MIT to begin a fundraising drive in order to increase endowmentBy Mathews M. Cherian
Second in a series on the budget and endowment at MIT.
MIT plans to embark on a major capital fund-raising campaign to increase its endowment. The Institute will try to double the flow of annual gifts from approximately $50 million to $100 million, according to President Paul E. Gray '54.
In an interview with The Tech [Feb. 15], Gray had said, "If you compare us with the other institutions we regard as our peers, the ones we compete with for students, compete with for faculty, or compete with for research support, then per student or per faculty member, per unit operating budget, we are lower than all those institutions in the size of the endowment."
The ratio of the endowment to faculty and the endowment to student is "way below what it ought to be," said MIT Treasurer Glenn P. Strehle '58.
"MIT has grown so fast over the decades that growth of the endowment has lagged behind the growth of the institution," Strehle explained. Our peers "have not grown as fast, and they have a much older alumni body," both of which contribute to a larger endowment.
Alumni donations play a large part "The endowment depends heavily on individuals," Strehle added. Joseph S. Collins, director of the Alumni Fund, agreed: MIT's fund-raising efforts are centered on individual volunteer efforts.
"The principle purpose of a [capital] campaign is to get a larger group [of alumni] sensitized to your needs and committed to giving in a generous way," Gray said.
Nearly 28,000 alumni currently donate though the Alumni Association, according to Collins. Only 20,000 contributed in 1979.
Last year, 51 percent of those with MIT undergraduate degrees contributed to the fund, Collins said. About 33 percent of alumni with graduate degrees from MIT who did undergraduate work at another school added to the fund. "Both of these measures are very strong in comparison to other universities," he said.
The median gift for alumni is $50, twice the 1979 median, Collins said. A total of $9.4 million was donated last year. The Alumni Fund has reached a new "million dollar plateau" four out of the last five years.
In the previous two capital campaigns, MIT has managed to double the annual donation rate. The Second Century Fund, the fund-raising campaign of the early 1960s, increased the level of annual support from approximately $10 million to $20 million. The most recent effort, the Leadership campaign, which ran from 1975 to 1980, almost doubled the value of annual gifts from $25-30 million to $50-55 million.
The current value of MIT's endowment is approximately $725 million, according to Strehle. Annual return on the endowment is 12-13 percent. Eight percent of the endowment is reinvested to keep the endowment growing with inflation. The Institute spends the remaining five to six percent.
Gray stressed the need to reinvest and keep the endowment growing with inflation even if the Institute could use extra money at the present.
He said MIT would benefit from the increased revenues of a larger endowment.
"The cost per student over the last 40 years has been twice tuition," Gray said. The difference has been "made up by earnings on endowment and expendable gifts." A larger endowment could help "to moderate tuition," he said.
MIT would also be able to provide more financial aid, Gray added. "Student aid is a very important priority," Strehle said. "The growth of student aid has lagged tuition." A larger endowment would allow MIT to bring financial aid more in line with tuition.
With a larger endowment, Gray hopes to increase faculty salaries and faculty research.