On Tuesday, Sept. 30, the Student Government Organization (SGO) hosted “Endowment 101,” an information session aimed at educating campus community members about the basic structure, purpose, and investment strategies of the college’s endowment. The presentation was led by Vice President for Finance and Administration Rob Goldberg and Chief Investment Officer Frank Grunseich, and was followed by an extensive Q&A.
As Goldberg discussed, the purpose of an endowment is primarily as a “perpetual asset” that supports the core mission of the college and its annual operating budget. In the college’s 2024-25 budget, $127 million in spending from the endowment accounted for 57.6% of the college’s revenue, which was then allocated toward infrastructure maintenance, debt service, and financial aid. Another 36.9% of the college’s revenue came from student tuition fees, with the remaining 5.5% from other sources, like direct gifts, grants, interest payments, and rents.
Graphic courtesy of Rob Goldberg
Goldberg emphasized the importance of the endowment in funding the education of every student. In 2024, the college’s spending per student was almost $143,000, significantly higher than the full cost of attendance without aid (around $81,000), meaning the endowment reaches all students, regardless of financial aid status. In response to a later question, Goldberg and Grunseich also emphasized that the college’s endowment per student, around $1.7 million, is among the highest in the nation.
Graphic courtesy of Rob Goldberg
While Pennsylvania state law limits nonprofit annual endowment spending to between 2% and 7%, the college’s internal spending rule keeps Swarthmore’s spending from the endowment between 3.5% and 5% of the fund’s annual value per year, with a target of 4.25%. The rule, according to Goldberg, is meant to ensure that the endowment’s returns are consistently greater than spending from the endowment plus the endowment’s loss of value due to inflation. In recent years, the college has been spending above the 4.25% target, with an estimated spending rate of 4.83% for the 2025-26 fiscal year.
Graphic courtesy of Rob Goldberg
The college spends from the endowment mostly to cover four crucial components of the yearly operating budget: this past year, 49% of endowment spending went to financial aid, 19% to payments towards the college’s debts, 14% to plant renewal and replacement, and 18% to further operations support. Goldberg described this allocation process, stating that in forming the annual budget, his office first determines each category’s funding needs and then attempts to align them with the 4.25% of the endowment that the college aims to spend annually.
In response to questions about how and why this internal spending limit was set, Goldberg shared that every college has one, and Swarthmore’s is on the more conservative side. He defended this approach in response to questions about why the limit didn’t depend on a given year’s inflation and/or endowment returns, saying that the limit ensured the college would not commit to programming that it likely would not be able to continue in future years.
At its core, Goldberg explained the endowment as “really just a pool of funds, seeded largely by gifts that get invested. Then the returns [from those investments] are what we use to fund the expenses of the college.”
Currently, the market value of the endowment is $2.7 billion, having grown from the original gifts of $537 million that comprise the endowment. Taking into account the $1.9 billion that has been withdrawn from the endowment to fund operations since 1982, Grunseich said the “$537 million in gifts has generated about roughly $4.7 billion in total value.” He described the growth as “a great story here in terms of … careful financial management,” and a portfolio that has been “well invested.”
Over the past decade, the college’s reliance on the endowment has grown significantly, with the percentage of yearly operations covered by endowment spending — rather than tuition revenue — increasing from 43% in 2012 to 60% in 2025. The increase in endowment dependence is largely from the spending side, resulting from the expansion of financial aid and new campus infrastructure projects, such as the geoexchange initiative.
Graphic courtesy of Rob Goldberg
The ultimate authority for the endowment management rests with the Board of Managers, which delegates responsibility to the ten-member Investment Committee. Eight of those members are Swarthmore alumni who are “subject-matter experts” and active market practitioners. Recommendations are made by four subcommittees, each covering a major asset type (such as real estate). Every subcommittee is made up of two Investment Committee members and three “subject-matter experts, who are also alums,” according to Grunseich.
The presentation also provided a look at the development of the endowment profile over time, showcasing its major diversification since 1980, when 81% of the portfolio was invested in domestic equities, with only five different managing firms and strategies. The endowment is now managed by 106 different firms and strategies and has gradually shifted toward private equity, alternative strategies, and international equities, which make up 32.3%, 16.2%, and 13.8% of the endowment, respectively. In the period ending in June, the endowment’s one-year rate of return has been 5.8%, and its ten-year rate of return is 8.3%.
Regarding its investment strategies, Grunseich emphasized the college’s responsible investing practices, including meticulous research and proposal review processes, as well as a values-based approach.
In response to a question about the college’s commitment to a carbon-neutral campus, Grunseich answered that, in August of 2019, the college stopped investing new money into fossil fuel partnerships. However, the college could still invest in index funds that include the stocks of fossil fuel companies. Grunseich also said that the Investment Committee has refused several investment opportunities based on the college’s values, including funds that invest in the defense sector, cannabis, and internal combustion engines for cars.
Several student questions also referenced a 1991 Board of Managers policy amendment that many believe to have functionally banned ethical divestment. Students questioned whether Grunseich and Goldberg’s assertion that the Investment Committee’s strategy considers social values contradicts the amendment, which deprioritized the “[pursuance of] other social objectives.” Given the information available, the policy does not seem to distinguish between divestment from existing holdings and investment in new assets; however, Grunseich clarified that the Board of Managers considers social values more in the latter case. “Saying we’re not going to touch this [new investment opportunity] is different than going to the portfolio and looking at the list of relationships we already have and saying … you have to come out,” Grunseich said.
Goldberg and Grunseich also addressed the federal government’s recent tax increase on endowment returns, which Swarthmore narrowly avoided paying. The college dodged the 8% increase in endowment taxes for wealthy private schools included in the One Big Beautiful Bill Act (OBBBA) due to a last-minute exemption for schools with enrollments under 3,000. Goldberg stressed that an increase of 8% in the federal tax on returns — much less than the 21% increase initially proposed in a prior version of the OBBBA — would nonetheless be an “existential threat” to the college’s mission and operations.
In May, before Congress had settled on the specifics of the federal endowment tax, the college released an interim budget in response to this financial uncertainty. The budget included delays to some faculty and staff raises, and an audience member asked how the college determined which wages to freeze. The budget included delays to some faculty and staff raises, and an audience member asked how the college determined which wages to freeze.
They also wondered how the college would determine what to cut if the federal government were to eliminate the endowment tax exemption in the future, and whether there would be community input on this decision. In response, Goldberg acknowledged, “I think we would have to engage in a dialogue around campus if we were facing that level of financial disruption.” Regarding democratic involvement in deciding cuts, Goldberg added, “How that process would look, I have no idea.”
