A GOOD BUY?

Radcliffe has amassed a record-breaking $15 million in donations over the past year--much of it in the form of large gifts from concerned alumnae this spring following widespread reports of Radcliffe College's imminent death.

But last year, donations to Radcliffe totaled a mere $9.5 million.

The wild fluctuation in recent donations illustrates the extent to which Radcliffe is dependent on the whims of its donors--especially since these donations consistently make up over a quarter of Radcliffe's annual operating budget.

And with changes in the air at Radcliffe, alumnae say they may consider giving to Harvard instead. They are skeptical about giving to an institution with no role in the education of undergraduates. They say they cannot commit to a research institution under Harvard's umbrella.

But without large alumnae donations, it is uncertain whether Radcliffe could remain financially strong.

The surging stock market growth of the 1990s should have spurred large returns in Radcliffe's investments, but Radcliffe's coffers have not burgeoned as much as might have been anticipated.

In addition, Radcliffe withdraws a larger percentage of money from its endowment than the American college average. This stifles the endowment's growth and, in some years, Radcliffe may actually eat away at some of the investments it already owns.

For Harvard--which under a new agreement may be forced to subsidize its new "tublet"--a partnership with Radcliffe could be losing proposition.

Taking Stock

At the beginning of the last fiscal year, Radcliffe's endowment was about $150 million. Income from the endowment and donations to Radcliffe's capital campaign increased the total by about $30 million.

But, then, finance administrators took $10 million--one-third of the income--from the total to pay for the college's annual operating costs.

Compared to other American colleges and universities, this is a sizable withdrawal from the endowment.

For the last four years Radcliffe's endowment payout has been 6 percent, two points above the national average of 4 percent.

In recent years, when Radcliffe has needed a boost of money, it has turned to its endowment for support.

Vice President for Finance and Administration Nancy Dunn says the 6 percent payouts have been necessary to fund special initiatives--including Radcliffe's seven-year capital campaign begun in 1992 and the founding of the Public Policy Institute in 1995. She adds that Radcliffe plans to decrease its payout to 5 percent next year.

But while Radcliffe's endowment spending may seem liberal--especially in comparison to Harvard's stingy 3.7 percent--Vice President for College Relations Bonnie Clendenning contends that Radcliffe is "financially conservative," saying the trustees are usually cautious to avoid going into debt.

Naomi Richman of Moody's Investors Services, an expert in college investment strategies, says $10 million is a large amount of money for Radcliffe to take from its endowment. But she adds that Radcliffe's low debt and large endowment should allow it to stay afloat--at least for now.

Yard Wars?

Even though Radcliffe is not sliding into bankruptcy, it does not appear to be soaring to great financial success either.

Harvard--known for its skilled investors and high yields--eclipses Radcliffe in financial growth and success.

The picture at Harvard is much bigger.

Although Harvard and Radcliffe are not in the same league--the University's endowment is about 60 times the size of Radcliffe's--it is possible to compare the relative successes of the capital campaigns of the two schools and the corresponding growths of their endowments.

Harvard has made greater progress in fundraising. Its $2.1 billion campaign is ahead of schedule, with 87 percent of its goal achieved. Harvard has one more year to raise the remaining 13 percent.

Radcliffe, in contrast, has only completed 67 percent of its campaign and, in two more years, must raise 33 percent of its ultimate goal.

Harvard's fundraising success has also translated into greater endowment growth. From 1992 to 1997, the University's endowment increased from about $4.5 to $11 billion, a growth of more than 140 percent. During the same period, Radcliffe's endowment grew slowly from about $120 to $170 million--an increase of only 44 percent--and even dropped from 1993 to 1994.

Anxious Alumnae

Emotional reactions to the current discussions between Harvard and Radcliffe range from ecstatic to fearful. But one thing's for sure--if Radcliffe were to tug on the purse strings of its alumnae post-merger, heartstrings in tune with Radcliffe "College" might snap.

Almost all major donors contacted by The Crimson say they would have to seriously reconsider the appropriation of their money if Radcliffe's status were to change.

"If Radcliffe no longer exists as the place we knew it, it will mean more money goes to Harvard," says Judith P. Willner '67.

Majorie N. Bennett '44 says she cannot imagine a Radcliffe that exists under Harvard's wings. But she says if that came to be she would have to "read the fine print" and scrutinize the terms of the agreement.

Some worry about Radcliffe's focus shifting from undergraduates to research.

But many say they feel a conflict between their loyalty to Radcliffe--the women's college that nurtured them--and their desire to contribute to undergraduate education and life.

"Wherever those [undergraduate] programs [for women] are going to be I'm going to be inclined to support them," says Molly N. Ross '72. "I'll scrutinize them to make sure they still have the same effectiveness."

If Harvard takes over the direction of undergraduate programs, she says, and runs them in a similar way, she would probably prefer to promote them by giving to Harvard.

But Ross says she continues to feel "sentimental attachment to Radcliffe."

Hanging On

Yet without any definitive conclusion to thediscussions--and galvanized by a perceived threatto its independence--Radcliffe women are willingto give their college the benefit of the doubt andrally around their alma mater.

Alumnae donations for this year peaked at anall-time high of $15 million.

Radcliffe has raked in a series of large giftsand pledges--many from after the negotiationsbetween Radcliffe and Harvard were publicized.

The Pforzheimer family donated $1 million inMay to general support of Schlesinger Library.

A $1.3 million bequest--ironically earmarkedfor the support of undergraduate programs--fromBetty Ann H. Vail '34 was realized in May.

Also in May, Radcliffe announced theestablishment of a $3 million matching fund froman anonymous donor.

But the question remains: Is this year aone-time boost?

Alumnae donations, which have been historicallysporadic, suggest this year may be an anomaly.

Like Harvard, Radcliffe has been engaged in acapital campaign since 1992.

At the start of the campaign, contributionsdoubled from about $6 million in fiscal year 1992to about $11 million in 1993, but then generallyremained level for the next four years. In 1995the college collected $11.1 million from graduatesand $9.5 million in 1997.

After five years, Radcliffe had only raisedabout half of its goal, and campaigns generallypeter out in their final stretch.

The beginning years of the capital campaignhelped encourage giving to the college but did notput funds into Radcliffe's coffers as quickly asadministrators had projected.

Now, the college still appears to be behindschedule. In the two remaining years, Radcliffeneeds to break this year's record by $1 millioneach year to achieve its goal.

"We expect the last several years of thecampaign to really outdo the first years," Dunnsays. "It takes time to cultivate people and makethem feel connected."

Dunn says she has complete confidence thatRadcliffe will raise its $100 million.

But Radcliffe has historically had problemsraising money.

Prior to the current capital campaign,Radcliffe was never immensely successful atfundraising because it "wasn't a priority" for thecollege, says Director of Development Martha AnnFuller.

Dunn says she aimed to change Radcliffe'sapproach to fundraising when she came to Radcliffein 1992.

"One of the goals that I had when I came in wasa review of our campaign strategy," she says.

Radcliffe administrators say they have madefundraising a priority in the last few years, andtheir work is beginning to pay off.

"Before the campaign, fundraising was not usedas a way to communicate the work of Radcliffe in asophisticated fashion," Fuller says. "It isn'tthat Radcliffe didn't have a good fundraisingprogram, but it was primarily oriented around theannual fund."

What Next?

Now, as Harvard and Radcliffe administratorsmeet to craft an agreement, they are consideringthe extent to which Radcliffe will--and must--bedependent on Harvard financially.

Radcliffe's operating budget for last year was$22 million--without any financial support fromHarvard.

But this independence may change in the futurewhen, without broad alumnae donations, Radcliffeneeds Harvard's funds.

Last year, Radcliffe received 28 percent of itsoperating budget from gifts and bequests. As anallied institution that does not graduatestudents, Radcliffe would eventually no longerhave alumnae, and these sources of income wouldbegin to dwindle, coming only from those who wouldsupport a center for studies in gender.

But Radcliffe will probably no longer have someof the programs it presently offers. Currently,Radcliffe spends $12.3 million--or 55.8 percent ofits budget--on programs and activities.

Sources describe one financial situationadministrators are considering.

Radcliffe would retain its endowment to fundits new incarnation. But Harvard would take overRadcliffe's management and pay the differencebetween its endowment income and the money theinstitutes would need to survive. The newRadcliffe would survive from income from theendowment and donations, with fewer overheadexpenses from development.

Harvard, as it prepares to negotiate withRadcliffe, evaluates the institution as it would acompany it is planning to buy.

University administrators focusing onRadcliffe's operating budgets see a blurrypicture. Its alumnae giving rates fluctuate; itsendowment grows sporadically.

In other words, Radcliffe's future finances arenot clearly defined. It may not have a certainpool of alumnae donations. It is taking largerchunks out of its endowment than is usuallyaccepted.

Harvard is left wondering why it--a collegemore financially successful than the norm--shouldmerge with an institution that has not reached thesame financial heights.CrimsonNicholas C. FoxHow Radcliffe Spends Its Money Radcliffeexpenditures for the year ended June 30, 1996