Financial Sustainability & Endowment Management

The effect of the 2008-­09 global economic crisis resulted in a three-fold impact on the College’s finances. First, the value of the endowment, which provides more than 25% of our operating budget, declined significantly and has not fully recovered. Second, the ongoing economic malaise has inhibited growth in family income in the U.S. and made it harder for families to meet rising educational expenses, even as financial aid costs have more than doubled over the past seven years. And third, uncertain economic conditions have resulted in a more challenging fundraising environment. These three immediate factors impinge upon Haverford’s current financial status in the context of longer-­term concerns about the ability of higher education institutions to continue to generate sufficient revenues to meet operating expenses.

Despite these challenges, Haverford remains an institution with significant financial resources and has always managed to compete successfully with wealthier institutions. Haverford faculty and staff have always found ways to do more with less. Continuing to do so will require an integrated, sustainable financial structure that will enable the College to use its financial resources wisely and to adapt to the new economic realities of the world.

We are committed to a long-­term financial plan that supports the initiatives and objectives of the strategic plan. It will do so through thoughtful balancing of needs and resources so that the College can continue its commitment to quality and mission, while reasonably projecting sustainable balanced budgets into the future. The first iteration of our ten-­year budget model was vetted by the campus community in 2012-­2013 and endorsed by the Board of Managers, subject to updates based on actual performance and evolving institutional priorities. The financial plan considers the following budgetary guidelines and trade-offs:

  • Sustaining institutional excellence. In allocating resources, we must sustain Haverford’s standing as a leading liberal arts institution.
  • Financial equilibrium. Require that annual revenue be equal to or greater than annual expense, without eroding the financial and physical endowment. Maintain disciplined long-­term operating projections to ensure that revenue and expense will continue to maintain a sustainable relationship, as the future trend is as important as the existing relationship.
  • Student charges and financial aid. Maintain competitive levels of student charges, while considering the increasing cost of higher education. Preserve generous financial aid policies that are also financially sustainable over the long term.
  • Enrollment. Manage enrollment levels, given the limitations imposed by the capacity of our facilities, academic program, and student services.
  • Endowment spending rate. Provide sustainable endowment income in support of both current and future generations at Haverford.
  • Endowment management. Maintain an endowment return in excess of spending and inflation. Continue to develop and refine investment policies, processes and research to provide for best practices in endowment management, recognizing the central importance of the endowment to sustaining the excellence and long-term welfare of the institution.
  • Investment in physical plant and technology infrastructure. Fund expenditures for renewal and replacement of the physical plant and equipment annually through the operating budget, and do so at a level that preserves their useful life and recognizes replacement cycles.
  • Human resources. Maintain appropriate numbers of faculty and staff, with competitive compensation and benefits, to sustain the quality of the institution.
  • Fundraising and capital campaign. The campaign, which began July 1, 2010 and will end on June 30, 2017, will provide significant resources to support the strategic plan across all dimensions. The campaign goal of $225 million sets Haverford, on a per donor basis, on par with our most successful fundraising peers. The goal represents a floor rather than a ceiling to our fundraising ambition. Most peer campaigns in recent years have surpassed their campaign goals, and we anticipate that Haverfordians will make an enthusiastic affirmation of our shared ambitions so that we may surpass the campaign goal with vigor. In executing the Campaign, we will be attentive to campaign success as well as to the creation of a philanthropic climate and experience that will enable the success of future campaigns to address new opportunities as well as any remaining priorities from this strategic plan.