In aiming to maximize profits for current stakeholders, financial institutions rise and fall; universities, however, explicitly balance the needs of their current constituencies with those of future generations.
Yale’s endowment generates returns to support the mission of the University — the uninhibited pursuit of knowledge — for the students, faculty and staff of today and tomorrow. This pursuit, especially in difficult financial climates, is impossible without the generosity of Yale’s alumni. Over time, the impact of giving is essential to support financial aid, University operations, and the expanding scope of University programs.
In the past year, the world has undergone a credit crisis that has led to the swift collapse of some of the largest and most well-established financial institutions in history. Unforeseen market turbulence has brought many Wall Street empires to their knees.
Though academic institutions have taken a substantial hit — the Yale endowment has lost around 25 percent of its value since June 2008 — the impact of these losses is mitigated considerably. Endowments are managed to exist in perpetuity; they require rigorous and timeless systems of management and support to achieve this goal.
Though Yale’s annualized returns are essential to the University’s financial health, alumni gifts are the very foundation of Yale’s endowment. David Swensen’s “Pioneering Portfolio Management” compares the development of Harvard, Yale and the Carnegie Institution’s endowment over the 20th century and finds that though investment and spending policies contributed to Harvard and Yale’s relative success, “the absence of gift inflows constitutes the fundamental reason for Carnegie’s failure to keep pace with Yale and Harvard.”
All new programs, initiatives and projects are initially funded by Yale’s Alumni Fund before being supported by the endowment. These projects include library expansion, establishing a Writing Center, summer travel fellowships and expanding our residential college facilities.
Giving back to Yale does not imply validation or endorsement of all actions the University takes. One may very well take issue with some programs — for example, the building of two new colleges or the decision to maintain an early action admissions policy.
In donating to the Alumni Fund, one may broadly decide how to allocate a donation from six potential pools, thereby signaling to the administration what its soon-to-be-youngest alumni think is most important. Donating to Yale implies an endorsement of the culture and philosophy Yale represents: lux et veritas. Light and truth.
Yale continues to stay on top and ahead of the curve, because for the past 308 years Yale classes have recognized their duty to offer future generations the same bright college years that they themselves enjoyed. Yale is thriving even amid this financial turmoil because former classes have “paid it forward.” It is now our turn to do the same.
So when considering whether to give or how much to donate, don’t write off your $5 gift as insignificant. Know that because of your support, generations to come will experience what we have been so lucky to enjoy for the past four years.
Maggie Goodlander is a senior in Berkeley College and Evan Leitner is a senior in Pierson College. They are Senior Class Gift co-chairmen.