’s severe market decline,” according to the report.

At the beginning of 2009, the foundation launched its “1,000 Promises to Keep” campaign – named after the number of student scholarships in jeopardy of disappearing without additional revenue. The foundation raised $250,000 within a span of several months, far short of its $1.2 million goal. Still, the campaign managed to provide enrolled UM students with all the scholarships they had come to rely on.

Then in March, the foundation announced plans to implement furloughs, requiring its 47 employees to take 13 days of unpaid leave between May and October. That cost-cutting measure is now complete.

“I wouldn’t want to have to go through it again, but everyone contributed to the challenge and understood the need,” Brehm said.

The foundation has approximately 750 endowments. As of June 30, though, two-thirds of those were suspended because of significant losses. When endowments drop below the principal amount, the foundation’s financial support to the UM campus is suspended until the value rebounds.

The last six months of the foundation’s five-year historic capital campaign, during which $131 million was raised, seeped into fiscal year 2008. The campaign produced many new endowments, which are the most susceptible to fluctuations in the stock market, said Keith Kuhn, UM Foundation executive vice president of finance and operations.

Kuhn described this past fiscal year as “about as traumatic of an investment market as, I think, many people alive since the Great Depression can remember,” he said. “We really haven’t seen times like this.”

Yet, many donors stepped up to the challenging times in big ways.

Many made one-time annual gifts to ensure that a student would receive a scholarship even though the person’s endowment had been suspended.

In the past six months, as the market has begun to rebound, only one-third of the foundation’s endowments remain frozen.

In 2008, the foundation had a record-setting fundraising year, raising $37 million. This year, the foundation brought in $22.6 million – its second-best fundraising year ever in terms of both dollars and the number of donors.

Those totals include pledges, new donations and bequests.

Also, the foundation gave almost 2 1/2 times more to the UM campus this year than it did in previous years, mainly because of the building boom on campus, Kuhn said. Support to the UM campus in FY 2009 reached $29.7 million, a significant increase from the previous year.

Much of the support was to pay for construction of new building projects, such as the addition to the UM Law School, the new Phyllis J. Washington Education Center and the Payne Native American Center.

The foundation also liquidated some investments and used some of its on-hand cash to pay the bills on those projects.

The total number of donors in FY 2009 reached 15,918. Of those, 58 percent were not UM alums, Brehm said.

As it becomes more evident that the state is not supporting its public colleges and universities with taxpayer dollars, private citizens are stepping up to the plate because they live here, are invested in Montana, and want to help grow its economy and support an educated work force, Brehm said.

“Our alumni are the backbone, but this other growing support base is important, too,” she said. “Maybe their alma mater is somewhere else, but they give here because it’s so important to keep this university at a high quality of education.”

Reporter Chelsi Moy can be reached at 523-5260 or at chelsi.moy

@missoulian.com.