Demystifying
Vassar’s
Endowment
Endowment
“The endowment provides a steady stream of income outside tuition and fees,” says Bryan Swarthout, Vice President for Finance and Administration. “It supports all aspects of the Vassar education and enables our generous financial aid policies.”
Vassar’s $1.3 billion endowment not only enables the College to have the resources to attract and enroll the most qualified students regardless of their finances, it also ensures students are supported along the way by strong faculty and staff who help get them to and through graduation and into meaningful careers. Approximately 92 percent of students who start at Vassar graduate, including those from low-income backgrounds—far exceeding the national average of 50 percent.
Importantly, Vassar is a nonprofit—and there is nothing profitable about it: The money the College takes in each year from students is about $100 million short of what Vassar needs to pay its yearly operating expenses of approximately $250 million. If the College only accepted students who could pay the full cost of a Vassar education, that shortfall would be far less. But a policy like that would not be in line with Vassar’s mission and values. Because Vassar is committed to need-blind admission, meaning that the College admits students without looking at their ability to pay, and is also committed to meeting the full demonstrated need of admitted students, Vassar provides about $80 million in financial aid. About $70 million of that is enabled by the endowment, with most of the rest coming from operating gifts donated to the annual fund.
This is why College officials are so concerned about an expanded endowment tax on colleges and universities now being considered in the House of Representatives. According to President Elizabeth H. Bradley, such a tax “would have dire consequences for Vassar,” as it would “make it hard for us to sustain our generous financial aid policies.” In a March email, she urged all who share these concerns to get in touch with their representatives, whose contact information can be found at www.house.gov/representatives/find-your-representative.
It’s also important to note that all money collected from students is used for the current year’s expenses—none of it goes into the endowment. So where do these funds come from?
BY THE NUMBERS
of the College’s annual operating budget, making it a crucial source of support.
toward financial aid for low- and middle-income students.
of the demonstrated financial need for all students, with an average student debt of only $5,000 per year.
Vassar’s Board of Trustees oversees the endowment through its Investments Committee but does not handle day-to-day management of the funds. That is left to the College’s professional investment manager, Pathstone, which is charged with building a diversified portfolio to support regular annual spending and growth over time with prudent levels of risk. Pathstone’s fund managers have discretion to select the securities in which they invest. This, says Swarthout, is the best way for Vassar to meet its fiduciary responsibility to invest wisely and meet its expenses.
“Managing the endowment to support Vassar today and into the future is critical to continuing the education and access that Vassar provides,” he explains.
Even seemingly minor variations in investments can have huge consequences. For example, if a $100 million portfolio earns 6.5 percent over 30 years rather than 7.5 percent, that one percentage point adds up to $214 million in lost investment return and would result in as much as $25 million less annual income to the College from the endowment.
Founder Matthew Vassar understood the important role that wise investments would play in the College’s survival. On February 26, 1861, he presented Vassar’s first Board of Trustees with a tin box containing securities totaling $408,000, plus the deed for two hundred acres of land on which to build a campus. He also told the trustees that he hoped they would at some point invest a “principal,” or endowment, to ensure the College’s financial health into the future.
When Vassar first opened its doors in 1865, this new institution of higher learning gave women educational opportunities they had never had before. Today, Vassar makes sure others are similarly empowered: the veteran who took some detours on the way to an undergrad degree; the first-generation college student with no higher education in their family’s background; the future scientist raised by a low-income single parent; any accepted student. According to Swarthout, that is how the endowment can truly function as a force for good.
“Questions about endowment policies and divestment are complicated with many different perspectives and implications,” says Swarthout. “Vassar can best address these issues by enabling as many students as possible to attend the College, where they can learn to evaluate and discuss such important concerns from all sides.”