SLC's top issue: The endowment

by Frederic Richter

Thursday November 29, 2007

A popular conception within the Sarah Lawrence community and beyond is that the college’s endowment is relatively diminutive compared to that of similar liberal arts institutions and, according to the numbers, this is true. Many are concerned that the size of the endowment may negatively affect the school’s ability to lure new professors and retain the illustrious ones currently employed at the school. The 2006-2007 endowment figures, especially the amount spent per student, are really quite staggering: Smith College, $358,691; Bryn Mawr College, $327,630; Northwestern University, $288,401; Vassar College, $276,090; Reed College, $269,084; Oberlin College, $250,829; Brown University, $236,277; Wesleyan University, $184,903; Barnard College, $67,616; New York University, $46,902; and, finally, Sarah Lawrence College, with $37,711 for 06-07 (and a school-estimated near-$50,000 for 2007-2008). But is the disparity truly as great as it seems at first glance? Sarah Lawrence is much smaller than most of these previously mentioned schools; a larger student body provides more income from alumnae contributions. The very small populace of a school like Bryn Mawr yields an enormous per-student figure. When the tenth president of the college, Karen Lawrence, was asked about this apparent disparity, she responded that almost all the of schools most often compared to SLC are substantially older—usually 50-100 years older, with the exception of Reed, which is only 20 years older. President Lawrence also commented that, in comparison, “the alumni base of these schools is considerably larger than Sarah Lawrence’s.”

According to President Lawrence, another important factor to consider in regards to Sarah Lawrence’s small endowment relates to the philosophy and culture of the college.

She notes that, “Until recently, (within the past few decades) the ethos at SLC was one that did not fully appreciate the importance of professional fundraising and alumnae/i cultivation.” This is a problem that President Lawrence and many other college officials plan to address, undertaking a series of fundraising campaigns in order to persuade SLC graduates of the value of “intergenerational equity.”

Many people argue that Sarah Lawrence’s fundraising difficulties result from the fact that its graduates go into fields with lower median salaries. President Lawrence responds, “Though many of our graduates do pursue careers in the arts, activism, non-profits or social justice, we have found that it does not really hinder our fundraising efforts.” However, profession inevitably has some effect on donation capabilities.

While it is true that the gift money SLC has received may not be particularly impressive compared to that of its peer institutions, SLC has still garnered more than $130 million in gifts the past 10 years. As Suzanne Murphy, Vice President of College Resources, stated, “Furthermore, we have had an extraordinarily positive response to our planned giving efforts (future gifts to be bequeathed to the College), securing more than $55 million of endowment gifts that will be realized in the College’s future. It is precisely these types that have built peer institution’s endowments to their current levels. We are constantly raising money for two distinct areas: the endowment and the Annual Fund.”

The Annual Fund, used primarily to fulfill the operational needs of the school, is mostly supported by smaller, consistent donations, while the endowment is sustained by larger, sporadic donations and bequests. In the past year, commitments to the school amounted to $14.7 million in gifts and pledges, 85 percent of which came “from large gifts, including a $3 million matching grant for the endowment from the Andrew W. Mellon Foundation.”

Despite the generally gloomy perception of the state of Sarah Lawrence’s endowment, the endowment has actually grown 53 percent since 2003 and a hefty 140 percent in the past 10 years. In May of 2003, the endowment was at $46.7 million, and today it is at $72.2 million.

According to the Vice President for Finance John Bernson, this increase was achieved through “the importance of endowment giving, a pretty good investment return” and “a highly diversified portfolio [that] is quite professionally managed.” This portfolio and the market have performed quite well recently due largely to “very favorable market conditions,” according to Bernson. While the cyclical nature of the market prevents any guarantee of future financial security, other signs of financial health should be taken into account.

For example, although the school has had a deficit for the last two years, this past year it was only slightly greater than $700,000, compared with around $2 million the year before.
But will SLC’s endowment ever catch up to those of the other schools?

“Based simply on mathematics and the power of compounding over time, it’s difficult to match the largest of the endowments in terms of gross dollars,” President Lawrence said. “However, if we successfully raise a number of very large gifts, which we will try to do in our next fundraising campaign, we can make great strides.” She also feels that it is “quite possible to close the gap” between SLC and its peer schools in terms of the per student endowment. President Lawrence believes fundraising will be “the primary vehicle for rapidly increasing the size of SLC’s endowment in the near future.”

So, does the size of the endowment really affect the school’s ability to attract new professors and maintain those it already has?
The median salary for a starting professor at SLC is considerably low. President Lawrence feels that this is not currently holding SLC back in recruiting and retaining professors, but that there is “a real risk that an inability to maintain the competitiveness of salaries and benefits will hinder our efforts to recruit and retain faculty who are superb teachers and mentors.” She confesses that a larger endowment and more income from it would certainly aid in this process, and that the school will address this issue through the faculty and staff compensation task force and an upcoming fundraising blitz.