The College’s endowment generated an investment return of 19.2 percent in fiscal year (FY) 2014, again earning Bowdoin a place in the top five percent of returns among peer colleges and universities, according to Cambridge Associates (a firm that tracks educational funds’ performances across the nation). The endowment had a market value of $1.216 billion on June 30, up from $1.038 billion at the close of FY 2013.

The return, which is heavily dependent on the health of the economy, was three percentage points higher than it was last year.

The endowment’s strong performance earned Bowdoin the “Endowment of the Year” award from Institutional Investor—a global finance magazine—in a category of nominees that included Williams, the University of Pennsylvania and the University of Richmond. U-Penn generated a return of 17.5 percent in FY 2014, while Williams and Richmond have yet to release their returns.

“Looking at year-to-year performance and winning [Endowment of the Year] is very exciting,” said President Barry Mills. “But the real story is in the three-, five- and ten-year returns, because that tells you with some certainty what you can expect over a long period of time, which allows you to think about how you operate the College. So it’s incredibly impressive that we are year-in and year-out in that very highest category, but what’s even more impressive is that when the markets fall, we don’t lose as much as other people do. That is phenomenal.”

Mills also stressed that excellent returns on the endowment still mandate strict financial prudence with regard to strategic planning.

“We’re not running an investment fund, we’re running an endowment to support the College—you have to match the way the College operates against the strength of the endowment, and that’s what we’ve done,” he said. “It’s a complicated balance, because in these colleges and universities, everybody wants to spend every nickel they have.”

Strong returns on the endowment are more important over the long-run in order to preserve capital and sustain the operations of the College. To cover a proportion of each year’s operating expenses, Bowdoin annually withdraws about five percent of its endowment based on a 12-quarter lagging average to compensate for particularly rough years, such as 2009’s 16.99 percent decline on investment returns. According to a release published on the Bowdoin Daily Sun, at the close of FY 2014, the endowment’s three-, five-and 10-year annualized returns were 12.3 percent, 13.8 percent, and 10.4 percent, respectively. 

Now that the weaker returns of the financial crisis have cycled out of the 12-quarter lagging average, funding from the endowment for each year’s operating budget will likely increase “over the next to two to five years,” according to Mills.

“You could use that money for debt service, if you needed a capital project—I think some of our students might say that our upperclass housing might need some improvement… There’s additional academic programing we could enhance, so we could spend the money on that. There are plenty of places to spend the money. My hope would be the first place people would think is to understand what our financial aid commitment ought to be, and continue to grow it,” said Mills, acknowledging a commitment throughout his tenure to increasing the affordability of a Bowdoin education.

The endowment’s continued strength, thanks to the impressive performance of the College’s investment committee, is also central to minimizing increases in tuition and fees each year. Since the 2011-2012 academic year, Bowdoin’s comprehensive fee has increased annually by just 3 percent, a rate lower than at most peer institutions. The comprehensive fee for FY 2014-2015 is $59,568, but Mills emphasized that the actual cost of educating a student for a year at Bowdoin is actually closer to $80,000. Financial aid from the endowment is one of the key means of managing that discrepancy. 

“The 80 [thousand dollars] I think is going to increase. The question is going to be, ‘What are we going to do with the 60?’ That’s why the endowment is so important, is to close that gap,” said Mills. “I think what you’re going to see is that at colleges that have very healthy endowments, more and more and more families in higher and higher income brackets are going to be supported, because these colleges are just so expensive… but, you’ve got to balance your checkbook.”

The Bowdoin Daily Sun release also reported $24.1 million in endowment gifts during FY 2014. Approximately 45 percent of the endowment can be used only as financial aid. In his last year as president, Mills is embarking on a final fundraising campaign for endowment gifts dedicated to financial aid with a goal of around $100 million.

“I came to Bowdoin fourteen years ago, when our endowment was less than 400 million dollars,” said Mills. “Having an endowment the size that we have today has clearly allowed us to support our students and families in ways that we couldn’t in the past on the financial aid front. It’s allowed us to grow our academic program, it’s allowed us to improve our facility…and so as I’ve said often, it isn’t about the money. But without the money, it’s very hard to create a sustainable program for the College.”