Engineering professor James McLeskey works with a student at Randolph-Macon College. (Photo by Beth Campbell courtesy Randolph-Macon College)
In October, James McLeskey was installed as the inaugural Maria Wornom Rippe Professor of Engineering at Randolph-Macon College. McLeskey, who is entering his eleventh year at the Ashland school, was recognized by RMC as a “prolific scholar, an outstanding teacher, and a frequent mentor to undergraduate research students.”
“I like that there’s this ‘a-ha!’ moment when a student learns something new,” McLeskey says. “I got into academia because I wanted to do all the different components of what being a professor means,” he says, adding that especially includes teaching.
He was awarded the newly endowed professorship, created through a gift from Rippe herself, the daughter and niece of RMC alumni, for his contributions to the school. Those include having a hand in designing the engineering curriculum and ensuring the program’s accreditation by the Accreditation Board for Engineering and Technology, the global standard for quality and rigor in the field.
McLeskey’s appointment is just one example of how university endowments work and how they shape life on a school’s campus.
Perhaps the most common misconception about university endowments is that they are piles of cash schools can spend at will. But spending that money would be a short-term fix with long-term consequences. An endowment is a carefully managed investment portfolio — typically a mix of stocks, bonds and private equity — and is designed to generate money indefinitely.
Schools can draw on only a sliver of their endowment each year, a practice designed to balance the needs of today’s students with those of the future.
Randolph-Macon’s endowment is $222 million, and its drawdown rate is 5% of the average value of the fund over the past three years. The college calculates that figure every December and applies it to the next fiscal year.
“We’re certainly fortunate at Randolph-Macon that our donors have had good intent when giving to our endowment and offer a little bit more operational flexibility for us,” says Rob Young, the college’s VP of business and finance, who stepped into the role last year.
That flexibility matters. It’s not uncommon for donors to attach strings to their gifts: Money might be earmarked for scholarships, a new building or a specific academic department. These are restricted funds. Others allow school leaders to decide where their money can do the most good. These are unrestricted funds, and at Randolph-Macon they make up 55% of the endowment.
That puts the school in an enviable position. For instance, Harvard, with its $50 billion endowment, has less wiggle room — only 20% of its funds is unrestricted. According to University of Richmond law professor Alison Tait, donors across the board are increasingly choosing restricted giving. That makes Randolph-Macon something of an outlier: smaller than the Ivy League giants, but with more practical flexibility.
That’s not to say restricted dollars aren’t valuable. They make professorships like McLeskey’s possible, and they allow donors to honor the schools and disciplines they consider personally meaningful. Every dollar in an endowment works for the school, its faculty and its students.
No one at RMC pays the full sticker price for tuition, which currently sits at $49,100. Adding room, board and fees, the published cost of attendance is $69,440. But 98% of students receive tuition assistance, with the average aid package coming to $38,650. That means the average student pays closer to $30,000 a year.
“For private institutions, having a healthy endowment does offer some assurances that you can hold tuition costs down a little bit over the long term,” Young says. “It just helps provide things that you wouldn’t otherwise be able to do. A lot of that is in merit and need-based aid.”
Ashlynn Kenney, a junior at Randolph-Macon College, received a $22,000 endowed scholarship last year. (Photo by Jay Paul)
For students like junior Ashlynn Kenney, who is majoring in both psychology and criminology, aid makes all the difference. Last year, Kenney was awarded an annual $22,000 endowed scholarship for psychology students who have demonstrated excellence in the subject. “If I didn’t have the financial aid and the scholarships that I have now, I probably wouldn’t be able to go to college, or I probably wouldn’t be able to go to Randolph-Macon,” Kenney says. The initial scholarships and aid awarded her freshman year weeded out all the other schools, she says. “It was tremendous.”
Nationally, Randolph-Macon’s endowment stacks up well. The median endowment for colleges in the U.S. is $243 million, putting RMC just shy of the middle. But because the college enrolls just 1,800 students, the money stretches further. For comparison, 30% of schools operate with endowments of $100 million or less, leaving them more tuition dependent and less financially stable.
The college has also been growing. This fall, Randolph-Macon welcomed its largest incoming class ever — 600 freshmen — marking the third consecutive year of enrollment growth.
How a college invests its endowment depends on its size and appetite for risk. Large universities with multibillion-dollar portfolios can afford to take chances on venture capital or even cryptocurrency. A bad bet won’t sink them. Smaller schools like Randolph-Macon can’t play that game.
While the endowment may not be something students see every day, it’s woven into their experience, funding faculty, stabilizing tuition and offering scholarships that make a college education affordable. That’s what makes an endowment powerful. It’s not a pile of money; it’s sustaining the future of the school.
