From the Kravis Center to the many newly endowed professorships, to the persistent phone calls and the letters in the mail home, students, faculty and parents alike have been affected in some way by the Campaign for Claremont McKenna.
As of January 31st, the campaign has raised $469,785,572 towards its goal of $600 million.
The record-breaking campaign, which entered its public phase in the spring of 2008, is the largest liberal arts college campaign drive ever announced. Although 2008’s financial crisis put a damper on the efforts to raise the money, the college is approaching its lofty goal. Importantly though, as the endowment fund took a hit, the money already raised via the Campaign, about $400 million, helped to alleviate significant losses for CMC investments in financial markets.
While many of the “mega gifts”, such as Robert Day’s $200 million commitment, were pledged before the recession hit, smaller gifts in the $250,000 to $3 million range were the ones that were noticeably affected.
“[When the recession hit] we didn’t change anything [about the campaign],” said Claremont McKenna President Pamela Gann. “We still wanted to raise money for the same things but we had to be patient and wait. The rate at which we raised money definitely slowed down but our activity level did not. It was a time to listen, not a time to stop.”
People delaying their gifts to the college or extending their payment schedule also had an impact on the campaign.
“We are trying to be donor-centric,” explained CMC Vice President for Development and External Relations Ernie Iseminger. “We are always trying to honor the donor and honoring what makes sense for them.”
The greatest effect of the recession on the campaign, however, was the hesitation of most donors to commit to gifts of significant size.
“Most of our donors are 60 years old or older,” said Gann. “Whatever it was that created their wealth, they are not going to create another round of it. Most of them needed to pause and see where the economy was headed.”
At the beginning of the recession, losses on the return of investment from CMC’s endowment, which provides nearly 20% of the operating budget revenue, were projected at -30% for fiscal year 2008-2009. While the college only realized investment losses of -21.7% in fiscal 2008-2009, an initial projected reduction of nearly $12 million was planned over three years in the operating budget, said Jim Floyd, Associated Vice President for Investments at CMC.
Although investment returns were better than initial projections, operating support from the endowment will likely remain near fiscal 2008-2009 levels for the next few years rather than increasing at the past normal levels of about four percent each year. Currently, the endowment spending level remains well below pre-financial crisis expectation.
While in house projections expected worse than what in reality happened to the fund, the makeup of the pre-recession portfolio did not sufficiently protect itself. The Forum, without confirmation from CMC administration, has gleaned from sources that the portfolio contained self-interested investment choices. Additionally, the Forum has heard that the portfolio did not include adequate insurance on its investments should they have failed as they did. The fund, as a whole, took a short position on volatility. This position is taken via a type of options that allow the fund manager to bet that future volatility, meaning potential deviations on the market or certain investment returns, will be less than expected. When the recession hit, these three factors contributed to significant financial losses.
Luckily, the campaign provided crucial funds for the college by replacing a portion of what was lost with new gifts. “It is safe to say that without the campaign, the recession would have been a lot more painful for us,” said Gann.
Scholarship funds and pledges for endowed chairs from the Roberts Challenge received prior to the recession provided CMC with a smooth transition into their new economic reality and preserved CMC’s focus on the student experience.
“In that time period, we were true to what mattered,” said Gann. “We wanted to make our cuts in a way that had the least possible impact on students and their time here.”
Efforts to mitigate the effects of the recession on CMC manifested themselves in freezes on salary increases and voluntary early retirement plans for faculty and staff along with the layoffs of several staff members.
“We did a lot of things, I don’t want to say drastic, but things we had never had to do in any previous situations,” explains Robin Aspinall, CMC’s Vice President of Business and Administration and Treasurer. “If we had not made reductions, we would currently be in a much more difficult place.”
In spite of the hardships imposed upon the campaign drive and CMC, both have prospered in recent years. Even with more than a year to go, the campaign drive will soon become the largest in liberal art colleges’ history.
In rankings released earlier this week by the National Association of College and University Business Officers, CMC’s return on endowment investment, which grew +16.4 percent for fiscal year 2009-2010, was ranked in the 95th percentile for one year return, in the 75th percentile for three year average return, and in the 94th percentile for five year average return.
“To be in top five and six percent of a group that includes Harvard, Yale, [and] all the big endowments out there is a big accomplishment for us,” said Floyd.
With the campaign nearing completion, parties involved with its implementation are eagerly awaiting the effects it will have on CMC’s future.
“[The campaign] is attracting the best students and faculty we can find,” said Floyd. “It will continue to improve our competitive position in the market place, but where it will take us, who knows.”
The sentiment was echoed by President Gann.
“CMC is a very outstanding college but we are also young and we are very ambitious to be extraordinary,” said Gann. “It takes a great faculty, great students and great resources to get there.”