By Lily Mura ’23
Earlham is invested in approximately 112 different investment vehicles, according to Stacey Davidson, the Vice President of Finance and Administration and the Chief Financial Officer of Earlham College Inc. According to the college’s most recent public audit, it has $375,903,632 in investments as of June 30th, 2020.
“The investments are in assets classes such as: domestic equity, global equity, international equity, private capital, flexible capital, directional hedge funds, real assets, fixed income, and liquid capital,“ says Davidson.
According to ProPublica, “Non Profit organizations that spend $750,000 or more in Federal grant money in a fiscal year are required to submit an audit covering their finances and compliance.”
According to the same audit, the college has $538,359,443 in total assets, including the investments mentioned above.
Also included in the college’s audit is the cash revenue gained from these investments. For the fiscal period ending on June 30th, 2020, the college purchased $1,478,916 of property and equipment and $37,046,759 in investments. The college made $9,511 and $61,978,392 from the sale of property and equipment and investments respectively. Overall this led to $23,462,228 in net cash provided by investing activities.
The audit also outlines Earlham’s investment strategy. Since Earlham has investments in areas like stocks and bonds, “it is therefore subject to various risks such as interest rates, market, and credit risks.” The audit continues, “Although the fair value of investments is subject to fluctuations on a year-to-year basis, management believes the investment policy is prudent for the long-term welfare of Earlham.”
A number of people are involved in making investment and financial decisions for Earlham. Davidson explains that the Earlham Foundation Board is in charge of making investment decisions for the Earlham endowment. According to Earlham bylaws, the Earlham Foundation Board is comprised of the Board of Directors Investment Committee. Other financial decisions are made by a combination of the Earlham College Board, Davidson, and Anne Houtman, the Earlham College President, depending on the decision, says Davidson.
One recent financial decision that was made known to the student body was the leasing of college land to a local developer. According to an email sent out by Houtman to the student body on March 6th, 2021, the college planned to lease out land on the corner of National Road West and College Avenue to a local developer to build a “retail and dining center.” In an email interview conducted on April 6th, Davidson confirmed that the lease had already been signed.
Also included in Houtman’s email was the announcement that the Board approved a resolution to establish an LLC “for the purposes of protecting the college from any liabilities associated with the lease of college-owned land for a new development planned for the corner of National Road West and College Avenue.” According to Davidson “it is typical for not-for-profit organizations (NPO) to create a separate LLC for revenue-generating ventures that are not part of the core NPO function.”
According to the Internal Revenue Service, a Limited Liability Company, or LLC, is a way to combine the tax benefits of a business partnership with the limited liability of a corporation.
Davidson explains that the College has been talking with this local developer for about eight years. When the houses at this location were deemed no longer habitable, “the conversations strengthened in regards to the possibility,” according to Davidson.