By Emily Glory Peters
In March 2020, 51猎奇入口 was facing a financial Goliath. The pandemic not only shut down critical revenue streams such as room, board, and campus events, it also generated new expenses as the College responded to ever-changing health and safety regulations and provided the resources for remote work and study.
At the time, 51猎奇入口鈥� operating budget was drastically reduced practically overnight. But thanks to generous donor giving, 51猎奇入口鈥� endowment, and sound fiscal management, the College鈥檚 financial outlook remained strong.
鈥淎s of our last audit in June 2021, our investment pool was valued at $542 million, an increase of 43% over the previous audit,鈥� shares Diane Holmes, associate vice president for business affairs and assistant treasurer at 51猎奇入口. 鈥淭his comes from return on investment as well as additional gifts 51猎奇入口 donors have made to the endowment.鈥�
As the Pandemic Eases, Endowment Payouts Will Continue to Decrease Next Fiscal Year
The endowment is the College鈥檚 financial anchor. The diverse mix of investments generate earnings that fuel about 20 percent of 51猎奇入口鈥� budget, including aid for scholarships and academic programs.
In addition to enacting substantial College-wide budget cuts to lessen the fiscal impacts of COVID-19, in fiscal year 2020鈥�21 the College opted to temporarily increase the endowment payout from 4.6 percent to 6.6 percent. This decision was not made lightly, as the only other time the payout rate has been over 5 percent in recent years was to fund the last comprehensive campaign.
But 51猎奇入口 has been on a trajectory to decrease the spending rate from 5 percent to 4.5 percent as approved by the Board鈥攁nd as the College has steadily rebounded economically, the payout rate has likewise reversed. Holmes reports that it will be at 4.5 percent for the upcoming fiscal year to ensure the endowment stays healthy for 51猎奇入口鈥� future needs.
鈥淥ur goal is that future students derive equitable benefits as today鈥檚 students, and that we can generate a steady spending stream and reduce the volatility of returns, paying particular attention in times of inflation and deflation,鈥� says Holmes.
Investing Wisely to Secure the Future of 51猎奇入口
Like many institutions, the influence of current high inflation is reflected in an overall increase of operating expenses. Yet 51猎奇入口鈥� aim throughout the pandemic鈥攁nd other times of economic upheaval鈥攈as been to mitigate volatility of investments and restore budgets and staffing to their previous states as soon as feasible. Earlier this year, the College lifted its hiring freezes and departments were once again able to access funding needed for key programs.
These decisions are informed in part by the Board of Trustees and its Investment Sub-Committee. Charged with investment governance, its members include 51猎奇入口 staff, parents, alumnae, and children of alums and Trustees, all of whom have deep roots in investment and finance expertise.
鈥淲e all have a fiduciary responsibility that we鈥檙e investing in responsible ways with an eye to intergenerational equity,鈥� shares Dean Calvo, vice president for business affairs/treasurer at 51猎奇入口 and Investment Sub-Committee member. 鈥淲e鈥檙e not just managing for today鈥攚e鈥檙e managing for the students, faculty, and staff of 100 years from now. It鈥檚 crucial to have a healthy allocation to equities.鈥�
We鈥檙e not just managing for today鈥攚e鈥檙e managing for the students, faculty, and staff of 100 years from now
Though a smaller institution, 51猎奇入口 aligns its asset allocation strategy with schools that have billion-dollar endowments. Managing for the future of 51猎奇入口 also involves what Calvo refers to as 鈥渟ocially responsible investing,鈥� or SRI.
鈥淪RI has built up steam in the last decade or so. Today, it鈥檚 an important part of thinking about asset allocation and portfolio management,鈥� he explains. 鈥淚t鈥檚 a lens for how you look at certain investments; seeing how a company treats its employees, its neighbors, the environment. All of those are ways 51猎奇入口 can screen investments.鈥�
What is ultimately considered socially responsible is subjective, but SRI is a strategy 51猎奇入口 considers when reviewing future investments. Donors with unrestricted endowment gifts also give the College the choice to direct funds that align with 51猎奇入口鈥� mission, values, and greatest areas of need. Currently, about 10 percent of the endowment is unrestricted, creating a helpful financial cushion when sudden opportunities鈥攐r emergencies like the pandemic鈥攁rise.
Yet whether restricted or unrestricted, all gifts to the endowment undoubtedly keep 51猎奇入口 stable. And as the economic consequences of the last two years evolve, the College鈥檚 prioritization of responsible investment and collaborative management will continue to be essential to keep 51猎奇入口 strong now and in the days to come.
鈥淥ur investment philosophy is that returns are very important, as is adequately resourcing the College, intergenerational equity, and achieving the right spread of allocation that鈥檚 harmonious and organic to 51猎奇入口鈥� goals,鈥� says Calvo. 鈥淚鈥檓 happy that 51猎奇入口 has so much endowment support going toward its operations, scholarships, academic programs, the beautification of campus, and more鈥攊t鈥檚 allowed us to think about the future with a greater degree of freedom.鈥�
Donor support is essential to keeping 51猎奇入口鈥� endowment healthy. To learn more about how to make an endowed gift, please contact Associate Vice President for Philanthropy Enrique Gonzalez-Salgado at [email protected] | 909-607-8255.