Thanks. And my apologies for being lazy. 
Bingo. The bulk of the gifts to Wesleyan University go towards endowment and would not show up on the âoperatingâ side of the ledger.
1 Like
Except for the annual fund, of course, which is all applied toward current-year ops.
1 Like
Yes, without getting too far into the weeds, the Annual Fund is what you will find when you look up gifts in the âOperating Revenuesâ section of Wesleyanâs Financial Reports.
2 Likes
So it is all relative.
Wesleyan does rely on gifts to balance its operating budget, just not nearly as much as the LAC-type units within Harvard, or Princeton.
This is not a surprise. Wesleyanâs endowment per student on this list:
https://www.reachhighscholars.org/college_endowments.html
. . . was about $491K. Thatâs a lot in the greater scheme.
But Princeton was $4.6M. Over 9 times as much! Harvard was spreading it thinner at $2.2M, but that is like 4.5 times as much.
So of course those schools spend more endowment income as a percentage of their operating budget than Wesleyan.
By the way, not to put too much weight on this, but . . .
The first 5 of the schools on that list are âPYSMHâ. The next are âWAPSâ. Not in the customary order, but those are familiar lists of letters.
It quickly gets way more muddled, but I think there is a basic truth to the theory that these particular colleges have essentially used a combination of extraordinary giving levels and good management of gifts to cement their places at the âtopâ of US News-style rankings. Obviously it is a feedback cycle, but a critical step in that cycle is getting the gifts and managing them properly.
1 Like
Youâre good. This sort of thing is like needlepoint for me, I find it relaxing.
2 Likes
And giving for capital things like buildings and labs and such is critical. All that is obviously part of the experience, an important part, and ârichâ LACs can do really well in this area over timeâincluding because at least often they are less land-constrained and/or additional land in their local is far less expensive. I think often this adds up to a ârichnessâ to their built environment per capita that is out of scale with their general endowment per capita.
But they do have to balance their operating budgets too.
2 Likes
Yes, and one can appreciate the teaching hospitals, physics research, engineering programs, institutes of advanced studies all funded by the first 5 and wonder what-in-the-world the next 5 are doing with that much money!!??
Doubtless, they are being pressured from a variety of gatekeepers to spend it as rapidly as possible, my hunch is mostly on need-based financial aid. But, you also get occasional whiffs of incredibly ambitious building programs.
1 Like
Typically endowment money doesnât go towards capital projects. Sometimes, specific endowments are created to fund (or partially fund) certain professorships or coaching positions but that is a different animal. Because endowment spending is capped at a certain % it doesnât make it a good source of support for significant building projects.
1 Like
Well, to be fair, those sorts of things often come at least much closer to paying for themselves. It is the elite arts and humanities and social science stuff that really needs the most support beyond net tuition.
And then there is a whole other issue about who teaches those classes. The more you can rely on low-paid teachers, including grad students (even if funded), the lower your operating costs per such student. LACs have some variables too. But if their ambition is actually to beat their R1 peers on things like student to faculty ratios (particularly not including cheap faculty and grad students in the ratio), then they will typically need more funding per capita for that purpose.
Now, I donât know if that totally answers the question. Indeed, I have never really looked into it, but I agree it often seems hard to âseeâ how the LACs with multiples of the endowment per capita than other still-elite LACs are spending all that money.
But all this is complicated enough that maybe expecting it to be obvious is not quite right.
1 Like
Endowments arenât usually spent on buildings - and schools just canât spend them down because they are usually restricted to using only a certain % of the total every year (which is a much lower % than you might imagine). Schools run specific capital campaigns to raise funds for building projects and donations are restricted to that specific project (unlike endowment giving which is unrestricted). Iâm in fundraising so . . .
1 Like
My rudimentary assumption about those numbers and what they actually mean has been that the luxury of a reasonable (and sustainable) draw from such huge numbers for ops support would make them less reliant on current and future gift giving. Iâve never bothered to examine their actual expenses.
I mean, a $36 billion endowment at a school educating 8,600 people in total makes the average person think that institution must be fairly independent and can call their own shots. Doesnât sound like it.
Indeed. I tried to be careful about saying âgiving for capital thingsâ versus endowment giving, because typically most giving for capital things isnât done through endowment giving. To me this is the pointâendowment per capita is most relevant to balancing operating budgets, but there is an entire side of giving that matters a lot to the experience at ârichâ colleges that isnât being reflected in such a measure.
2 Likes
A big endowment is great but you canât touch the principal - spending is usually capped at 4-5% of investment return (based on a 3 year average). In years with poor investment performance there is a less to spend.
2 Likes
Yes, I know how that goes; Iâm a fundraiser myself. The endowments donât pay directly for construction but when the bills become due for debt service - that certainly comes out of the endowment bucket.
1 Like
And to illustrate this earlier point (to be clear, I am by no means suggesting she required lowering the standards)âŠ
1 Like
Exactly. Also, annual giving - which supports operations- may be restricted too. Schools often allow donors to select where they want their donations to go - I typically select financial aid.
2 Likes
Current, sure.
But future? I mean, they were not given all that at one point in the distant past. So hypothetically go back into the past and apply this logic, and they wouldnât have ended up in the same position today.
And they are in a competition with each other, and increasingly globally, a competition they see playing out on the scale of generations and indeed centuries.
So how big will these numbers for the âtopâ universities and colleges be in 50 years? 100? 200?
I suspect they do not believe future giving will be irrelevant to who is still at the top of these rankings at those time scales.
1 Like
Yes, they often have to go that route because you arenât getting all that you need up front (and depending on a pledge schedules, you might be waiting several years before you have the total gift in hand).
Itâs not like a bridge loan. Naming rights to a building rarely require the donor pay for 100% of the cost of construction. Amherst, the âAâ in the above-mentioned, WAPS colleges (grimace) has over half-a-billion dollars in debt issued mainly to bulldoze buildings that have fallen out of fashion with its base.