by Nathaniel Shahan
“The optimistic part of me thinks about … doubling the endowment size,” President Sean Decatur said. Size does matter when it comes to a college’s endowment. In 2014, Kenyon’s endowment stood at $206.8 million. In comparison, Decatur’s alma mater Swarthmore College, whose student body is smaller than Kenyon’s and opened 40 years after Kenyon did, had an endowment of $1.5 billion in 2013, according to its website.
Kenyon’s small endowment is infamous on campus, and is often blamed for any woes of the College. Even the Collegian’s staff editorial from Feb. 5 of this year urged trustees to increase the endowment. But that $206.8 million does not represent a pile of cash the College draws from to pay bills and sponsor programs; “an endowment originated as a gift … by law and donor restriction you can’t spend principal and the yield on the endowment … supports operations,” Joe Nelson, vice president for finance, said. Even if it wanted to, Kenyon could not simply take out a few million dollars to fund a project or increase the financial aid budget.
An endowment represents an invested sum of money from which returns are derived and then spent or reinvested. Money donated to the College’s endowment can be invested in any number of ways, including venture capital and real estate, according to Nelson. “What you try to do is build a portfolio that’s diverse,” Nelson said. At present, the College is invested in “probably 70 different investment relationships,” according to Nelson.
In 2014, the College’s operating budget totaled $129,618,000, according to financial information provided by Director of Annual Giving Shawn Dailey. Of these costs, only 5.8 percent, or $7,805,000, were paid for from the endowment. This amount is determined every year based on a “payout formula” to determine “how much [the endowment] will support the budget,” Nelson said, explaining that this works out to be around five percent of the budget each year. This money is largely reserved for endowed professorships and endowed scholarships — “probably the largest piece of the endowment is … for scholarships,” Nelson said.
A small endowment has not always plagued Kenyon, according to College Historian Tom Stamp. “There were in fact times during the period before the Civil War when Kenyon’s endowment compared … with those of some of the colleges that are now our more wealthy competitors,” Stamp wrote in an email to the Collegian. However, over time, the College lagged behind. One factor may be the hazing death of Delta Kappa Epsilon pledge Stuart Pierson which in 1905 tainted the College’s image and led to a period of decreased giving. However, this story is not entirely true, according to Stamp. “The death … did indeed have a deleterious effect on Kenyon’s finances, but it was primarily because of a decline in admissions,” Stamp wrote, maintaining that the “College had fully recovered [financially] after 10 years.”
According to Stamp, Kenyon has received large gifts from alumni such as the Gunds, the Mathers and the Gambles (of Procter & Gamble). The College has never received “mega-gifts.” For example, Oberlin College, which has an endowment of $808.8 million according to their website, at one point received a gift of $90 million.
Kenyon was also long affected by its size, which resulted in fewer alumni. The College “was very small for a very long time,” Stamp wrote.
Low enrollment and expenditures to make the College co-ed in the 1960s put Kenyon behind similarly sized schools, according to Dailey. “We were a little bit behind in the ’60s and there was a 25-year bull run on the stock market, and the real reason that we’re behind is largely … the power of compounding interest,” he said. “That disparity grew as the stock market boomed,” Dailey continued. “We had less to invest.”
Looking forward, Decatur says increasing the endowment will be “the primary focus” of the upcoming capital campaign.” He believes if that is made a priority, and if there is not an economic downturn, he could see the endowment doubling over the next 10 years. However, Nelson believes Kenyon will always lag behind its peers. “In a relative way, without some cataclysmic event, … we’re not going to catch up,” Nelson said.