The College has an $85 million endowment fund, which is an accumulation of donations and gifts from alumni, friends of the College, and residents of Lake Forest since the start of LFC in 1857. The endowment fund is essentially the “saving account for the College,” according to President Stephen Schutt.
The Board of Trustees and an investing committee decide how to invest the money in order to make a return of about 6 to 7 percent each year. The College limits its withdrawals to 5 percent of the fund per year in order to keep its $85 million principal untouched, so that the fund can continue to grow.
The College makes three “draws” from the fund each year. One of the draws is a little over $1 million. This draw is used for debt service, or to pay back the interest on the bonds that the College issued in order to renovate and rebuild Nollen and Deerpath halls.
The second draw is about $2.4 million and goes toward the operating budget. The annual operating budget is close to $45 million: these funds keep the school running. Costs of faculty and staff salaries, all building utilities, and maintenance of the residence halls and grounds are included in the operating budget.
The third draw is around $750,000. This money goes toward “restricted accounts,” which are causes and funds that alumni specifically donated to, such as donations to a specific sport team or a scholarship that supports students from the state the alumnus is from.
Together, the three draws add up to $4.15 million, which is a little under the 5 percent withdrawal limit of the endowment fund.
When President Schutt first came to the College, the endowment fund was at $50 million. The fund has grown fairly quickly over the years, and President Schutt believes that the fund will continue to grow.
At first glance, Lake Forest College’s endowment fund seems to be considerably smaller than those at other ACM colleges. In 2013, the average ACM college endowment fund was over $370 million, while Lake Forest College lagged behind at close to $77 million that year.
Despite the difference, President Schutt said that LFC’s endowment is not in a weak position. He pointed out that there are some outliers in the $370 million average; for example, Grinnell College has an exceptionally large endowment of over $1.5 billion.
Also, some of the smaller colleges’ endowment funds are on the larger end only because they were fortunate to have one wealthy alumnus make a significant donation. That one generous amount, properly invested by a college, makes up the majority of some of the small colleges’ endowment funds.
Lake Forest College has yet to receive a several million dollar donation by a single alumnus: hopefully, one of you can be that donor in the future.
