History, Struggle and Progress
By Tommy Brown
A college’s endowment is its lifeblood. From paying faculty salaries to offering financial aid, from maintaining good housing on campus to funding various programs around campus, the endowment’s impact can be felt everywhere on campus. It is therefore incredibly important for students and alumni alike to understand where Kenyon’s endowment stands today, how it has progressed and what the administration plans for its future.
What is the endowment, exactly, and what is it used for? Take Kenyon’s roughly $105 million operating budget and divide it by its enrollment of about 1600 students, and what’s left is a figure just over $65,500. The difference between this number and the cost of full tuition is covered by the interest earned by the endowment and yearly donations to the Kenyon Fund by alumni. Any financial aid offered to students also comes from these two funds, as do expenditures ranging from upkeep of buildings and grounds to salary increases for faculty and staff.
At first glance, Kenyon seems to be struggling when compared to similar institutions. Kenyon’s perennial rival Denison, for instance, has an endowment of almost $530 million compared to Kenyon’s endowment of almost $180 million. In other words, Denison is able to spend about two and a half times more per student than Kenyon can. Grinnell’s endowment is better yet, purportedly exceeding $1.4 billion. Looking at the raw numbers, it seems as if Kenyon is being left in the dust. Such a shallow examination, however, does not take into account the history of the College’s endowment, which helps account for this difference, nor does it consider the great progress the College has made over the years.
As Vice President for Finance of the College Joe Nelson told the Observer, there are essentially four reasons for the size of the endowment: the size of our alumni base, the dynamics of how endowments make their institution money, time and simple math. Nelson points out that Kenyon remained a male-only school until 1969 and was much smaller than many of our competitors. It therefore had a restricted alumni base from which it could solicit donations for the endowment. Kenyon’s early history of graduating mostly ministers and academics also played a role; though undoubtedly honorable professions, positions in the clergy and academia do not generate as much disposable income for donations as more lucrative professions. Secondly, many other institutions have depended on large seed money for their endowment or gotten lucky early in their endowment’s growth. Grinnell serves as a good example of this: one of its initial investments was in the corporation that eventually became Intel, now a Fortune 500 company, and was aided by investment advice from famously successful investor Warren Buffett. Time and math also play a big factor in how much interest an endowment is able to earn: the more money an endowment has, the more money it earns on compounded interest, and the longer an endowment has been established, the more money is made beyond the principle investment.
All four of these factors contribute to the state of Kenyon’s endowment, but one would think they matter little when we compete with other colleges to attract the best and brightest students. Our faculty, location and student body all play significantly larger roles in prospective students’ decisions to come here, or anywhere for that matter. Another crucial factor in these decisions, however, is how much financial aid Kenyon is able to provide; the Kenyon Fund, the annual alumni donation fund and the endowment all directly impact the College’s ability to offer attractive aid packages. Compared to its peer institutions, Kenyon is not as able to give financial aid to students in need, thus restricting the number of students who are able to attend the College.
Nevertheless, Kenyon’s endowment has made significant improvements, particularly through the fundraising efforts of President Nugent. Though the institution certainly got a late start in growing its endowment, we have seen consistent success in the past decade. Because of the size of the endowment, Kenyon depends more on annual giving through the Kenyon Fund to make up the difference between the operating budget and tuition. While this puts more stress on alumni in making annual donations, it also comes with unforeseen benefits. As Nelson pointed out, there were few places to hide during the financial crisis of 2008-2009, and many schools saw their endowments take a large hit. Through intelligent investments by the Investment Committee of the Board of Trustees, our endowment fared better than those of our peer institutions.
According to Myles Alderman, Jr., the chair-elect of the Kenyon Fund, we were also aided greatly by the strength and loyalty of our alumni and the strength of their annual giving to the Kenyon Fund. Despite a small endowment, these impressive regular donations, which according to Kenyon Fund chair Ben Gray totaled $5 million last year, have helped buoy Kenyon’s finances. Our peer institutions, which enjoy larger endowments and rely less on annual giving, found themselves forced to cut programs. Meanwhile, Kenyon’s loyal alumni giving program granted us more flexibility during uncertain economic times because we were not as dependent on our endowment and not as beholden to fluctuations in financial markets.
Kenyon’s endowment is not quite on the level of Bowdoin’s, Williams’ or Oberlin’s, but it is getting there. A large endowment is an ideal towards which the College is striving, especially considering our 150-year lag behind competing schools. An article published in 2006 in Business Officer, the magazine of the National Association of College and University Business Officers (NACUBO), applauded our endowment’s consistent growth over the past decade and even placed it in the top decile of performers over the past 10 years.
While there certainly remains room for improvement, through the leadership of President Nugent, the loyalty of alumni giving to the Kenyon Fund and a continually growing alumni base, the endowment is on track to compete with our peer institutions. As we all approach the post-graduation real world, it’s important to think of how we’re going to give back to this place that we love. With the help of current and future alumni, the endowment will be yet another of Kenyon’s outstanding features.