Thanks to HWC for giving me permission to publish answers that he provided via e-mail to some questions I had about the finances of Williams, Amherst and Swarthmore. Details below.

My questions are in italics.

Thanks for your comment on Amherst. I am planning on putting that in a main post.
1) Do you have a link to the info?

Amherst June 2008 Annual Report.
Swarthmore June 2008 Annual Report.
Williams June 2008 Annual Report.

2) What is the $500 million in obligations? I know that Williams has $260 million in debt. Is that what you mean? Or do you mean actual contractual obligations (capital calls) that, in the future, private equity fund A can make against Amherst?

Capital calls. All the colleges have started including these under a Commitments and Contingencies heading in the NOTES to the financial reports, along with outstanding construction contracts and so forth. Here are the three statements from the above financial reports along with a page reference and a June 2008 pre-crash endowment value for reference. BTW, I misquoted Swarthmore’s number. I used the 2007 figure instead the new $235 million figure.

Amherst $1.7 billion (Page 21)

Under the terms of certain limited partnership agreements that represent venture capital, private equity, real estate and oil and gas investments, the Institution is obligated to remit additional funding periodically as capital calls are exercised. The Institution has outstanding commitments to limited partnerships at June 30, 2008 of approximately $503 million.

Swarthmore $1.4 billion (Page 22)

As of June 30, 2008 and 2007, the College had outstanding capital commitments to limited partnerships of $235,901,000 and $207,292,000,

Williams $1.8 billion (Page 18)

The College is committed as of June 30, 2008 to invest approximately $267,900,000 in certain limited partnerships.


On bond Debt:

Amherst had $173 million, $165 million of which are Variable Rate Demand Bonds.

Swarthmore had $181 million, all fixed rate.

Williams had $262 million, with $72 million in Variable Rate Demand Bonds plus another $36 million in variable rate that aren’t subject to a forced buyback for five years (I think).

Between the $165 million in variable rate demand bonds that are subject to forced buyback and the additional $500 million in cash call obligations and the fact that they had $20 million cash stuck in the Common Fund on Oct 1st, I don’t know how Amherst could raise the cash. Under 50% of their endowment is liquid. They would be forced to basically sell every publicly traded investment they own and dump the money into cash calls, making their entire endowment invested in private equity, hedge funds, and the like.

3) Have you looked at other schools? I have heard that Middlebury has a huge amount of debt ($700 million?), so much that their net endowment might be close to zero.

I’ve looked at quite a few. Most fall into line proportionally similar to Williams and Swarthmore as far as bond debt, cash call commitments, and so forth. Amherst caught my eye as an outlier on the cash call commitments. Their asset allocation is much more “aggressive” than Swarthmore’s or Williams’. I have no idea about Middlebury. They don’t make their financial reports available that I can find. They have been “out of equilibrium” in terms of endowment spending in recent years.

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