Endowments of Top 25 Liberal Arts Colleges

The release of the latest endowment data piqued my curiosity.  One can look at them a million ways, but I'm particularly interested in liberal arts colleges and decided to compare the endowment figures to US News & World Report rankings.

As you can see in the table below, the higher-ranked schools generally have both larger endowments and more endowment money per student (correlation of -.53 between endowment and USNWR rank and -.58 between endowment/student and UWNWR rank), which is, of course, not a surprise (both because they money allows schools to afford items that increase prestige and because the endowment itself is used by UWNWR as one component of their rankings).

Before I get into the discussion, let me display the data.  In the six columns are the USWNR ranking, the school name, the endowment size (in thousands), the school's enrollment (as reported by USNWR), the endowment per student, a ratio of 5% of the endowment per student (which is roughly how much a school has to spend per student solely from tapping into the endowment), and the rank (within this sample) of the endowment per student.

USNWR	School	Endowment	Enroll	End/Stu	5%/stu	Rank
1	Williams	$1,784,305	2,083	$856,603	$42,830	5
2	Amherst	$1,641,511	1,795	$914,491	$45,725	3
3	Swarthmore	$1,508,483	1,524	$989,818	$49,491	2
4	Pomona	$1,700,454	1,560	$1,090,035	$54,502	1
5	Middlebury	$907,668	2,532	$358,479	$17,924	12
6	Bowdoin	$904,215	1,762	$513,175	$25,659	8
6	Carleton	$653,465	2,020	$323,498	$16,175	17
6	Wellesley	$1,499,872	2,411	$622,095	$31,105	6
9	Claremont McKenna	$543,236	1,278	$425,067	$21,253	10
10	Haverford	$402,730	1,177	$342,167	$17,108	14
11	Davidson	$509,583	1,742	$292,528	$14,626	20
12	Washington & Lee	$1,218,132	2,173	$560,576	$28,029	7
12	Wesleyan	$589,811	3,215	$183,456	$9,173	23
14	Vassar	$814,130	2,446	$332,841	$16,642	16
17	Hamilton	$657,529	1,861	$353,320	$17,666	13
18	Harvey Mudd	$243,125	773	$314,521	$15,726	19
19	Grinnell	$1,500,219	1,655	$906,477	$45,324	4
19	Smith	$1,429,527	3,113	$459,212	$22,961	9
21	Bates	$231,451	1,725	$134,174	$6,709	24
21	Colby	$611,441	1,825	$335,036	$16,752	15
21	Colgate	$693,436	2,903	$238,869	$11,943	21
24	Oberlin	$699,895	2,974	$235,338	$11,767	22
25	Bryn Mawr	$671,103	1,755	$382,395	$19,120	11
25	Macalester	$654,465	2,033	$321,921	$16,096	18

I should first note that I dropped the US Naval and Military Academies (which tied for 14th) from the sample -- no endowment data was available, and I'm not convinced they belong in this group anyway.

In no particular order, here are the things that stand out to me:

1.) As I said above, the wealthiest tend to be ranked the highest.  No surprise.  Five institutions in particular far out-distance the rest in terms of resources per student, four of which are ranked 1-4.

2.) Given that all of these schools are in the same general arena in terms of prestige, there's quite a bit of variability in terms of financial resources -- two schools have less than $10K per student to spend while five have over $40K.

3.) Notable underachievers (high resources, low ranking) include Grinnell, Smith, Washington & Lee, and (arguably) Wellesley.  Two of these are single-sex institutions, which may limit applications (raising acceptance rate) and/or increase alumni giving relative to other factors.  Washington & Lee is one of only two schools located in the South and has a reputation as being more conservative than the other schools.  I'm not sure how to explain Grinnell other than possibly the Iowa location.  As I mentioned above, exactly five schools have more than $40K to spend per student (the same five that have endowments exceeding $1.5 billion), and four of those rank 1-4.  Grinnell ranks 19th.

4.) Notable overachievers include Carleton, Davidson, Wesleyan, and Bates.  I'm not sure I have a great explanation for these other than the possibility that their reputation is larger than their endowment (an argument I don't find super compelling).  More on this below.

5.) An interesting factoid: Macalester's endowment is exactly $1 million more than Carleton's.  Macalester is 45 miles north of Carleton, enrolls 13 more students, and is 19 spots behind in the rankings.


Were I to do more than muse about summary statistics, I'd wonder why some schools earn much higher ratings relative to their financial resources than others.  To the extent that a given school's goal is to enroll the best students and earn the highest ranking, some are drastically more successful/efficient than others.

Of course, I'd expect that a large part of the explanation is that some of these schools place far more emphasis on the factors USNWR measures and/or the USNWR rankings themselves.  I'd also imagine that, among other things, allocation of these resources, admissions practices, location, reputation, campus offerings, and -- in various ways -- performance of campus leaders, faculty, and staff influence the success/efficiency of a school (as measured by USWNR relative to endowment resources).

Lastly, I'd wonder if the endowment, say, 20 years ago might be more strongly correlated with the ranking than the current endowment.  Or at least if some the low endowment/high rank schools had higher endowments relative to their peers 20 years ago and some of the high endowment/low rank schools had lower endowments relative to their peers 20 years ago.  This certainly would've influenced the faculty they hired 20 years ago, the perception of the college by students' parents, and probably the perception of the school by people in academia, at foundations, working as college counselors, etc.  In other words, schools that have dramatically expanded recently may be thought of as more resource-rich than they currently are and schools that have seen recent dramatic growth in endowment may be thought of as more resource-poor than they current are.

I'm no expert on higher ed or philanthropy, so I can really only guess about these numbers.  All I know is that I find them interesting and that there are probably some good explanations for the patterns we see.  If anybody knows more about these topics than I, I'd love to hear your explanations.

Update: I neglected to note that along with allocation of resources, I'm sure the allocation of the endowment matters as well -- if  large chunk of the endowment is restricted to, say, maintaining the hockey rink or seminary that it will affect the school differently than if a large chunk is restricted to, say, financial aid or even unrestricted uses.

I also neglected to mention that not only do some schools emphasize the ratings and try to game the system, but some might even just flat out lie.