President Clayton Rose responded to a congressional inquiry into the finances of Bowdoin in a letter dated March 17, stressing the importance of Bowdoin’s $1.393 billion endowment for providing financial aid for students.
Seeking to survey “the numerous tax preferences [56 colleges whose endowments exceeded $1 billion] enjoy,” the February 8 congressional inquiry—signed by Senator Orrin Hatch and Congressmen Kevin Brady and Peter Roskam—came after recommendations from the Nexus Research and Policy Center advocating an excise tax on private college endowments greater than $500 million. According to Bloomberg News, in January Republican Congressman Tom Reed floated the idea of a bill that would mandate what percent of college endowment incomes would be devoted to financial aid.
Senior Vice President for Finance and Administration & Treasurer Katy Longley noted that government mandates and taxes on the endowments of nonprofit colleges would represent a “fundamental shift” in their purpose.
“The purpose of an endowment is to have a gift in perpetuity yield as much as it can for the institution. The purpose of the donors who gave this money hundreds of years ago was to support the school—not to support something else.”
In the letter, which is now available online, Rose noted that sixty-six percent of student financial aid comes from endowment specifically designated for financial aid. Out of the over 1,600 funds in the College’s endowment, 833 are restricted by donors to financial aid.
Rose wrote that Bowdoin uses a large portion of its endowment to make education here “accessible and affordable to all students.” The nearly one-half of Bowdoin students who receive financial aid from the College are granted an average of $39,620, which is approximately two-thirds of tuition and fees charged.
Longley’s office further noted that, in addition to paying out a total of 33.1 million in salaries to Brunswick residents in FY 2015, the College gave $125,900 in unrestricted payments to the town. This money, however, was paid out of the College’s operating budget—not its endowment.
Amherst College submitted their response to the inquiry on April 1, similarly speaking to their endowment’s dedication to financial aid. The letter noted the discrepancy between the growth of their endowment and the need for financial aid, determining that their financial aid has increased at nearly double the rate of the endowment’s growth.