Sarah Lawrence College’s endowment, established in 1926 with a gift from William Van Duzer Lawrence, is made possible by a history of generous philanthropic support. Endowed gifts help ensure the College’s future by providing a stable source of income in perpetuity. The College is profoundly grateful to donors of endowed funds who help sustain Sarah Lawrence’s unique educational model financially, providing current and future generations of students with the extraordinary experiences for which the College is known.
As part of its fiduciary responsibility to act in the best interest of the College, the Sarah Lawrence College Board of Trustees is charged with stewarding the College’s endowment to reach its long-term return goal of providing ongoing financial support to the College and its students, faculty, and staff. In accordance with its governance structure, a subset of Board members comprises an Investment Committee that provides strategic oversight to ensure that the endowment continues to be a perpetual source of income that supports the College's operation.
Below are answers to some frequently asked questions about Sarah Lawrence’s endowment and how it is managed.
What is an endowment?
An endowment is a fund of donated assets – money or property – that is invested to provide financial support for a nonprofit organization in perpetuity.
The donations that make up an endowment (endowed gifts) are normally made with the requirement that the principal remain intact in perpetuity and be invested so that the returns on the investment will support the organization.
Can endowed gifts be used for any purpose?
Donors to endowments may, and often do, designate the purpose for which the earnings on their endowed gift may be used, and this use is agreed upon by the donor and the College as a condition of accepting the donation to the endowment. These funds are known as restricted funds. The College may only use restricted funds for the purpose that was agreed upon with the donor.
Sometimes, donors allow their endowed gift to be used more generally to support the College’s mission and priorities. These funds are known as unrestricted gifts.
The vast majority of gifts to the Sarah Lawrence endowment are restricted. In fact, only about 15% of the endowment is unrestricted.
What is the relationship between the endowment and the operating budget?
The operating budget is a financial projection of the College’s revenue and expenses for a fiscal year.
Revenues drawn from the endowment’s restricted and unrestricted funds comprise part of the annual operating budget. The percentage of the endowment allocated annually to support operations is referred to as the spend rate.
In setting the annual spend rate, the College seeks “intergenerational equity”, balancing the interests of the present generation of students and educators with those of future generations. That is, the College seeks to preserve enough of the endowment so it can continue to grow for future use while leveraging enough of it to support the College’s present-day needs.
Funds generated by investment returns on the endowment and distributed according to the spend rate support financial aid, faculty compensation and faculty chairs, lectures and programming, and other annual operating expenses.
Presently, funds generated by the endowment provide approximately 9% of the annual revenue in the College’s operating budget.
Do tuition and fees go into the endowment?
No, tuition and fees are not invested in the endowment. These funds go directly toward covering the College's operating expenses.
What is the relationship between The Fund for Sarah Lawrence and the endowment?
Gifts to The Fund for Sarah Lawrence, as well as gifts in response to appeals such as Giving Day, Giving Tuesday, Socktober, and end-of-fiscal and end-of-calendar year campaigns, are known as gifts for current use. These gifts are not put into the endowment; instead, they are used immediately to support the College's needs.
How is the endowment managed and by whom?
Oversight of the College’s endowment is the responsibility of the Board of Trustees, under the guidance of its Investment Committee. When the College's endowment reached approximately $60 million in the early 2000s, it became evident that the endowment required the dedicated attention and expertise of an investment staff. The Investment Committee determined that it would be prudent to explore outsourcing the management of the endowment to an investment management firm. After reviewing proposals and undertaking due diligence, in 2005 Sarah Lawrence partnered with Commonfund, a private, nonprofit organization, to serve as the Outsourced Chief Investment Officer (OCIO) for the College’s endowment portfolio.
When the College moved its investments to Commonfund, it ceased to have direct holdings in individual companies. Instead, Commonfund worked collaboratively with the College and the Investment Committee of the Board of Trustees to design a tailored long-term asset allocation plan for the endowment. The strategy is implemented through proprietary investment vehicles that engage third-party managers to execute the plan through investments in a diversified range of asset classes. The Investment Committee regularly reviews the performance of its OCIO in achieving returns and balancing risks. The College also periodically conducts a rigorous process of soliciting and reviewing proposals from a range of firms before engaging in a multi-year contract; this was done most recently in 2022.
Commonfund is a signatory to the United Nations Principles for Responsible Investment (PRI), a statement of principles and practices designed to promote environmental and social responsibility among the world's investors.
What is the investment objective for Sarah Lawrence College’s endowment?
The investment objective of SLC’s endowment portfolio is to ensure that its future growth is sufficient to offset normal inflation plus reasonable spending. Commonfund uses a carefully planned and executed investment program aimed at enhancing the endowment’s long-term viability by maximizing its expected return with a prudent level of risk.
What philosophies and policies guide the endowment’s investment program and management?
Sarah Lawrence College aims to incorporate responsible investing in its endowment portfolio. To that end, as part of its investment strategy and adherence to the PRI, Commonfund considers environmental, social, and governance factors alongside more traditional performance indicators when evaluating investment opportunities.
Sarah Lawrence’s endowment portfolio is invested with the primary performance objective of earning at least enough to offset normal inflation plus reasonable spending while preserving its value. This is pursued through a carefully planned and executed long-term investment program.
Intergenerational equity is a key principle that guides the management of SLC’s endowment. Intergenerational equity is the principle that equity should be preserved across generations of beneficiaries. In other words, in real (inflation-adjusted) terms, the support provided to today's generation from the endowment should be roughly equivalent to the support provided to future generations.
How and when was Sarah Lawrence’s endowment started?
William Van Duzer Lawrence contributed stocks to establish the endowment when he founded the College in 1926. In Lawrence’s words in the College’s charter application, the contribution was “to be credited to the endowment of such college and … the income thereof be used perpetually for the payment of the cost of conduct and maintenance of such college.” Since then, leaders and Trustees have stewarded the College’s investments to maximize the endowment’s growth and longevity. However, the scale of the endowment is such that the College has been dependent on tuition revenue to fund its operating expenses for much of its history.
Where does the endowment stand today?
The value of the College’s endowment changes daily. As of June 30, 2024, it was $148.1 million.