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Frequently Asked Questions
What is the Macalester endowment?
The Macalester endowment is a long term investment fund made up almost entirely of private gifts made to the College over the past 100 or more years. The income from the endowment supports scholarships for students, academic programs, and salaries for faculty and staff. The Macalester endowment increased dramatically in 1990 as the result of a large gift of Readers Digest (RDA) stock from DeWitt and Lila Wallace.
How large is the Macalester endowment?
The June 30, 2009 market value of the endowment was $546 million, which puts Macalester above the average of the 40 largest liberal arts college endowments.
Do we still hold Readers Digest common stock?
No, we do not. The last of the 10 million shares of RDA common stock that we received in 1990 were sold in 2002. The sale proceeds were invested in a diversified portfolio of stocks, bonds, and alternative assets (real assets, private capital, hedge funds).
Who manages the endowment?
Craig Aase ('70) is chief investment officer, and has responsibility for management of the endowment. Other staff includes Alana Hedlund ('04), director of investments, and Hanni Wenker, investment analyst. Oversight is provided by the Investment Committee of the Board of Trustees, chaired by Jeff Larson('79). An investment consultant, Cambridge Associates, is retained to assist in asset allocation and other policy matters. All assets are managed externally, by approximately 40 different investment firms.
What have been the investment returns?
Our June 30, 2009 one-year return was -13.4%. Our three and five year average returns were 2.4% and 6.7% respectively.
How much of the endowment do we spend each year?
Our spending policy attempts to preserve intergenerational equity i.e. future students should benefit from the endowment with the same purchasing power as today's students. To attempt to assure this the Trustees have chosen a 5% spending rate, and applied it to the 16-quarter moving endowment's average market value. This equates to approximately 4.5% of the current market value over time, and requires a total return of about 5% plus inflation.
Is the Macalester endowment invested in a socially responsible way?
The College's social responsibility policy for investments in corporations was formulated largely in response to South African apartheid. It affirms the primacy of maximizing economic return on the endowment, but allows the Trustees to take non-economic factors into consideration when making investment decisions. With increased campus interest in corporate citizenship, the Investment Committee has adopted a more proactive approach to exercising our shareholder rights. Emerging corporate social responsibility issues are reviewed in consultation with the College's Social Responsibility Committee, and proxies and shareholder resolutions are voted with input from this committee when applicable.
How much is added to the endowment each year through gifts?
The typical endowment will see gift additions between 2% and 4% of the current market value of the portfolio. We have averaged about 0.5% per year, which puts us at a comparative disadvantage with peer institutions. Putting this in terms of dollars rather than percentages, each year we expect to earn through investment returns about $61 million, spend $30.5 million, and grow the portfolio for inflation protection by $30.5 million. On top of that, we might receive $2 million in gifts for new or expanded program support. At the same time, peer institutions of our approximate size will add $10 million in gifts. Over time this gap will negatively affect Macalester's institutional strength as well as its program enhancement capability. Hence, we would like to encourage the alumni, friends and supporters of the College to help us expand Macalester's revenue coming from donations and gifts.
How can you support Macalester's mission?
There are many ways in which you can help ensure the strength of Macalester’s mission for generations to come. One of them is to endow a special fund, arrange a planned gift, or make a contribution to the Annual Fund (which reaches our areas of greatest need). In case you have any questions or concerns related to donations and gifts, please contact Kate Abbott, Assistant Vice President of Advancement Operations, at 651-696-6065, by email at abbott@macalester.edu or visit us online at www.macalester.edu/giving.
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