I grew up knowing the importance of giving. My parents gave regularly to our church and generously supported school activities. They spent many hours serving on committees and behind the scenes. Every day I discover more and more places and people they have given to and continue to dedicate themselves to.
I try to emulate what they taught me: If you have, you give. If you can, you do.
My husband has spent 20-plus years leading nonprofit organizations in our community. It is hard work. It takes a lot of people giving dollars and time to keep these vital agencies moving forward. And in a period of steep inflation or economic downturn, when individuals have to tighten budgets to keep their families moving forward, nonprofits always feel pinched. People who have less or are spending more often give less to nonprofits. On top of that, when nonprofits have to pay more for supplies, their buying power plummets.
It’s easy to see that on a small scale in an organization with a handful of staff and an annual budget of $500,000. Every penny counts. A raise in someone’s salary means fundraising more or serving fewer. And that’s when the furnace and plumbing work properly. There is little wiggle room for surprises.
It isn’t any different at Wabash. The numbers are simply bigger. Sometimes bigger numbers make it easier to downplay the need or to say, “Look how big the endowment is. They don’t need my gift.”
I had been at Wabash just a year in 2008 when there was a major economic downturn. There was one particular staff community meeting during that time that was the most formative to my understanding how the College operates.
Then-Chief Financial Officer Larry Griffith walked us through the College’s endowment, how tuition is set, and how merely changing the number of students we admit or “just going after full-pay” students 1.) isn’t as easy as it sounds, 2.) ultimately does not work, and 3.) runs counter to the mission of Wabash to admit all students who can succeed and thrive, regardless of means.
An endowment is similar to an individual or family’s dollars set aside and/or invested in markets to hopefully gain a positive return. A savings account or certificate of deposit is generally stable but has a lower interest yield. Various markets like stocks and bonds or real estate may have a much higher yield but may also involve more risk. Usually less so over a greater amount of time—so there’s a lot of risk in putting all my savings in markets and pulling it out in six months versus letting it continue to ebb and flow for the next 60 years.
How do we know where to invest our dollars to ensure the gain outpaces the amount we need to live and offsets inflation? Well, we don’t know for absolute sure that inflation won’t be 9% or there won’t be a pandemic.
This is where I like to let the experts guide me—just as the College relies on experts like the treasurer, trustees, and the College’s outsourced chief investment management firm, Strategic Investment Group, who study and know the trends and warning signs.
The College uses a 12-quarter rolling average to determine how much from the endowment gets allocated to the annual budget (the draw). This means the draw rate is determined by the prior 12 quarters (three years). Using an average value of the endowment over time helps smooth out quarterly blips in either direction in the market.
President Scott Feller goes into more detail in his column on the next pages about the College’s work to continue to push down the total draw rate—much of which has been done in my time here. It has required sacrifices from everyone.
Currently, the Wabash College endowment has an approximate value of $371 million.
Simply put, if through investments, we gain 10% but only spend 5%, our endowment continues to grow year over year. If we gain 10% and spend 10%, our endowment stays the same—assuming no inflation (which we cannot assume). If we spend 10% of our endowment’s value after an annual gain of just 5%, the endowment decreases.
Easy, right? There are three ways to grow the endowment: better yield from our investments, decreased draw (by spending less in the annual budget and/or increasing the immediate income to the budget), and increased giving to the endowment.
To increase revenue to fund the annual operating budget, we can apply for more grants (we are), increase tuition (we are, but 98% of our students receive financial assistance), and increase our Annual Fund contributions (you can!!).
Wabash is blessed to have a wonderful network of alumni and friends—48 of whom made gifts of $1 million or greater during the Giant Steps Campaign, of which $40 million went directly to growing the endowment.
An additional $103 million is deferred as part of planned gifts and bequest commitments.
A gift doesn’t have to grow the endowment to make a difference. Wabash is also blessed to have a wonderful network of alumni and friends—9,132 of whom made gifts of less than $1,000 during the Giant Steps Campaign. It takes a $20,000 investment in the endowment to generate annual income of $1,000. So, someone who makes an unrestricted gift of $1,000 to the campaign or Annual Fund is making an impact today and allows the College to leave the endowment to grow and increase next year’s revenue, and the next year’s, in perpetuity.
When it comes down to giving, the big questions a lot of people ask are: do I feel a connection to the organization, and are my dollars being used wisely? Only you can answer the first question. I will say, however, that I wish I felt even a quarter of the connection to my alma mater that many of you feel toward Wabash—that even I feel toward Wabash.
If you no longer feel connected, how can we change that? Come back—even if you never give a dollar. See for yourself what’s happening at this little college with a giant footprint. Let us help you remember what drew you here in the first place.
Are your dollars being used wisely? That’s what this issue of Wabash Magazine is all about. The stories introduce you to a few of the people, programs, and places supported by the generous gifts from the Giant Steps Campaign. Regardless of the size of your gift and the date you give it, you can be sure it will make a difference. We are an institution that educates young men. In turn, they become better sons, spouses, partners, fathers, and citizens, which means we are all recipients of the gifts of a Wabash education.
If you have, please give. If you can, please do.
Kim Johnson | Editor
Learn more about the Giant Steps campaign: https://giantsteps.wabash.edu/.