To: Wellesley College Faculty and Staff
From: President Paula A. Johnson
Re: Endowment Return Update
Date: November 10, 2021
In late October, the Wellesley College Board of Trustees approved the College’s audited financial statements for FY21, closing the books on operating, capital, and investment results for a year like no other.
This year the College earned a record investment return on the endowment of 46.5 percent. After such a financially challenging year, this is a remarkable result. We can credit both strong markets and the excellent work of our investment office, led by Debby Kuenstner ’80. Because the College uses an endowment spending formula that, by design, smooths spending over time, the short-term budgetary impact will be muted. Longer term, higher endowment spending will significantly strengthen the College’s financial health and help us to achieve our strategic priorities and advance our mission. Three of these priorities are outlined below.
Bolstering inclusive excellence by meeting the financial needs of students. The strong endowment return will help us sustain our need-blind financial aid policy, which is core to our mission and an essential pillar of our goal of achieving inclusive excellence. Higher endowment spending will enhance Wellesley’s capacity to meet the needs of our students while continuing to recruit a brilliant and diverse student body.
Investing in our residential and academic buildings. While we have been making steady progress, our deferred maintenance needs still far exceed $500 million. A recent electrical outage and water main break are powerful reminders of the operational risks that we must address with the greatest possible urgency.
Higher endowment spending will enable us to make critical investments in our buildings and infrastructure, possibly on an accelerated timeline, to renew the campus and to strengthen the Wellesley experience for our students and our community. These investments will allow us to make Wellesley more accessible, and they may allow us to reach the goals we have set for carbon neutrality sooner than we had planned.
Sustaining the excellence of our program by investing in our people. The excellence of our program derives from the excellence of our faculty and staff, and from fostering the relationships that are possible in a college where all members of the community share a commitment to our mission. Investing in numerous ways in our faculty and staff is essential to Wellesley’s future.
While we welcome this historic return, we must be realistic about the financial challenges we still face. Our budget projections for the next several years assume only modest increases in the comprehensive fee. Given the increasing financial needs of our students and families, this will likely mean that the rate of growth in net tuition income will not keep pace with annual increases in salaries and other expenses. This projected imbalance will require us to remain steadfast in achieving a sustained operating surplus so that we can strengthen the College on multiple levels.
The pandemic has challenged us all—as individuals, as an institution, and as a society. Thanks to the tremendous dedication of our community, Wellesley has met this challenge, and I believe we have emerged stronger and more committed to our mission. A larger endowment will add to our strength of purpose. It will allow us to invest in our people so that we can continue to recruit and retain talented faculty and staff. It will allow us to better meet the needs of our students, our families, and our campus. Importantly, it will allow us to advance the goals of the strategic plan and move Wellesley into a bold and bright future.
I look forward to continuing to work with all of you to focus on our highest priorities and to position the College for excellence and financial sustainability in the future.
