If you had $112,933,607, what would you do with it?
How much would you spend?
How would you use it?
How much would you save?
Doane University has 112 million dollars in its endowment, and how that money is spent weighs into the success and future of the university, Jill Smith, Board of Trustees chairwoman said.
An endowment is a university’s savings account, made up of large donations made with the understanding that the donations will be kept permanently, invested and grown, said Julie Schmidt, Vice President for Financial Affairs.
It may seem like the money is sitting in the bank, out of reach of students struggling to make tuition payments and drowning in student debt.
It’s not that easy.
The Board of Trustees wants to keep more than 95 percent of that money in a savings account.
This savings account is the endowment.
It’s made up of 41 million dollars of donations from people who care about Doane and its mission, Smith said.
Then there’s another 45 million dollars from those donations being invested in bonds, stock and other investments, like farm real estate, she said.
That leaves 26 million dollars that Doane officials call the quasi endowment. This is money from Doane’s operating budget that the board decides should be treated like the endowment, Schmidt said.
These funds exist to maintain Doane’s buildings and facilities as the campus ages, Smith said.
Recently, some of this money was spent on increasing online programs, Schmidt said.
Of the 112 million dollars, Doane spends 4.5 percent each year, which amounted to about 4 million dollars this year, business professor Les Manns said.
This covers 18 percent of the Crete campus’s operating costs, Schmidt said.
Without these 4 million dollars, Doane wouldn’t look the same, Schmidt said.
Doane wouldn’t have been able to add two counselors to aid students.
Couldn’t offer a travel scholarship.
Couldn’t provide events and programs for students, Schmidt said.
Why not spend more and provide more scholarships or services to students?
The money in the endowment isn’t just sitting there, it’s growing. The more the endowment grows, the more Doane will receive, Smith said.
Take this simple example, if a savings account has $100, 4.5 percent would be $4.50. If the savings account grew to $1000, that same 4.5 percent would amount to $45.
A spending policy, set by the Board, determines that the college must preserve the original value of the donations, and must earn as much as it spends, plus the rate of inflation, Smith said.
To promote growth of the endowment, and in the amount spent in the future, Smith said it is important to follow the spending policy.
Keeping spending low now ensures a future for Doane University’s students, Schmidt said. If more of the endowment is spent now, that robs future students of the same future.
The last two presidents have spoke about rising costs of higher education and in response, President Donald Trump has called attention to universities with high endowments, urging them to spend more on students.
An Education Trust study agrees, saying that endowments higher than 500 billion dollars should spend more to help low-income students pay tuition.
While Doane’s endowment is far from 500 billion dollars, the question remains the same - should more of the endowment be spent to make paying for Doane more affordable?
This is the question that will be addressed over the course of the next month as the 2017 capstone class looks at Doane’s endowment, and it’s future.