GW is attempting to offset increased University operational costs by devoting less University budget money to financial aid and instead shifting some of the costs of financial aid to donors.
By raising money through the University’s advancement office, GW can grant more financial aid from the University’s endowment and less financial aid from tuition dollars, said Senior Vice President of Student and Academic Support Services Robert Chernak.
GW has launched a campaign to attract new scholarship donors in response to monetary pressures facing financial aid. Chernak said the University hopes to bolster scholarship funds in the endowment to help suppress rising tuition costs. At this February’s meeting of the Board of Trustees, the University’s highest oversight body raised tuition by 3.9 percent, the lowest increase in more than 20 years.
A University report released in February outlining financial aid concerns indicated that 35.6 percent of annual tuition revenue is allocated for scholarships. GW gave $110 million dollars worth of financial aid last year, and Vice President for Advancement Laurel Price Jones said most of that money came from tuition dollars.
Jones said the University has a goal to raise about $100 million to fund financial aid, though she did not put a timetable on the goal. Schools with larger endowments rely less on tuition for financial aid.
Chernak said having more endowed scholarships would allow the University to save money as it works on the budget.
“If we could just save one percent,” Chernak said, referring to the 35.6 percent of tuition revenue directed toward financial aid with a steady student population, “that one percent savings … would equate to about $900,000 in total savings.”
“In order to keep the tuition growing at no greater pace than inflation, we are required to be more disciplined in our spending,” Chernak said.
“The objective is to raise more endowment money so that scholarships are permanently endowed,” he added.
Last year, GW’s endowment was valued at $823 million dollars, a 12.2 percent increase from the previous year.
“Scholarships are very important. Nothing can be more important to the University,” Jones said. “It’s also something that donors find very easy to relate to.”
Chernak said that any future changes to the financial aid structure would not affect current students because of a fixed tuition and guaranteed financial aid.
Jones said the minimum amount of money needed to create an endowed scholarship is $50,000. Endowed scholarships pay out 5 percent per year yield, meaning a $50,000 donation would yield $2,500 dollars in scholarship money per year. Donors also have the option of donating smaller gifts, called current-use gifts, which are directly deposited into preexisting scholarships.
“We’re also probably going to ask current students to contribute (to current-use gifts),” Jones said.
Next year, GW’s budget will increase to $114 million, putting added pressure on administrators to meet the demands of a rising budget without significantly increasing tuition.
“We have to develop a case to demonstrate to people who have the willingness to give that this is the compelling justification for you to give,” Chernak said.
In February, the Office of Advancement hired 10 additional employees to help focus on raising money.