Worcester Business Journal

10 Worcester Business Journal | September 2, 2019 | wbjournal.com BY GRANT WELKER Worcester Business Journal News Editor e Central Mass. colleges with the biggest endowments tend to get the highest returns I n 2016, the College of the Holy Cross gained $83 million in investment income in its endow- ment. at's about 16 times greater than the entire endowments of Anna Maria College or Becker College. Such is oen the financial reality in higher education today, with those three Central Massachusetts colleges demon- strating how wealthier institutions benefit from hey finance accounts and generous donors, while smaller schools face what some in the industry warn may be insurmountable challenges in the years ahead. "It illustrates a perverse dichotomy in higher education that the rich get richer and the poor get poorer," said Scott Latham, a business professor at UMass Lowell, who has been studying endow- ments and the higher education industry. Colleges with smaller endowments may be getting relatively poorer com- The rich get richer pared to deep-pocketed peers, but with the economy providing higher invest- ment returns – and more donor support – nearly every Central Massachusetts college has seen endowments grow in the past decade or more. Holy Cross' endowment has bal- looned by $364 million in the last 15 years, and endowments at Clark Univer- sity and Worcester Polytechnic Institute have expanded by more than $200 million each, according to the National Center for Education Statistics. at has helped pump millions more into student financial aid, as well as support for fac- ulty positions and other areas. Endowments aren't the only source of financial aid. But nearly half of endowment spending supports financial aid, and for the largest endowments, a school's ability to defray student costs becomes significant. Endowments can be a bragging point, a factor in college rankings, a consideration for presi- dential tenures, and a reassuring sign to prospective students and parents a college is on solid financial ground. A new priority Central Massachusetts colleges that used to treat endowments as practi- cally an aerthought have been forced to make fundraising a high priority, including public institutions previously relying on state funding for the bulk of their income. at's no longer the case, and schools have adjusted, including at Framingham State University, where today's endowment of more than $40 million was $1.7 million in 2004. "We were not nearly as active in fundraising in the past," said Eric Gus- tafson, Framingham State's vice president of development and alumni relations. Donors to Framingham State have helped increase scholarships and cover the cost of what for students would oth- erwise be unpaid internships, he said. "ey really believe in our mission about making an excellent education affordable to everyone," Gustafson said of the school's donors. At Worcester State University, Tom McNamara, the vice president for uni- versity advancement, remembers when the endowment was $170,000 about two decades ago. A state incentive program matched dollar-for-dollar any amount the university brought in on its own, helping to eventually grow the endow- ment past $30 million. "At the time, it was significant in changing the culture of giving," Mc- Namara said. Worcester State uses about 70% of what it draws from the endowment each year on financial aid, with the help of more than 400 individual scholarship funds for students. "We're giving so much more money than we ever could before for scholar- ships," McNamara said. The wealthiest gain the most Colleges with the largest endowments to begin with have generally seen higher investment return rates than their small- er counterparts, according to a study this year by the National Association of Col- lege and University Business Officers and the financial services company TIAA. ose schools have bigger investment Eric Gustafson, Framingham State University The College of the Holy Cross' endowment has grown by $364 million in the last 15 years, providing tens of millions of dollars for student aid. H I G H E R E D U C A T I O N PHOTO/BRAD KANE

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