Evening star. [volume] (Washington, D.C.) 1854-1972, 1949-01-16
Institutions Try
ToStay
Endowments Don't Meet
Postwar Operating
Expenses
By Lawrence N. EIdred

~ ~.
CHICAGO. - Before they are
ripped apart under the strain of to-
days money troubles some of the
Nations private institutions are
having to find ways to strengthen
themselves.
Much of the income of universities,
hospitals, Embarrassing Or
CARNATIONS and welfare agencies is
firmly rooted in prewar endow-
ments, but their expenses are tied
to the postwar imitation kite.
However, Booz, Allen & Hamil-
ton, management counselors, con-
tend in a current brochure that they
can do nothing about the income
side, but they can relieve strain at
the other end by advising on how
expenses can be reduced.
Since 1s4O," the firm said, near
ly every institution has undergone
a sharp increase in demand for its
services. Higher learning ranks
have been swelled to more THAI,
twice their preWar size by returned
veterans.
Hospitals have experienced great
er use of their facilities as member
ship in medical prepayment plans
has grown more than 500 per cent in
the last eight years.
with 100000 more people in
the country than in 1910, other in
situations nave felt the pinch as
we'll"
Good MANAGEMENT Necessary
Costs of both goods and services
have risen more than so per cent
above the prewar period. but raised
rates in few cases have been ade-
1uate to match tine cost spiral, the
firm declared.
On the other hand, it was added,
large fortunes which were once
the mainstay of private institutions
are being eaten away by Federal
estate and gift taxes and State in
heritance taxes. And the income
tax laws put a damper on the &C
emulation of new fortunes on
which private agencies may draw.
For example, individuals earning
more than 100000 in 1929 retained
an aggregate net income after Fed
eral taxes of s3,717,0OO,O In 1945
those in the same bracket had a
total net income after Federal taxes
of only S453,O 100000, less than one
eighth the 1929 figure.
ITO complicate the financial sit
uation of institutions, income from
has been reduced ma
terially in the last two decades. 1t
takes approximately so per cent
more endowment today to yield the
same return obtainable in the
192Os."
The only way out of the dilemma
is through good. performance and
good management, the counselors
declare.
1T is only in such planning and
performance that these institutions
can rightfully feel that Govern
ment ought not to interfere" the
counsellors noted.
In one case history cited by the
firm, a psychiatric sanitarium was
exceeding its income yet
its administration was inadequate
for its needs. The medical staff was
involved in routine administrative
chores instead of doing the neces-
sary clinical and therapeutical
work.
Ways of Saving Suggested
An item on the cost side showed
the institution was spending $4,000
a month to provide extra free meals
for employees, guests of patients and
friends of the staff.
The counseling firm suggested
routine chores should be done by
!aymen, leaving the medical staff
for medical duties. Free meals
should be controlled within we'll
defined personnel policies.
In another case, the executive
director of a famous museum had
been attempting to operate with an
ton which had long been
outmoded.
Substantial savings were effected
BY co-ordinating routine work, set
Ting up q salary structure based on
objective job civilizations, and giving
The museums executive director up
,o-date control over each division.
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