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BY MOLLY WESTON

In print | Published February 11, 2010 — Updated March 31, 2010 21:18

For the 2009–2010 budget year, the administration has budgeted $107 million, down from the $115.2 million of the last budget year’s rosier financial times. Spending just over $100,000,000 dollars requires bringing in that much money. Where does that money come from? There are three major groups of sources and many minor ones.

Before beginning, please note two cautions. First, because the 2009–2010 fiscal year is not yet over, there are limits to the information available on this year’s spending. Both this year’s projections and last year’s released information are used for this column. Unless otherwise noted, estimations for this year’s budget come from the operating budget released in May 2009. Secondly, the college’s fiscal year runs from July 1 to June 30 rather than from September to May with the academic year.

The largest and most familiar source category is student charges, including tuition, room and board and the activity fee. Included in this category are dollars from students and their families as well as those from outside scholarships or tuition benefits that students use to cover these costs. These revenues are expected to bring in $48.2 million and represent 45 percent of the college’s income. This year’s overall projected revenue from student charges represents a rise in both absolute (from $46.2 million) and relative (from 40 percent) terms from last year.

Understanding this number requires understanding the college’s commitment to financial aid. If every student and his or her family paid “sticker price” every year (for the 2009–2010 school year, $49,600), student charges would bring in almost $74 million per year. However, as most students know, just under half of the student body receives financial aid from the college. Last year, the average financial aid award for the 49 percent of students receiving aid from Swarthmore was just over $29,000. This aid is the realization of the college’s commitment to meeting 100 percent of demonstrated need, as determined by the financial aid office (a determination that often does not match students’ and families’ calculations of their need). This year the college estimated the gap between expected post-financial aid revenue and theoretical revenue without aid to be around $26 million.

After student charges, Swarthmore’s endowment makes the second largest contribution. At the end of last fiscal year (June 30, 2009), the endowment’s market value was assessed at $1.129 billion, down over $280 million from the previous year. The projected 2009–2010 budget has the endowment contributing $46.9 million, 44 percent of the total. This represents a lower percentage than in previous years; for example, endowment spending made up 50 percent of the college’s income in the 2008–2009 budget year, with the bulk of the change coming from previously noted greater student charges. In my next column, I will explore in more depth the endowment and its relationship to the budget.
Grants, gifts and bequests make up the third major source of income. Altogether, these sources are expected to bring in around $7.5 million this year, representing seven percent of expected income.

When the college set its budget for this year, it expected this category to remain roughly constant from the 2008–2009 budget year in absolute terms and therefore increased slightly relative to other sources (from about six-and-a-half percent). The Annual Fund is the college’s main fundraising initiative each year. It has three parts: the Alumni Fund, the Parents Fund and the Friends Fund. The Annual Fund is made up of donations that are unrestricted (that is, not designated for a particular spending purpose) and are spent within the year they are donated. These donations pay for much of the college’s day-to-day operations, including faculty salaries, library materials, dorm maintenance, and financial aid.
One of the unfortunate features of the recession is that the Annual Fund’s income has declined at the same time the endowment is losing value. In 2008–2009, the Annual Fund raised almost $4.4 million, down four percent from the record-setting previous year. Participation rates, however, remained high, with 55.5 percent of solicitable alumni donating (versus 57.0 percent the previous year). Many decades of alums are represented among donors in the 2008–2009 year, including 111 members of the class of 2008 and representatives from as far back as the cla­ss of 1937.

Swarthmore has historically struggled to match peer institutions in fundraising: in the 2007–2008 year, our average Alumni Fund gift was just $479, compared to $723 at Williams and $771 at Amherst in the same year. This is not to suggest that only big donations are worthwhile: the average represents both “leadership givers” (who generally gave at least $1864) and many smaller donors. Small donations matter both because they add up and because foundations and other grantors look at participation rates in deciding among various institutions to donate to. Many donations are also matched either by donors’ employers or by other alumni, meaning that each dollar donated may mean two or three dollars to the college.

Revenues from government grants fluctuate greatly. The average over the last five years is around $1.8 million per fiscal year. Similarly, capital gifts and bequests vary from year to year. Bequests in the wills of alumni and other friends of the college, along with other non-Annual Fund gifts, brought in around $14.8 million last year.

However, not all of these gifts are spent in full each year because these revenues are often intended for multi-year purposes or may be restricted to funding particular budget items. Other non-spent gift income is invested in the endowment so that the endowment will continue to grow and provide income in the future.

A number of smaller sources make up the remaining four percent of the college’s yearly revenue. Among them are rents on college-owned properties, application fees, and royalties on college-owned works.

I would love to hear your questions, comments or concerns about the college’s budget, the endowment, the annual fund or any other related issues. Please come back in two weeks when the column will explore that billion-dollar black box, the Swarthmore endowment.

Molly is a senior. She can be reached at mweston1@swarthmore.edu.

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