Endowment exceeds projections

According to the most recent statistics, the endowment at the College is performing at a high level. The “endowment, investment program and more importantly, the overall financial position of the College is very healthy,” Chief Investment Officer Collette Chilton said.

The performance of the investment pool continues to exceed objectives, standing at $1.8 billion as of June 30. The 10-year return as of June 30 was 5.6 percent after accounting for inflation, above the target 5 percent, which “ensures the pool can support the College today and maintain its value for future generations,” according to Chilton.

The cost of education at the College, about $85,000 per student, remains well above the revenue the College collects in tuition and fees, even from students who do not receive financial aid. Earnings on the endowment make up much of the difference between tuition payments and the College’s $175 million operating budget.

“In comparison to the liberal arts colleges that we normally define as our peers, we  at the College have the largest endowment,” Provost Will Dudley ’89 said. However, Pomona and Swarthmore both have higher endowments per student than the College by approximately 33 percent and 20 percent, respectively.

While the recession led some colleges to eliminate need-blind admission, which allows students to be evaluated for admission equally regardless of their ability to pay, Dudley said that need-blind admission remains “fundamental” at the College. “Our resources are sufficient to support these core principles into the future,” Dudley said. The endowment was at its lowest in 2009, when it bottomed out at $1.35 billion. Today, the endowment stands near its highest point in 2007, before the recession hit, at around $1.8 billion. Inflation has impacted this number, however, and in “real terms,” according to Dudley, the College endowment is about 15 percent lower than it was in 2007.

About half of every dollar the College spends comes from the endowment, according to Dudley, which makes its preservation and growth crucial for College operations. “The endowment provides 46 cents of every dollar we spend at Williams, and the College is counting on it to provide that level of support for the rest of time,” Dudley said. “It can do so, but only if its real value remains undiminished. To maintain the real purchasing power of the endowment in perpetuity, we need to limit our annual draw to approximately 4.5 percent of its value. Currently, this amounts to $80 million, which pays for nearly half of our annual operations. Undertaking new capital projects will depend upon receiving new philanthropic support.”

To grow the endowment, the College relies mainly on gifts from alumni and its investments.

“Our investment office works to earn the highest possible returns consistent with our limited tolerance for volatility and our need for a high degree of liquidity,” Dudley explained. “The Office of College Relations works with alumni, parents and other donors to raise additional endowed funds. This work is critical to our ability to sustain the scope and excellence of the education we provide to students at Williams.”

Further information about the College’s investment program can be found at the Investment Office website. Investment Reports, which cover “governance, asset allocation and performance,” for fiscal years 2009-11 are currently available online, and the 2012 report will be made public soon. In addition to investment reports, “our audited financial statements contain eight pages of footnotes describing our investments,” Chilton said.

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