Let’s spend the next few days asking questions about the future of Williams in the era of CV-19. (And, yes, I was sorely tempted to call this series “Wuhan Flu Questions,” but I resisted the trolling urge.) For each question, I want your thoughts on what will happen, what Williams will do, and what Williams should do.

Question 5: How is the endowment doing?

Answer: Not well.

1) Williams is about 30% less wealthy than it was a month ago. Wow! Even as rich as we are, that sort of drop will put a crimp in some of our strategic plans. The new art museum is the first things we should cut.

2) The endowment was at $2.9 billion last June 30. Through the end of February, it was up about 9%. But the college was also spending money, and raising money, throughout that time period. Put our total wealth at over $3 billion and the recent drop cost Williams a yard, as we finance bros say.

3) Will the next report from the Investment Office look that bad? No. First, the S&P is only down around 17% since last June. Second, a lot of the College’s investments — especially in private equity, venture capital and real estate — is not “marked-to-market.” The College’s managers are able to “smooth” returns, and you can be certain they will do so this year.

4) How much of a hit will this cause to the Williams budget for next year? I am unsure. Recall:

Spending from the endowment to support operations, referred to as asset use at Williams, is expected to be 5.0% of the twelve quarter trailing average of the end of year investment pool over the long run.

There is a big hit now, but endowment growth has been significant over the last few years. So, it could be that the trailing twelve quarter average wealth as of June 2020 is not that different from the same figure calculated for June 2019. So, perhaps the allowed “draw” from the endowment won’t be much lower. Of course, 6 months ago, the College planned/hoped that it would be higher, so some (minor?) belt-tightening might be required.

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