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We Fall Ever More Behind
Dartmouth’s endowment grows more or less quickly depending on three factors: the returns on the funds invested by the endowment’s managers; how much money the College draws out of the endowment to fund its ongoing operations; how strong giving is to the College.
As we have seen in past posts, the endowment grew faster than all of our Ivy peers in the 1990’s, and slower than all of them in this century. As well, we have looked at Jim Kim’s lackluster record as a fundraiser.
The College will soon be announcing the investment returns on the endowment for fiscal 2012. At that time we’ll look at how well we did this year compared to the other Ivies.
However, in preparation for that analysis, let’s look at the figures for 2011 — when a large part of the endowment was being managed by Trustees’ firms. Once again, our investment returns were the worst in the Ivy League:
Endowment returns, which are publicly announced, are measured by the increase in value of the College’s holdings, minus the cost of administering the endowment. Rumor among insiders has the Trustees applying all possible expenses to the endowment as a way of getting costs off of the operating books. The rules of accounting allow a certain leeway in areas like this, and our clever administrators are doing whatever they can to make things look good. However the final outcome does not make us appear very strong as compared to the other members of the Ancient Eight.
Despite offloading these items, the College still draws off the endowment at a level that surpasses all of the other Ivy schools except for Yale:
As you will have discerned for yourself, when Dartmouth draws more off the endowment that our Ivy sisters, and when we earn less than their endowments do, the results are clear: declining financial power and increasing institutional weakness.
Addendum: To calculate these schools’ endowment draws, I have used the figures in their 2011 accounts: the amount drawn in 2011 from their endowments, and the endowments as they stood at the end of fiscal 2011.
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