The sustainability of three primary sources of revenue -- net student revenues, endowment, and fundraising -- determines the size and scope of programs at Grinnell College.

1. Choosing Grinnell’s Future 132nd Annual Alumni Reunion June 4, 2011 Presented:Faculty Meeting – April4, 2011 Staff Meeting – May 10, 2011

2. 2 …The College aims to graduate women and men who can think clearly, who can speak and write persuasively and even eloquently, who can evaluate critically both their own and others’ ideas, who can acquire new knowledge, and who are prepared in life and work to use their knowledge and their abilities to serve the common good.

3. The sustainability of these three primary sources of revenue determine the size and scope of the program. Mission-based allocation decisions 3

5. Strong reputation for and faculty commitment to teaching

6. Legacy of social engagement

7. Committed and expert staff

8. Successful and engaged alumni

9. History of innovation

10. Flexible endowment

11. Low debt

12. Excellent physical plant

13. Low tuition/comprehensive fee

15. Current gifts declining

16. Endowment recovering but long-term investment returns likely to be lower than in the past

18. 6 Net student revenues (or $ collected from students) Grinnell Trends

19. Net Student Revenues and Scholarships and Grants 7 Grinnell Trends Recent comprehensive fee increases are more than offset by scholarships and grants provided. Net student revenues are not growing appreciably. aid changes fee increase Source: Audited Financial Statements

20. Grinnell Trends Composition of Revenue Sources that Fund Cost per Student as Compared to Comprehensive Fee The total cost per student is more than 50% endowment supported. The comprehensive fee does not cover the full cost of educating a student. $58,036 $55,758 $56,447 Cost per student $53,207 $50,613 38.0% 37.8% 38.6% 36.5% 38.5% Comprehensive fee 50.9% 51.9% 51.0% 54.1% 52.4% Source: Audited Financial Statements 8

21. 9 Fundraising Grinnell Trends

22. 10 Grinnell Trends Decade of Fundraising Large gifts are primarily from bequests, foundation grants and trusts. Current gifts are declining. in millions Source: Council for Advancement in Education

23. 11 Endowment Grinnell Trends

24. Endowment Market Value 12 Grinnell Trends The endowment is recovering but is still below its peak value. * Includes debt reserve Source: Audited Financial Statements

25. 13 Endowment and Similar Funds Performance Analysis as of June 30, 2010 Grinnell Trends Long-term returns are trending downward. Rolling 10 Year Return (%) Fiscal year end Source: NACUBO Endowment Study

26. 14 Grinnell Trends Endowment Spending Policy The College has been well served by its endowment spending policy and the buffers embedded in it. Approved April 2004* Reaffirmed April 2008. Distribution Endowment distribution is calculated as 4.0% of the 12-quarter moving average endowment market value determined annually as of the December 31 immediately prior to the beginning of the fiscal year. The collective efforts of the Board of Trustees and the campus community have allowed us to respond responsibly over the past few years. Budget Allocation The College shall not allocate 100% of this distribution to the operating budget. Factors in determining the allocation include: 1) revenue balance, 2) expenditure discipline, 3) facility requirements (including debt service) and strategic initiatives, and, 4) the allocation to the operating budget should not increase or decrease more than 5% of the prior year’s budget allocation. * Included staged reduction from 4.5% (FY 2004), 4.25% (FY 2005 & FY 2006) to 4.0% in FY 2007.

28. The endowment funds 50% of all costs and the spending rate is 4%.

29. Inflation is 3% (HEPI averaged 3.7% over the past decade).

30. At a minimum, the “real” cost of the program must be retained. Even modest increases in the growth of these revenues sources compound and increase the endowment/program’s sustainability. What does this mean? The endowment return would need to cover: Spending rate (4%) + Factor to cover lack of growth in other revenue sources + Inflation rate ( 3% to maintain real value of the endowment ) = Total Required investment return to maintain real growth of the program and real value of endowment.

31. Grinnell Compared toCarleton, Swarthmore and Williams 16

33. Only Carleton and Grinnell award merit aid.Source: Audited FY 2010 Financial Statements

34. 18 Grinnell as Compared Decade of Fundraising Carleton, Swarthmore and Williams averaged $13, $8 and $31 million MORE annually, respectively. They have built their endowments as well as supporting operations. (in millions) $437.8 $256.6 $208.1 $125.1 Source: Council on Advancement in Education

35. Endowment and Debt 19 Grinnell as Compared Grinnell’s endowment is investment performance rather than gift driven… The sources of Grinnell’s endowment reflect disciplined “savings” and provide financial flexibility. …and has used debt more conservatively. (in millions) Source: Audited FY 2010 Financial Statements/NACUBO Endowment Study

36. In review… 20

38. Gifts are declining.

40. Invest in development to increase gifts

41. Continue to maximize endowment returns

42. Develop a compelling case for why to invest in Grinnell