College endowments in MEA were reevaluated for environmental standards
Almost all of Goshen College’s $102 million endowment will fund environmentally friendly companies, according to Jim Histand, vice president for finance.
GC and other Mennonite institutions that manage their endowment fund investments with the Mennonite Education Agency can rest assured that their collective endowment investments will be in more environmentally friendly companies.
Specific investments with oil, coal and gas companies have been reevaluated by Everence, the Mennonite-based financial company handling the MEA’s endowment investments.
Nevertheless, the college has been searching for ways to reduce a $2.8 million budget gap. To the untrained eye, GC may appear to not be in a position that permits choosy investing.
But endowment funds and annual budgets, Histand explained, are fundamentally different cogs of the machine.
“Endowment, by definition, is a permanently restricted set of funds,” Histand said. People that start endowment funds with Goshen College want their donations to be there indefinitely.
“Indefinitely,” however, doesn’t render the money entirely useless. Money in the endowment fund is invested in hundreds of separate publicly traded companies, a service facilitated by Everence.
The money that is invested earns interest and dividends, which is then added back to the endowment fund. This increases the value of the fund, and provides more earnings through future investments.
Generally speaking, the money in an endowment fund is used to support facility upkeep, financial aid and scholarship upkeep for future generations.
Histand explained that a donor could choose to contribute to the annual budget, but that only helps the current generation and gets spent right away. Contributions to the endowment fund perpetually earn funding that is used for many generations after the donation.
Some of the endowment fund, however, is still used for annual budgets, though the amount withdrawn is carefully calculated.
“We rely on this endowment to generate income to the operating budget every year – that’s partly how we pay bills,” Histand said.
In four of the last five years, Histand said, endowment funds have been used to balance the annual budget for the school. The board has approved this, said Histand, because “they have wanted us to continue to work at developing new initiatives.”
Such initiatives have included the CORE curriculum, iPad initiatives, Hispanic student outreach and online programs.
“All of these operational things that we’ve been doing, we’ve recognized that, at the level of enrollment that we’ve been at, that we have too much operational structure,” Histand said. “Either we need to reduce that structure or find another revenue source to do these strategic initiatives.”
Histand explained that anyone could borrow as much as they needed for operations, or even dip into savings repeatedly.
But for the long term health of GC, he said, “One of the key questions that you’re always balancing is the needs of today versus the needs of tomorrow.”
“Our mission is to serve students,” Histand said, “not just in the here and now, but students now and into the future.”