Sharing news about the annual college rankings has been a pleasure at Elon in recent years. Once again, the fall editions of the major guides placed Elon among the top schools in the nation, with praise for our engaging, student-centered style of teaching and learning. The rankings are a source of pride and a recognition of all that has been accomplished at this remarkable institution.
However, one ranking you haven’t heard us talk much about places Elon at or near the bottom. Elon’s endowment level is a fraction of the endowments held by most of our peer institutions.
Elon’s current endowment of about $60 million ranks last among the U.S. News & World Report top-ranked private Southern universities. The average endowment for private schools in that group is more than $300 million. Among the private schools that Elon competes directly with for admissions, the average endowment is more than $360 million. Every school in both groups has an endowment of at least $100 million, with the highest endowment reaching nearly $1 billion.
For people outside of higher education, the concept of an endowment may be a bit of a mystery. I liken it to a family’s savings account, with some important differences. First, only a portion of the interest earned from endowment is spent each year; the principal is never touched. Second, earned interest on the endowment is usually restricted by donors for specific purposes, allowing them to provide a meaningful legacy through scholarships or professorships. But like a family savings account, the “miracle” of compound interest also applies to college endowments; many schools have seen their endowment values skyrocket through the growth years of the investment markets.
Why is Elon’s endowment smaller than its peer institutions? Many of those schools were fortunate to receive major, transformative gifts decades ago, providing a foundation for long-term endowment growth. Elon’s donors have been generous, but our primary fund raising has been directed to building campus facilities, including Koury Business Center, Belk Library, Rhodes Stadium and the Academic Village pavilions, as well as increasing annual giving through the Elon Fund and Elon Athletics Foundation, which have both been increasing steadily. Another reason is that our alumni body is relatively young — 51 percent are under the age of 40. Most young alumni gifts are to annual fund campaigns, not endowment or capital projects.
It is now time to begin a more concerted effort to build our endowment. Quite simply, a larger endowment is critical to both our long-term financial health and the continued development of quality programs. It would be unwise to depend for the long term on growing the size of the student body and increasing tuition as our principal sources of additional revenue. We must be careful not to raise prices so high that students of modest means cannot afford Elon. And we also must continue our policy of slow growth, so we do not endanger the core community values that make this such a special university.
What is important for alumni and friends to know about Elon’s endowment? First, the majority of our endowment comes from planned gifts. Bequests in wills and estate-planning strategies, such as charitable remainder trusts, gift annuities and life insurance policies, offer donors many attractive financial advantages, allowing them to provide for loved ones while leaving legacies for future generations. Of course, some of these gifts will not be realized for many years, even decades, but it is imperative that the “pipeline” of planned gifts to Elon increase to ensure that our endowment will grow in the future.
Second, Elon’s endowment is exceptionally well-managed by the Investment Committee of the Board of Trustees. Long-time committee chair Wallace Chandler ’49 and other trustees, in partnership with Gerald Whittington, vice president for business, finance and technology, have established wise investment policies that have served Elon well. The portfolio is managed by several of the nation’s most respected financial institutions, and over the most recent 10-year period, the endowment has earned more than 10 percent per year on average, despite the stock market decline earlier this decade.
Third, endowment funds make an incredible difference in improving the quality of campus life. Recent endowments, funding the Baird Pulitzer Prize Lecture, the Kenan Honors Fellowship, the Gordon Dancer and Isabella Cannon international study scholarships, the Rawls Professorship and undergraduate research scholarships, and the Truitt Center for Religious and Spiritual Life, have made substantial improvements in the quality of academics, athletics and student life. Best of all, endowed programs provide a lasting legacy, transforming the lives of generations of future students.
We are already at work developing strategies to raise the endowment level above $100 million, a central goal of the next comprehensive fund-raising campaign in the second half of this decade. We will continue to conduct some targeted campaigns for necessary new facilities, but our primary emphasis must be on growing the endowment with a special focus on supporting scholarships and the work of excellent faculty and staff. I look forward to hearing your ideas about this Elon priority. Building the endowment is important work that will shape and direct this university for many years to come.
Leo M. Lambert