My institution, Misericordia University in Pennsylvania, received a solid, but uninspiring B- on Forbes "America’s Top Colleges 2016." After reviewing the criteria, though, it appears our letter grade represents who we aspire to be as it fits our long-held mission of serving first-generation students and others in need.
Sometimes, well-known propositions lead to predictable conclusions. But not always. Occasionally, they lead to surprises—and even busted myths. Here’s one: Wealthy, private institutions willing to invest large endowments in financial aid for poorer students do the best job of expanding access to higher education.
With college students increasingly calling on schools to divest endowments from fossil fuels, Becker College in Massachusetts became the first institution to mandate that all of its investments generate a positive impact on society—and a targeted financial return.
On average, academic institutions spend between 4.5 and 5 percent of their endowments annually. But when endowment returns are way down, it’s not exactly prudent to spend the same percentage of the endowment with the assumption that target investment payoff percentages will return.
It’s certainly not black or white for investors.
“The discussion around the table in investment committees is: How do you allocate risk across various investment options available to optimize returns for five to seven years? There isn’t a neat, pat answer,” says Bill Jarvis of the Commonfund Institute.