Dartmouth Endowment

September 18, 2022
By AdmissionSight

Dartmouth Endowment

What is the current Dartmouth Endowment? The Geisel School of Medicine at Dartmouth, which was established in 1797, the Thayer School of Engineering at Dartmouth, which was established in 1867, the Tuck School of Business at Dartmouth, which was established in 1900, and the Guarini School of Graduate and Advanced Studies are committed to providing the best undergraduate liberal arts experience and outstanding graduate programs, respectively.

Dartmouth is a member of the Ivy League and is consistently ranked among the world’s greatest academic institutions (2016). The education you receive at Dartmouth is unparalleled. Dartmouth instills in its students a passion for learning and equips them to take on leadership roles for the rest of their lives through one-on-one instruction as well as opportunities to develop new knowledge and put it to use both on campus and in other parts of the world.

The assistance of donors has been and will continue to be essential in Dartmouth’s efforts to accomplish its comprehensive mandate of academic and research excellence. The endowment received a total of $85 million in contributions from alumni, parents, and friends for the fiscal year 2021.

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The Dartmouth Endowment has benefited significantly over time from the ongoing support of generous donors and the power of investment compounding of those endowment gifts; without which, the endowment’s market value and impact would be significantly lower.

How much is the Dartmouth Endowment?

How much is the Dartmouth Endowment? According to an announcement made by the college in October of 2021, the endowment for Dartmouth College had an astounding growth of 46.5% during the fiscal year that ended on June 30, 2021. As of the 30th of June, the endowment had a value of $8.5 billion, which is an increase from the $5.98 billion that was reported the previous year.

During the past decade, the endowment of the College has generated average annual returns of 12.8% over that time period. The investments generated a return of 7.6% in the previous year, and they generated returns of 7.5% in the year before that. Previous endowment reports go as far back as 2004, and they show that in 2014 there was a growth of 19.2% and in 2008 there was a growth of 23.7%. Diana Lawrence, a spokesman for the College, was questioned whether this year’s growth has historical precedent. She responded by pointing up the figure of 12.8% on average, but she did not comment further.

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According to the notice, because of the significant increase in enrollment, the College will no longer take the estimated parent contribution into account when determining undergraduate financial aid for families with annual incomes of up to $65,000.

Additionally, qualified employees, defined as those who were active on the 30th of June and continue to be active today, will receive a bonus at the end of the calendar year that is equivalent to three percent of their base wages for the 2021 fiscal year. Student workers will see a boost in their hourly minimum wage from $7.75 to $11.50, while graduate students who are now receiving stipends will receive a bonus of $1,000.

According to a statement that Lawrence sent out through email, the expected number of student workers who will be affected by the rise in the minimum wage is approximately 1,000, and the graduate student bonus stipend will be distributed to between 600 and 650 students.

The returns from the endowment greatly exceeded those of the stock market over the same time period, which saw the S&P 500 index grow by 38.6% and the Dow Jones Industrial Average grow by 32.9% respectively.

On the other hand, the Wall Street Journal reported on September 29 that the endowments of other wealthy universities are growing at a rate that is comparable to Dartmouth’s endowment and that the endowments of several universities, including Brown University, Duke University, and Washington University in St. Louis, have surpassed Dartmouth’s endowment growth.

According to a report published on October 1 by the Chronicle for Higher Education, wealthy universities are more likely to see higher returns because they have the ability to put their money in “alternative investments,” such as venture capital and private equity. This is in reference to an article that was published in the Journal. Phil Hanlon, President of Dartmouth College, attributed the increase in the endowment’s value to the generosity of donors, “excellent market performance,” and “a smart investment office” in an announcement made by the college.

In the current fiscal year, the College applied the endowment returns of $335 million toward the operating budget of $1.2 billion. The College established the Infrastructure Renewal Fund in March of 2021 in order to address challenges that have persisted for a long time, such as deteriorating dormitories, campus infrastructure, and energy systems. According to the announcement, the IRF will make it possible for more rejuvenation projects to the tune of more than $500 million over the course of the following decade, beginning with $31 million this year.

The announcement comes not long after the College publicly declared a commitment to divest from fossil fuels, stating that investments in renewable energy are more likely to provide higher returns than those in fossil fuels.

What is an Endowment?

What is an Endowment? The endowment was established to ensure that Dartmouth College will always have access to the greatest possible financial support so that it can continue to fulfill its goal. Creating a balance between the needs of the present and future generations of Dartmouth students is one of the most important goals of the endowment. The foundation of this idea of intergenerational equality is ensuring that the value of the investment is preserved over time, taking inflation into account.

In order to accomplish this goal, the primary investment objective of the endowment is to produce, on average and over the course of time, inflation-adjusted gains from investment returns that at least match distributions to the institution. The investment strategy is structured to serve this objective. The spending distribution policy provides a mechanism for supplying financial support to the operational budget while simultaneously assuring some level of protection from the volatility of the capital markets. This level of protection is ensured through the provision of a spending distribution policy.

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The endowment of Dartmouth College has been an indispensable resource in ensuring the continued success of the college as a whole, including its professional schools. The distribution from the endowment accounted for 28% of the revenues that were used to fund operating activities in the fiscal year 2021.

The Dartmouth Endowment is comprised of nearly 6,300 separate endowed funds, all of which serve a variety of functions within the school; nevertheless, the majority of these funds are designated solely for one particular purpose. These endowed funds were established as a result of the long tradition of philanthropic alumni at Dartmouth College; the oldest fund in this collection dates back to 1789.

Each limited fund has a specific mission, and that mission is to provide perpetual long-term funding for the activity that it was established to support. The value of the endowment as a whole is $8.5 billion, with teaching and research accounting for forty percent of that value and financial aid accounting for approximately one-quarter of the total.

In order to provide essential long-term financial support for the most important campaign priorities and programs, the Call to Lead campaign has set a goal of raising $1.6 billion for the Dartmouth Endowment through donations. In this sense, the Endowment serves as a vital instrument for Dartmouth to continue to achieve its purpose, which is founded on the sound and responsible financial management of the institution’s assets.

What Investment Firm handles Dartmouth Endowment?

What Investment Firm handles Dartmouth Endowment? The Dartmouth College Investment Office is responsible for the management of the endowment as well as other Dartmouth investment portfolios. This office operates under the guidance of the investment committee of the board of trustees.

The Investment Office is in charge of making investment decisions as well as monitoring the company’s overall portfolio and its performance on a day-to-day basis. In addition to this, the Investment Office provides the Investment Committee with suggestions concerning investment policies and strategies.

Chris Lord serves as the committee’s chair, and its members include both trustees and non-trustees who have a significant amount of experience working in the investing business. The committee is made up of nine different people, and it gets together once every three months to debate and assess asset allocation policies, investment performance, and the most recent strategies that are being looked at by the Investment Office.

Group of people talking while in a conference hall.

The Dartmouth College Investment Office is responsible for managing the investments of the College, including the endowment, as directed by the Investment Committee of the Board of Trustees. The Geisel School of Medicine, the Thayer School of Engineering, the Tuck School of Business, and the Guarini School of Graduate and Advanced Studies are among the institutions that benefit financially from the endowment.

The endowment’s investment and spending plans are formulated to strike a balance between the requirements of present Dartmouth students and the requirements of future generations of Dartmouth students. The foundation of this idea of intergenerational fairness is the development of long-term returns that are able to sustain the purchasing power of the endowment when adjusted for inflation.

The Dartmouth Investment Office is responsible for making recommendations about policies and strategies, as well as hiring and supervising external managers. The asset allocation strategy for the endowment is highly diversified across a variety of asset classes. This is done in order to maximize the overall return while minimizing the risk that would be incurred from an excessive concentration in any one asset class or investing strategy.

Where is Dartmouth Endowment Invested?

Where is Dartmouth Endowment Invested?  Dartmouth’s approach to investing and its overall strategy are both shaped by the objective of the endowment. Dartmouth prioritizes the long term while making decisions about its capital allocation and portfolio management. This is done to maintain consistency with the endowment’s unlimited time horizon.

The portfolio has a considerable emphasis on equity investments for long-term growth, with significant participation across a variety of strategies, geographic locations, and asset classes; this contributes to the portfolio’s diversification benefits.

Students sitting on the bench.

Its profile is in line with the liquidity that is required to meet the requirements of portfolios and institutions in the short term.

Dartmouth’s plan for managing its endowment consists of the following steps:

  • locate extraordinary investment opportunities with superior return potential across the globe, all the while keeping a keen awareness of the many sorts of exposures and dangers that are the direct result of this bottom-up attitude.
  • Contributing financial resources whenever doing so will result in a return on equity This is typically the time when capital is tight, and it’s also the time when Dartmouth has the best opportunity to capitalize on dislocations generated by the short-term emphasis of many market participants.
  • focus your investment efforts where you have the most conviction.

Investors looked forward through the trough of COVID-19’s impact on business fundamentals to a recovery in corporate earnings that would be made possible by the development and rollout of vaccines in concert with the controlled economic reopening. As a result, equity markets rallied broadly for the 12 months ending June 30, 2021.

In light of these circumstances, the MSCI All Country World Index (MSCI ACWI) increased by 39.3% over the course of the past year. Emerging markets (MSCI EM) and the United States (S&P 500) were the primary contributors to this increase. As a result of COVID-related lockdowns and supply chain delays, international developed markets (MSCI EAFE: 32.4%) fell behind on a relative basis, which was especially noticeable in the European and Japanese economies. Following a year in which yield curves steepened, the Bloomberg Barclays U.S. Aggregate Bond Index completed the fiscal year with a loss of 0.3% and credit spreads that were close to all-time lows.

The Dartmouth endowment generated a return of 46.5% during the fiscal year 2021, which was higher than the return of 39.3% generated by the MSCI All Country World Index. The performance of the Dartmouth endowment ranks in the top decile of the Cambridge Associates (“CA”) College & University universe over intermediate and long-term periods (the three, five, ten, and twenty years immediately preceding the most recent year of data). The positive contributions made by the portfolio’s asset allocation and equity orientation, in addition to the outsized returns that were generated by world-class investment managers, were the primary factors that drove the results for the fiscal year 2021.

As a result of the endowment’s long-term nature, Dartmouth tries to diversify its sources of return in order to reduce risk, maintain superior returns throughout the course of a market cycle, and supply the College with meaningful liquidity. As a result, we continue to center our efforts on maintaining superior performance over extended periods of time. The endowment of Dartmouth College produced an annualized return of 12.8% for the ten years that ended on June 30, 2021, which was higher than the return of 9.9% generated by MSCI ACWI and the return of 7.5% generated by a general benchmark composed of 60% equity and 40% bonds over the same time period.

The Dartmouth endowment has been successful in reaching its primary objective of providing investment returns that are higher than the spending distribution rate + inflation during the course of the past 20 years, resulting in an annualized return of 9.9% for the endowment.

Dartmouth will continue to invest in key long-term initiatives, such as creating a community that is more welcoming and inclusive; ensuring the mental and physical health of students, faculty, and staff; and positioning the institution for continued success in a higher education landscape that is rapidly changing, with the help of the endowment.

These initiatives, as well as Dartmouth’s continuous commitment to undergraduate financial assistance, are supported by an approved endowment payout of $335 million for the current fiscal year. This amount accounts for over one-third of Dartmouth’s yearly operating budget.

The board of trustees has highlighted a greater emphasis on diversity and inclusivity as a priority for the school. This is in addition to an enhanced emphasis on financial aid. The Investment Office unveiled its Diversity, Equity, and Inclusion Action Plan in March 2021. This project, which was one of many new programs being implemented all across campus at the same time, is dedicated to improving diversity in the industry throughout the course of time. This plan begins in our office.

It sought out different student groups at Dartmouth to give training and career assistance through our new Endowment Fellows and Investment Office Internship programs. This search was motivated by Dartmouth’s aim to deliver excellent undergraduate education. In addition, we are going to make it a priority to improve the diversity of our staff, particularly at the entry-level, where we have the best opportunity to cultivate a pipeline of diverse investment professionals.

If you need help putting the finishing touches on your college applications,  at AdmissionSight, we have over 10 years of experience guiding students through the competitive admissions process, including our athletic recruitment program.

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