There are two other important financial streams depicted on the left side of the figure above. Entrepreneurial efforts are alternate sources of income that are usually directed to the Auxiliary Enterprises Corporation, AEC, an independent 501c3 linked to the college. An example of an entrepreneurial project we are pursuing now is community PV solar installation at a couple of locations on campus. That would not only be a great action to take on climate change, but it would also produce an additional $240,000 in revenue for the college each year. That is equivalent to adding $6.5 million to our endowment because it would yield that income annually for the 25 years it would be producing electricity.
Speaking of endowments leads us to another 501c3 linked to the college, the Herbert H. Lehman College Foundation. The AEC and the Foundation are both financially and administratively independent. They exist only to serve the college but do so outside of the shared governance and administrative structures. These relationships may seem a bit complex, but they are mandated by New York state law and they are important partnerships.
The Foundation is primarily a fundraising entity that works closely with the college administration to seek outside funding for college priorities. It does not determine the purposes for which the funds are expended, but manages them in investments and bank accounts, and allocates them to the college in accordance with the terms with which they were received from donors. CUNY determines how much endowment earning may be used each year and currently that is 3.75 percent of the endowment.
This past summer $6.6 million in CARES Act funds went directly to students for their basic needs and at least another $6.6 million will be similarly distributed by summer, bringing the total to around $14 million. We hope to also use some CARES and CRRSA Act funds to pay down some portion of owed tuition, also helping students directly. Knowing the dire situations of many Lehman students, we launched the Campaign for Lehman in the fall of 2020, and so far have raised over $1.2 million. Those funds are being distributed through the food bank, microgrants and scholarships.
We are also allocating nearly $1 million from the Scott gift for direct student support over the next 18 months. While these add up to close to $20 million over an 18-month period, we know even that seemingly large amount of funding is insufficient to take care of all the needs Lehman students have. We are continually looking for other sources of support for students from other organizations, city and state offices.
With such immediate and pressing needs before us, looking to the MacKenzie Scott gift to the college has been natural, and as I’ve just mentioned we have done that. In my communication last December, I offered initial thoughts about that amazing gift and how we would use it. It was given to the college with no designation other than that it be, “for the benefit of Lehman College and its students.” It further stipulated that, “Use of the gift shall be subject to the priorities, guidance and final approval of the Lehman College President.”
Referring to left side of the figure, the Scott gift is most closely tied to new initiatives, special projects, student support and the other activities listed there. What is depicted in the figure is very important because it incorporates the role of the Strategic Plan in guiding the allocation of resources. That is true for the operational budget, shown in the middle of the figure, as well as the areas listed in the left side of the figure. The Strategic Plan discussed in last Thursday’s Town Hall is the best guide we have for how funding will be allocated over the next five years.
Many gifts to the college have an immediate and direct impact — helping students continue their educations, while other gifts address the present and also empower the future. The Scott gift is the latter; a present and future gift. Were we to use it to solely to address current needs, it could be entirely used in a matter of months. That is clear when one considers that over a period of a year, at least $14 million in federal funds will be distributed directly to students, an amount equal to almost half of the Scott gift.
This unusual gift needs to be used to also empower the future for students who will come to Lehman in the years to come. That is why $26 million of the $30 million has been placed in and endowment which will fund a variety of initiatives and needs of future generations. Prior to receiving this gift, Lehman’s endowment, largely for scholarships, was $6 million, and with a recent new bequest grew to $7 million. Some of our sister CUNY schools have endowments in the hundreds of millions. Building Lehman’s endowment to $33 million by adding part of the Scott gift is a tremendous step forward. That will provide a steady annual stream of funding of over $1 million. Just as importantly, it will fund current and new initiatives and capacity building activities that will further increase the amount of funding from outside sources.
We consulted recently with Bridgespan, a group that helped advise MacKenzie Scott in her giving. Part of that time, we discussed our new Strategic Plan and its impact on our use of the gift. That kind of deliberation will continue into the future.
As I had previously communicated, $4 million of the Scott gift will be expended in the next four years for immediate student needs, activities related to the recent Campus Climate Task Force report, activities coming from the Strategic Plan, and capacity building to help us raise more outside funding. Those allocations will be in addition to the regular funding that will start coming each year from the endowment. All told, this gift places the college in a much different position than it was in a few months ago, and though we will continue to struggle with our constrained operating budget, we will have the opportunity to invest in the future. That will make all the difference.
I hope it is clear that the Strategic Plan will be the guide for much of the allocations of the Scott gift funds. As the gift document states, it will be the job of the president to see that they are used in accordance with the priorities that have been established. As with the Strategic Plan itself, over time the uses will change as circumstances and opportunities arise and priorities evolve.
If you have made it to the end of this piece, you have hopefully gotten a comprehensive overview of the college’s financial basis. I find that understanding finances is always necessary when we are having programmatic discussions and I trust this will be useful in that regard. As I mentioned, the details of this year’s tax levy budget will be clarified next week and will be shared with the campus.
Daniel Lemons
