MSOE has put a recent emphasis on increasing its endowment. Endowment funds are vital to supporting student scholarships.
Despite MSOE’s rich heritage and strong placement, our endowment is substantially smaller than that of our peer institutions. This lack of substantial endowment leads to two issues:
When publications rank undergraduate institutions they weigh a number of factors, one of which is “alumni satisfaction”. In order to measure an intangible such as this, the publications use the alumni donor rate as a measuring stick.
For the fiscal year ending June 30, 2011 the MSOE alumni donor rate was 12%.
At peer institutions, the alumni donor rate fluctuates between 18% and 30%.
Simply put, our competition boasts endowment funds at five to 20 times larger than ours. MSOE has a ways to go. Our lack of alumni participation impacts our ability to increase our ranking amongst these peer institutions.
A low endowment also means that we lack the dollars needed for upgrading labs, developing new facilities and giving more scholarship aid to deserving students. For example:
If MSOE had $600 million dollars in our endowment, the annual interest distribution would amount to approximately $30 million. These funds would be independent of any income derived from tuition, grants, donations and other income. That money could be used in a variety of ways, including scholarships, to attract high-caliber students.
The funds that the MSOE endowment currently distributes, while important, are not sufficient to maintain current programs, let alone grow them. As a result the scholarships that we give are, to a great degree, unfunded and the challenges of new classrooms and equipment are left unmet.
Essential to understanding the role that a healthy endowment plays in the stability of a university is that the endowment corpus is never spent. Therefore, it will generate an income stream in perpetuity to continue meeting the needs of the university. If the corpus grows with inflation, it will provide an important on-going revenue source to underpin the financial strength of the institution.