Lewis & Clark’s endowment reaches all-time high
March 31, 2014
At the end of 2013, Lewis & Clark’s total pooled endowment reached a record-high valuation of $224.3 million. The Source checked in with Vice President for Business and Finance Carl Vance to learn more about the significance of this recent financial boon.
Why is the endowment critical to the life of the college?
The endowment supports many programs that cannot be funded just from tuition revenues. With more than 500 different endowments at Lewis & Clark, donors sustain their passions and help create the future for Lewis & Clark. For the college to be competitive in the future, it is critical for the endowment to grow.
Is there a right amount of endowment dollars?
For colleges there is no “right amount.” The larger the endowment, the less dependent the institution is upon tuition revenue. Larger endowments generally allow schools to provide higher scholarships, pay higher salaries, and offer more programs. Endowment per student correlates highly with the U.S. News & World Report ranking for top liberal arts colleges.
How much of the endowment do we spend each year?
The endowment spending level is determined by a 2009 Board of Trustees policy. This formula will reduce the annual spending from 6 percent to 5 percent of a rolling 16-quarter market value over a 10-year period in order to preserve the endowment’s purchasing power as inflation increases. In 2013-14, the operating budget will receive $9.6 million from the endowment.
If you are spending millions of dollars every year from the endowment, how does it manage to grow?
Lower spending levels help, but the endowment market value is determined by three dynamic variables: investment performance, new gifts, and spending amount. Between 2007 and 2009 the stock market crashed and the endowment value plummeted. With the rebounding stock market and new gifts, it took until the end of 2013 for the Lewis & Clark endowment to fully recover.
How do you decide how to spend the money?
A number of donors identify a specific purpose they want their endowment to support—for example, an endowed professorship such as the Pamplin Professor of Science. Most unrestricted endowments are used for general operations of the college.