Williams is committed to delivering the best possible undergraduate education. Our highest priorities reflect this commitment. We hire supremely talented faculty and staff, offer affordable access to students from all backgrounds, and provide excellent facilities that support teaching and learning.
What We Spend
Top-notch college education is expensive. Last year we invested $115,000 in each of our students, resulting in a total expenditure of $238 million. Sixty percent of that spending went toward compensating our employees. Williams has among the lowest student-to-faculty ratios in the country, which enables us to mount a rich curriculum and offer highly personalized instruction in the form of tutorials, lab work, honors theses, and small seminars. Coaches, librarians, information technologists, and other staff members also make a significant educational impact. Security, dining, and facilities ensure that our students are safe, well fed, and have appropriate spaces in which to live, learn, and play. Maintaining those spaces, and repaying the debt that financed their construction, consumed another 16 percent of the budget. The remaining 24 percent of the budget included everything that is neither a person nor a building, such as food, fuel, electricity, books, computers, and travel. Williams successfully reduced these operational costs by 20% between 2009 and 2012, and they remain lower in real terms than they were a decade ago. This prudent fiscal management has allowed us to preserve the scope and quality of our educational programs, retain our faculty and staff, and sustain our fundamental commitment to financial aid.
Our Revenue Sources
Three primary revenue sources supply the funds required to educate our students. The largest source of funding is the endowment. Last year the endowment contributed $113 million, which covered 48 percent of the total cost of running the college. Families paid an average of $39,500—34 percent of what we spend per student—collectively contributing $79 million. Annual giving is the third critical revenue source. The Alumni Fund, Parents Fund, and other current giving contributed $34 million to Williams’ operating budget last year. This impressive sum, which makes every area of college life and operations 11 percent better than it would otherwise be, is equivalent to having an additional $680 million endowment. The $15.8 million brought in by the 2019 Alumni Fund alone represents the equivalent of having an additional $316 million in our endowment.
The difference between the $115,000 that we spend on each student and the $70,000 that we charge for tuition and fees reflects the $45,000 annual subsidy enjoyed by every full pay student, thanks to the resources provided by endowment earnings and gifts. Half of our students receive additional discounts, based on the ability of each family to pay. Our commitment to need-based aid makes it possible for the most talented students to attend Williams regardless of their family circumstances and explains why our actual revenue per student falls $30,500 short of full tuition and fees.
The Power of Philanthropy
The $75,500 subsidy per student (equal to the difference between spending per student and revenue per student), multiplied by ~2,000 students, leaves a $151 million annual gap. We rely on the endowment and donations to fill this gap, and in doing so they provide nearly 62 percent of every dollar we spend. To secure the college’s current level of excellence for future generations, we must maintain the real purchasing power of the endowment in perpetuity. Assuming that the Investment Office can, over the long run, earn 5 percent better than inflation, we must limit our annual spending from the endowment to 5 percent of its total value. Because the subsidy per student is approximately 6 percent of our endowment per student, we cannot responsibly rely on the endowment to fill the entire gap in the budget. Annual giving is the key to the financial puzzle, supporting not only the students of today by providing 14 percent of everything we invest in their education, but also the students of tomorrow, by ensuring that the endowment will be there for them too. The extraordinary success of the Alumni and Parents Funds is a testament to the generosity of present generations, expressing their gratitude to those who came before and their confidence in those who will follow. Without the financial support of each successive generation for the next, Williams could not fulfill its commitment to deliver the best undergraduate education in the world.
The video below, produced several years ago, sheds additional light on Williams’ financial model.