The 2017 DePauw endowment earns $70 million


This past year the DePauw University endowment earned over $70 million, compared to the $30 million loss last year.

“We have some budget challenges, but it was really nice to go to an investment meeting and see the endowment grow,” said Bob Leonard, vice president for finance and administration. “It was a good investment year.”

With each year DePauw’s endowment of $644 million fluctuates and changes because it is invested in different places.

According to Leonard and DePauw President Mark McCoy, it is standard practice to draw between 4.5 to 6 percent from the endowment. When withdrawing from endowments, the hope is that it will grow by 7 percentage points each year. With that 7 percent, institutions hope to draw 5 percent from the endowment and lose 2 percent to inflation. Because of this typical fluctuation, the endowment is supposed to maintain its purchasing power.

Currently, the University is drawing 5.5 percent. In the past, DePauw has drawn too much from the endowment. The goal of the University is to draw 5 percent from the endowment yearly.

The DePauw budget is planned out in the spring of each year, using the numbers collected from the three previous years and averaged out. This year DePauw is drawing $32,549,722, compared to last year’s endowment draw of $31,184,623.

The University is not in danger, but the student experience could be affected in the coming years. “Depauw is not in danger of going under or facing massive cost cuts or structural shifts because we have a large endowment and a strong balance sheet,” said President McCoy. “DePauw has serious financial challenges as probably does 99 percent of the other institutions in higher ed.”

The endowment is managed by Cornerstone Investment Partners LLC and currently has the DePauw endowment invested in bonds and cash, private credit, domestic and international equity, real estate, and natural resources. “It’s a very diverse portfolio and like most endowments, there is an allocation strategy, so you have all these different assets that carry different risk, so there is a prescribed percentage of the endowment which can be invested in any one of those categories,” Leonard said.

The endowment is one of the three main sources of revenue for DePauw; the other two are the Annual Fund and tuition and fees from students. All of these sources allow for DePauw to exist as an institution.

The administration hopes to continue the growth of a large endowment at DePauw. According to President McCoy, growing the endowment is difficult because most donors want to fund buildings or scholarships at DePauw. “We need to start directing more [alumni donations] to the endowment so that the endowment can provide financial aid,” Leonard said.

The DePauw administration believes that the annual fund is just as important as the endowment in funding the University. “We are trying to increase giving, and anyone can give to the annual fund,” said President McCoy. “The importance of the annual fund cannot be overstated because that is money directly to our budget.”

Also, President McCoy feels as though the average DePauw student does not pay the full cost of a DePauw education. There are no current plans to raise the tuition fees of students. “If college students on DePauw's campus paid the full stated price, which no one does because everyone has some type of scholarship, they wouldn’t pay the cost,” said President McCoy, “Because it’s very expensive to educate students the way we choose to educate students.”

DePauw’s major goal is what the administration refers to as “intergenerational equity,” which is an attempt to develop a standard DePauw experience. “We are striving for intergenerational equity at DePauw. Our goal is that someone who comes to DePauw in 2017 will have near the same experience as someone who came in 1955 or 2055,” President McCoy said.

However, if the University continuously draws over 5 percent of the budget, intergenerational equity cannot be maintained. “We are not in danger, we are just not maintaining intergenerational equity, and that’s the trouble,” President McCoy said.

In response to this, the early retirement packages for faculty members, similar to those for the staff, are being carried over. The faculty has until October to make a decision.

With issues involving higher education and continuing to make revenue, Leonard is not too worried about the future of the DePauw budget. “We have a runway to work through these issues,” Leonard said. “We are doing some really heavy strategic planning right now in order to try and really position DePauw for success in the future.”

Students tend to feel that some of the money could be moved around to better fit the needs of students and improve the school. “I know a lot of people that it has directly impacted when we talk about dorm conditions,” junior Sarah Russell said. “A lack of money always impacts, but we can’t always see the impacts because we don’t know what we’re missing.”