Covenant Faculty and Students Benefit from Endowment
As a result of an endowment of more than $19.4 million, Covenant College received more than $800,000 to benefit the faculty and students of Covenant College this past fiscal year.
Most of the college's endowment is unrestricted, meaning that the proceeds may be used where most needed. Some of the endowment is restricted for student scholarships.
The Maclellan Scholars Program is the largest scholarship fund, receiving more than $206,000 from the endowment. Students also benefited by $36,000 from the Westminster/Covenant Seminary endowment.
Of the portion of the endowment restricted for faculty, there is currently one endowed chair in the business department. The Sanderson Fund, which generates $50,000 for faculty development, gives faculty members the opportunity to apply for grants for professional development, equipment, etc. The emphasis is to provide the faculty with tools to enable them to be even better teachers. The college continues to seek matching planned gifts for the $700,000.00 Norris and Billie Little faculty endowment in honor of Covenant's meritorious faculty represented by Chuck Anderson, Nick Barker, Ray Clark, Henry Krabbendam, Reg McLelland, John Sanderson, Lou Voskuil and John Young.
Income from endowment approximates 8.9% of discounted student tuition. The average baccalaureate college has an endowment of $82,900 per student compared to Covenant's endowment of $13,400.00 per student. If Covenant had an endowment equal to the average of other baccalaureate colleges, endowment income would approximate more than 1/3 of tuition, thus making the college more accessible and competitive.
Even after paying out more than $800,000 to the college, Covenant's endowment grew from $17.7 million last year to $19.4 million this year. This growth came from additional gifts and bequests totaling $723,000 as well as from investment growth. Among the bequests received was a bequest from Bob Robinson, a Lookout Mountain resident and World War II P.O.W. Mr. Robinson was highly respected in Lookout Mountain Having received on of the military's highest honors, the Distinguished Flying Cross.
During fiscal year 2004-05, the combined college and foundation's investment return on the endowment was 7.09%.
Since endowment is a source of perpetual income, the trustees seek to have a long-term perspective, measuring the college's investment performance against all other college's over the last ten years. More than 700 colleges submit their investment results annually and the results are published the following year.
For the ten years ending June 30, 2004, Covenant's annualized return was 10.5%, ranking Covenant at the 32nd percentile. The college's goal is to be in the top quartile, which requires a 10.8% return. This is the first year in the last five years that the college has not been in the top quartile. (The average college with less than a $25 million endowment earned 8.8%.)
Because of its long-term perspective, the college has traditionally invested more in equities than the traditional 60/40 model. In recent years, trustees have increased the percent invested in alternative investments, international equities and real estate.