On Oct. 9 Hillsdale College launched “The Rebirth of Liberty and Learning Campaign,” a new fundraising effort intended to build upon the college’s current endowment.
A financial endowment is considered to be a donation from an individual of specific funds or property to a institution, with the purpose of investing and acquiring interest over a lengthy period of time.
At Hillsdale, the endowment funds a large portion of students’ scholarships, professors’ salaries, and even certain campus maintenance projects.
According to Hillsdale College Treasurer Patrick Flannery, the fair market value of the college’s current endowment at the end of September was $386 million. Last fiscal year, the endowment had a 10.63 percent return.
The recent economic slowdown caused by the 2008 recession put stress on the college’s endowment.
Hillsdale College Provost David Whalen said the college took crucial measures in reducing any negative impact that a troubled economy could have on investments.
“The college responded to the downturn by cutting its budget by 10 percent that fiscal year,” Whalen said. “If the college sees that the endowment is returning less than planned it tries to curtail current expenses.”
The new campaign projections hope to raise $472 million over the next eight to 10 years.
“The majority of the goal in the new campaign is to seek funds for the future endowment,” Flannery said.
Of the estimated $472 million, the college predicts that $334 million will be considered endowments.
Every year the college allocates five to six percent of the total 10.63 percent return, from endowment, for college expenses.
“Five to six percent is withdrawn from the return every year and dropped into the college’s operating budget,” Whalen said.
Whalen said over the past 12 years the market has stayed relatively flat. This stagnation has caused endowments to have a low return in interest, in comparison to the initial anticipated returns.
“The endowment hasn’t earned a lot of interest due to the flat performance of the stock market. It ought to be growing based on its own compounding,” Whalen said. “Just like your bank account, you want it to grow. Not because you keep making deposits but because you are acquiring interest.”
Whalen attributed the college’s independence from state and federal funding to the generous donations that has created such a promising endowment.
“It is not too much to say the endowment is what permits the independence of the college. If the college did not have the endowment it would not be able to afford students scholarship,” Whalen said. “The independence of the college and the strength of our endowment are very closely tied.”
