Endowment Growth

I haven’t been on here in forever, and I hope the undergrads don’t mind a crusty alum posting out of the blue, but I wanted to say something about an item in Ed Haldeman’s latest e-mail, and I don’t know if it went out to undergrads.

Here’s the quote (I don’t have a link, unfortunately):

Recently we’ve been talking a lot about governance at Dartmouth. This morning I attended a Dartmouth Investment Committee meeting along with other Trustees and alumni who serve on the Committee. I am pleased to report that over the past two fiscal years (fiscal year ends June 30), the College endowment increased by more than $1 billion dollars. The percentage increase over this two-year period was approximately 38 percent. As of June 30, 2007 the total value of the College endowment was approximately $3.7 billion. I thought you would want to know about this good news.

Leaving aside the question of whether giving more money to Wright and company is a good thing, there are two things to say about this.

First, while those numbers sound impressive, according to CNN Money, from 2005 to 2006 Dartmouth’s endowment growth rate was next-to-last in the Ivy League (ahead of only Harvard), and we’re in the middle of the pack when measured among all the colleges and universities with endowments over a billion dollars.

So this isn’t a matter of particularly brilliant management or generosity from alums, but rather of a rising tide lifting all ships.

And second, now that the economy is strong and the endowment is growing, and now that we’re looking at “governance,” it might be a good time to take a look at how we manage the spending that comes out of the endowment, which underwrites 20-30% of Dartmouth’s annual budget.

As some may remember, only five years ago, the College tried to eliminate the swim team, cut course offerings in the humanities, and stopped staffing the Sanborn Library because the Administration had assumed that the dot-com boom would continue forever and was facing a budget shortfall because they had overspent from the endowment.

With the subprime lending market’s crash now causing serous hiccups in the broader market, there’s no time like the present to take a serious look at how we take money from the endowment to cover operating expenses.