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Understanding $100 Million
Yesterday’s anonymous gift to the College of $100 million dollars should be put into financial context. The administration will not put this money into an account and use it as needed; rather, it will go into the endowment, be invested, and then funds will be drawn off of the endowment at the usual draw rate of about 5%.
As a result of the $100 million gift, the administration will be able to increase its annual operating budget in perpetuity by about $5 million.
Similarly, when a donor gives $5 million to endow a scholarly chair, that money is invested in the endowment and each year it throws off the sum of $250,000 — the same 5% as above — enough to perpetually fund the salary and other expenses of a senior professor.
The point of this post is to shed light on the virtue of cost reduction. If the administration reduces, say, the bloated cost of the College’s employee benefits package by $5 million — which should be easy to do given that the cost of benefits at Dartmouth is currently $30 million more than the cost at Brown, even through the College and Brown have the same number of fulltime employees — then each year into the future an extra $5 million will be available for our operating budget to use for other, more productive functions.
Such a saving would be the exact equivalent, at least in the short term, of receiving another gift of $100 million, though it would not make headlines.
Addendum: Yes, Virginia, there is a Santa Claus, and your math is correct, too. If the administration could cut our benefits package by $30 million to make it the equivalent of Brown’s, that savings would be the equal of receiving an alumni donation of $600 million.
October 18, 2009
When Love Beckoned in 52nd Street
We were at San Francisco’s BIX last evening, enjoying prosecco, cheese, and a bit of music. A full year of inhabitation in Northern California has unraveled to me no decent venue for proper lounging, but…
October 9, 2009
D Afraid of a Little Competish
So our colleague and Dartblog writer Joe Asch informed me that the D has rejected our cunning advertising campaign. Uh-oh. The Dartmouth is widely known as a breeding ground for instant New York Times successes,…
September 4, 2009
How Regents Should Reign
As Dartmouth alumni proceed through the legal hoops necessary to defuse a Board-packing plan—which put in unhappy desuetude an historic 1891 Agreement between alumni and the College guaranteeing a half-democratically-elected Board of Trustees—it strikes one…
August 29, 2009
Election Reform Study Committee
If you are an alum of the College on the Hill, you may have received a number of e-mails of late beseeching your input for a new arm of the College’s Alumni Control Apparatus called…
August 23, 2009
Fare Thee Well, Tom Crady
And now Dean Tom Crady has precipitously announced his departure from the College after only 20 months on the job. How to read this? By way of background, prior to coming to Dartmouth, Crady had…
May 31, 2009
Kangaroo Court, Indeed
In an interview with The Dartmouth, alumni-elected trustee T.J. Rodgers ‘70 explained his reasons for declining to participate in future evaluations of trustees up for “re-election,” namely the “kangaroo court” nature of such discussion in…