Financial Future Update Spring 2014

Grinnell College is among a handful of small, private, national liberal arts colleges with endowments valued at more than $1 billion. If Grinnell has this level of resources, why does it need to raise more money?

Currently, Grinnell’s $1.74 billion endowment is responsible for funding 53.7 percent of the college’s operating budget. Our endowment covers a larger share of annual operating expenses than similar endowments at Amherst, Pomona, Swarthmore, Wellesley, and Williams.

At the same time, financial need is growing in Grinnell’s admit pool, and at schools across the country.

From 2008–09 to 2010–11 at Grinnell, the number of entering students with high financial need increased 10 percent. Domestic students who are admitted have their full financial need met, with aid rising along with any increase in tuition and fees. Grinnell’s resources will steadily erode unless revenue growth — backed by reasonable cost controls that don’t harm our mission — keeps pace with the demand for aid.

Even with a highly diversified, high-quality portfolio, our ability to achieve our mission and values would depend on the ups and downs of global markets.

To strengthen the financial forecasts, Grinnell focuses on three diverse revenue sources: the endowment, student revenue and philanthropic giving.

Grinnell’s list price for tuition and fees is similar to other schools with similar endowments, so at a glance, it looks like Grinnell is taking in about the same amount of revenue from students. Except it’s not.

Within the context of Grinnell’s access-oriented admission process, a large number of qualified students with low financial need are offered admission to Grinnell each year. Relatively few of them choose to enroll. By contrast, Grinnell is particularly appealing to high-need students, who have been nearly three times as likely to enroll.

The difference in net student revenue — the comprehensive fee minus institutional financial aid — between Grinnell and the other colleges with large endowments is stark. On average, the other liberal arts schools with large endowments are bringing in nearly $10,000 more per student every year.

That’s $16 million annually that Grinnell doesn’t have to spend on academic excellence, diversity, and access.

Why the big difference? In 2013–14, 11 percent of Grinnell students paid the full comprehensive fee. By comparison, the other schools averaged more than 40 percent full-pay students.

So work to encourage access among students across the financial spectrum remains vitally important. Sixteen additional full-pay students per year would cover the $16 million dollar annual gap in student revenues.

Part of that work comes in enrollment management. As part of a broader effort involving many others, over 250 alumni volunteers are involved in interviews and receptions to help Grinnell make a stronger case for enrollment among all qualified admits.

Philanthropy is also crucial. Grinnell’s giving in recent years has been less robust than the support at peer schools with comparable endowments. Changing that will be difficult, but ultimately it is crucial to keep Grinnell accessible to all who are academically qualified, regardless of their ability to pay.

These factors help explain why Grinnell is focusing so intently on financial sustainability, even as the endowment remains at a high level.