QUESTION #9: HOW CAN YOU TELL ME THAT WE'RE IN A TIGHT BUDGET ENVIRONMENT WHEN WE HAVE A BILLION DOLLAR ENDOWMENT? WHY CAN'T WE JUST USE MORE OF THE ENDOWMENT OR ENDOWMENT INCOME IN THE BASE BUDGET?
The proportion of the budget supported by the endowment is already unusually high at Grinnell compared to our peers. As set out in the revenue chart in Question #2, the endowment contribution to the base budget represents 48.6% of the total available revenue in next year's budget. In the event of a sustained downturn in the stock market, this revenue source will decline. If that decline is accompanied by a decline in gifts and grants, the College will find itself with difficult choices between sharp net tuition increases and equally dramatic program cuts. Because increased dependence on the endowment risks the long-term health and stability of the institution, it is wise to seek balance among the "three legs of the stool": tuition revenues, gifts/grants, and the contribution from the endowment. The endowment itself needs to continue to grow (both in nominal and real dollars), not just remain stable, since the steep rise of educational costs would make it impossible to support the College in the same fashion if it didn't grow. Thus, the Board of Trustees charged the President to develop a strategy to reduce this dependence on the endowment and create a more balanced revenue stream.
