How the endowment supports students and sustains the college’s mission
By Abe Loomis
With Trinity’s 200th birthday approaching and a new strategic plan just approved, the college is poised at a nexus of past, present, and future: the celebration of a long, venerable history and a moment of careful preparation and positioning for the future.
Through it all, the endowment helps to sustain everything Trinity is and does, including animating the college’s daily operations and long-term vision through financial aid for students, endowed positions for professors, and funding for academic and athletic facilities and programs. It connects past gifts to the college with present necessities and visions for the future.
“Some portion of every student’s experience is supported by income from the endowment,” says Dan Hitchell, Trinity’s vice president of finance and chief financial officer. “It’s almost a physical emblem of the passion of Trinity’s alumni and friends for the school and their intergenerational desire to see the college go forward and get better over time.”
Hitchell notes that what is commonly referred to as “the endowment” is really a set of endowments: the sum of donations made as long-term investments in the college over the years. Some of those gifts are restricted, or earmarked for specific purposes—such as funding a chaired professorship, supporting a particular athletic team, constructing an academic center, or providing for scholarships. But many are unrestricted, given freely to be used for any purpose, at the college’s discretion. Whatever their specific intent, however, all contributions to the endowment are meant to be permanent gifts and to generate investment income to support the activities of the college.
That income—from stock, bonds, private equity, venture capital, fixed income, and other financial instruments—plays a critical role in funding the college’s yearly operations. From a present total endowment of about $577 million, Trinity draws 5 percent of a 36-month moving average to support operations. That amounts to about 15 percent of the college’s annual operating budget.
From 2012 to 2017, Trinity’s endowment has grown from $409 million due to gifts and investments returns less spending. While some of Trinity’s New England Small College Athletic Conference (NESCAC) peers have among the country’s largest endowments, $2 billion or more, most colleges have much smaller endowments. Trinity’s endowment per student of about $240,000 ranked in the top 10 percent of 540 similar baccalaureate colleges in 2015, the most recent year for which data is available from the U.S. Department of Education’s National Center for Education Statistics.
Vice President for College Advancement Michael Casey says that knowing that the endowment is there and that it is growing has effects that go beyond the day-to-day. The principal amount, however, must stay intact so the endowment can last forever. “The endowment means Trinity can plan for the long term,” Casey says. “Having a substantial endowment gives us the capacity to do that.”
Building a strong endowment is key to supporting the ideals that define Trinity’s mission. According to Casey, “Having an endowment ensures our independence. It means we can pursue the mission of the college independent of the whims of the economy, of public opinion, or of the idea, for instance, that we need to change our approach because some pundits are saying that the liberal arts are no longer relevant, even though we know—and our experience shows—that this continues to be the best way to educate leaders for today’s world.”
Educating such leaders means attracting and supporting the very best and brightest students from around the globe, the primary charge of Angel B. Pérez, Trinity’s vice president for enrollment and student success. Pérez oversees admissions, financial aid, student success, and career development. He also is passionate about ensuring that every Trinity student gains the tools to lead in a world where relationships between people and institutions are increasingly international.
“I want the student from New York City to sit in the classroom next to the students from Iowa and California; Portland, Oregon; Mumbai; and Botswana,” Pérez says. “That is what will prepare them for the kind of global environment that they are going to work in for the rest of their lives.”
Achieving such a mix on campus, Pérez says, is expensive. And geographic diversity is only one piece of the puzzle.
“Another thing we talk about at the college—and in higher education in general—is that we want to make sure that we have socioeconomic diversity represented in our student body,” Pérez says. “We don’t want to have a community of students who can all pay full tuition. It’s simple math: The stronger our endowment, the greater the returns are every single year, and those returns are what we use to help fund students every single year.”
Trustee Kevin Maloney ’79 was once such a student. He attended Trinity on a scholarship, majored in economics, and was a proud Bantam, playing on Trinity’s soccer team. After graduation, he earned a doctorate in economics from Washington University in St. Louis, taught finance and economics at the Tuck School of Business at Dartmouth College, and then spent 22 years in the investment management industry. Now a professor of finance and executive-in-residence at Bryant University, he serves as chair of the Investment Subcommittee of Trinity’s Board of Trustees, helping to shepherd the college’s investments so that the endowment can continue to support Trinity’s mission in both the short and long term.
The Investment Subcommittee recently conducted a thorough assessment of the external investment landscape and recommended moving Trinity’s outsourced endowment management services from Investure to Commonfund. “This was a very well-considered, careful process and a thoughtful decision by the Investment Subcommittee,” Hitchell says, noting that the transition of services will take place on July 1, 2018.
“Our goal is to maintain the endowment’s purchasing power over time and to provide income in support of college activities,” Maloney says. “The number one objective is to pick a reasonable spending formula and then invest the endowment to provide long-term growth, maintain purchasing power, and meet that spending policy.” Trinity’s spending rate and formula, he says, are consistent with peers and industry best practices. “What we strive to do in managing the endowment is to provide permanent funding to the college in support of its mission.”
It is partly for this reason, CFO Hitchell notes, that alumni, parents, and other friends of the college see gifts to Trinity’s endowment as one way to make a lasting difference in the world.
“Trinity is closing in on 200 years,” Hitchell says. “An investment in the endowment today will have an impact on what this institution can do 200 years from now. An investment in the endowment of Trinity College is an investment forever.”
ILLUSTRATION: ADRIENNE GALE