Choosing Grinnell’s Future<br />132nd Annual Alumni Reunion<br />June 4, 2011<br />Presented:Faculty Meeting – April4, 201...
2<br />       …The College aims to graduate women and men <br />      who can think clearly, who can speak and write   per...
The sustainability of these three primary sources of revenue determine the size and scope of the program.<br />Mission-bas...
Grinnell has several strategic advantages…<br />4<br /><ul><li>Intellectual capital
Strong reputation for and faculty commitment to teaching
Legacy of social engagement
Committed and expert staff
Successful and engaged alumni
History of innovation
Flexible endowment
Low debt
Excellent physical plant
Low tuition/comprehensive fee
Opportunity to shape Grinnell’s public identity</li></ul>Our current challenges…<br /><ul><li>Net student revenues not gro...
Current gifts declining
Endowment recovering but long-term investment returns likely to be 	lower than in the past
 Program aspirations and innovations demanding increased expenditure</li></li></ul><li>Grinnell Trends<br />5<br />
6<br />Net student revenues<br />(or $ collected from students)<br />Grinnell Trends<br />
Net Student Revenues and Scholarships and Grants<br />7<br />Grinnell Trends<br />        Recent comprehensive fee<br />  ...
Grinnell Trends<br />Composition of Revenue Sources that Fund Cost per Student as Compared to Comprehensive Fee<br />     ...
9<br />Fundraising<br />Grinnell Trends<br />
10<br />Grinnell Trends<br />Decade of Fundraising<br />      Large gifts are primarily <br />   from bequests, foundation...
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Choosing Grinnell's Future

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The sustainability of three primary sources of revenue -- net student revenues, endowment, and fundraising -- determines the size and scope of programs at Grinnell College.

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  • I would like to see a comparison of earnings of Grinnell graduates with the benchmark schools in this presentation. (Not as an indicator of mission accomplishment, because students don’t attend Grinnell to make monied connections.) Is there a financial driver behind lower fundraising? Or is there something in the culture (e.g. famous endowment, giving preferences for social causes) that contributes to the discrepancy with the comparison schools?
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Choosing Grinnell's Future

  1. 1. Choosing Grinnell’s Future<br />132nd Annual Alumni Reunion<br />June 4, 2011<br />Presented:Faculty Meeting – April4, 2011 <br />Staff Meeting – May 10, 2011<br />
  2. 2. 2<br /> …The College aims to graduate women and men <br /> who can think clearly, who can speak and write persuasively and even eloquently, who can evaluate critically both their own and others’ ideas, who can <br /> acquire new knowledge, and who are <br /> prepared in life and work to use their knowledge <br /> and their abilities to serve the common good.<br />
  3. 3. The sustainability of these three primary sources of revenue determine the size and scope of the program.<br />Mission-based<br />allocation decisions<br />3<br />
  4. 4. Grinnell has several strategic advantages…<br />4<br /><ul><li>Intellectual capital
  5. 5. Strong reputation for and faculty commitment to teaching
  6. 6. Legacy of social engagement
  7. 7. Committed and expert staff
  8. 8. Successful and engaged alumni
  9. 9. History of innovation
  10. 10. Flexible endowment
  11. 11. Low debt
  12. 12. Excellent physical plant
  13. 13. Low tuition/comprehensive fee
  14. 14. Opportunity to shape Grinnell’s public identity</li></ul>Our current challenges…<br /><ul><li>Net student revenues not growing appreciably
  15. 15. Current gifts declining
  16. 16. Endowment recovering but long-term investment returns likely to be lower than in the past
  17. 17. Program aspirations and innovations demanding increased expenditure</li></li></ul><li>Grinnell Trends<br />5<br />
  18. 18. 6<br />Net student revenues<br />(or $ collected from students)<br />Grinnell Trends<br />
  19. 19. Net Student Revenues and Scholarships and Grants<br />7<br />Grinnell Trends<br /> Recent comprehensive fee<br /> increases are more than offset by scholarships and grants provided. <br /> Net student revenues are not<br /> growing appreciably. <br />aid<br />changes<br />fee <br />increase<br />Source: Audited Financial Statements<br />
  20. 20. Grinnell Trends<br />Composition of Revenue Sources that Fund Cost per Student as Compared to Comprehensive Fee<br /> The total cost per <br /> student is more than<br /> 50% endowment<br /> supported.<br /> The comprehensive fee<br /> does not cover the <br /> full cost of educating <br /> a student. <br />$58,036<br />$55,758<br />$56,447<br />Cost <br />per student<br />$53,207<br />$50,613<br />38.0%<br />37.8%<br />38.6%<br />36.5%<br />38.5%<br /> Comprehensive fee<br />50.9%<br />51.9%<br />51.0%<br />54.1%<br />52.4%<br />Source: Audited Financial Statements<br />8<br />
  21. 21. 9<br />Fundraising<br />Grinnell Trends<br />
  22. 22. 10<br />Grinnell Trends<br />Decade of Fundraising<br /> Large gifts are primarily <br /> from bequests, foundation<br /> grants and trusts. <br /> Current gifts are <br /> declining. <br /> in millions <br />Source: Council for Advancement in Education <br />
  23. 23. 11<br />Endowment<br />Grinnell Trends<br />
  24. 24. Endowment Market Value<br />12<br />Grinnell Trends<br /> The endowment is <br /> recovering but is still <br /> below its peak value. <br />* Includes debt reserve<br />Source: Audited Financial Statements<br />
  25. 25. 13<br />Endowment and Similar Funds<br />Performance Analysis as of June 30, 2010 <br />Grinnell Trends<br /> Long-term returns<br /> are trending<br /> downward.<br />Rolling 10 Year Return (%)<br />Fiscal year end<br />Source: NACUBO Endowment Study<br />
  26. 26. 14<br />Grinnell Trends<br />Endowment Spending Policy<br /> The College has been well<br />served by its endowment <br /> spending policy and the <br />buffers embedded in it. <br />Approved April 2004*<br />Reaffirmed April 2008.<br />Distribution<br />Endowment distribution is calculated as 4.0% of the <br />12-quarter moving average endowment market value determined annually as of the December 31 immediately prior to the beginning of the fiscal year.<br /> The collective efforts of the <br /> Board of Trustees and the<br /> campus community have <br /> allowed us to respond <br /> responsibly over the <br /> past few years.<br />Budget Allocation<br />The College shall not allocate 100% of this distribution to the operating budget. Factors in determining the allocation include: <br /> 1) revenue balance, <br /> 2) expenditure discipline, <br /> 3) facility requirements (including debt service) and strategic initiatives, and,<br /> 4) the allocation to the operating budget should not increase or decrease more than 5% of the prior year’s budget allocation.<br />* Included staged reduction from 4.5% (FY 2004), 4.25% (FY 2005 & FY 2006) to 4.0% in FY 2007.<br />
  27. 27. Required Investment Return<br />15<br />Grinnell Trends<br />Let’s assume…<br /><ul><li>Net student revenues and current gifts are flat (not growing).
  28. 28. The endowment funds 50% of all costs and the spending rate is 4%.
  29. 29. Inflation is 3% (HEPI averaged 3.7% over the past decade).
  30. 30. At a minimum, the “real” cost of the program must be retained.</li></ul> Even modest increases in the <br /> growth of these revenues sources<br /> compound and increase the<br /> endowment/program’s<br /> sustainability.<br /> What does this mean?<br />The endowment return would need to cover:<br /> Spending rate (4%)<br /> + <br /> Factor to cover lack of growth in other revenue sources<br /> +<br />Inflation rate ( 3% to maintain real value of the endowment )<br /> = <br /> Total Required investment return to maintain real growth of the program and real value of endowment.<br />
  31. 31. Grinnell Compared toCarleton, Swarthmore and Williams<br />16<br />
  32. 32. Net Student Revenues per Student<br />17<br />Grinnell as <br />Compared<br /> Assuming an enrollment of 1600,<br /> Carleton, Swarthmore and Williams<br />would have collected $21, $18 and $13<br /> million MORE, respectively,<br /> from students.<br />Fall 2009 enrollment 1986 1651 1513 2119<br /><ul><li> Grinnell, Swarthmore and Williams are need-blind.
  33. 33. Only Carleton and Grinnell award merit aid.</li></ul>Source: Audited FY 2010 Financial Statements<br />
  34. 34. 18<br />Grinnell as <br />Compared<br />Decade of Fundraising<br /> Carleton, Swarthmore and <br /> Williams averaged $13, $8 <br /> and $31 million MORE annually, <br /> respectively. They have <br /> built their endowments as <br /> well as supporting operations.<br />(in millions)<br />$437.8<br />$256.6<br />$208.1<br />$125.1<br />Source: Council on Advancement in Education<br />
  35. 35. Endowment and Debt<br />19<br />Grinnell as <br />Compared<br /> Grinnell’s endowment is investment performance <br /> rather than <br /> gift driven…<br /> The sources of <br /> Grinnell’s endowment <br /> reflect disciplined “savings” <br /> and provide financial <br /> flexibility.<br /> …and has used <br /> debt more <br /> conservatively.<br />(in millions)<br />Source: Audited FY 2010 Financial Statements/NACUBO Endowment Study<br />
  36. 36. In review…<br />20<br />
  37. 37. 21<br /><ul><li>Net student revenues aren’t growing appreciably.
  38. 38. Gifts are declining.
  39. 39. The endowment is recovering but sustaining its real value </li></ul> will be a challenge. <br /><ul><li>Growth in program requires efficient use of existing resources and additional revenue sources.</li></ul>Our strategic options…<br /><ul><li>Explore admission and financial aid policies to determine how to increase net student revenues
  40. 40. Invest in development to increase gifts
  41. 41. Continue to maximize endowment returns
  42. 42. Develop a compelling case for why to invest in Grinnell
  43. 43. Increase operational efficiencies</li></li></ul><li>22<br />

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