Claflin University President on closing the endowment gap and how HBCUs have been handling COVID-19

Dr. Dwaun Warmack, Claflin University President, joined Yahoo Finance to discuss his outlook for the upcoming school year and the the gap between HBCU endowments and PWI endowments.

Video Transcript

- Well, as the a coronavirus pandemic has dragged on, colleges and universities have been hard hit, but HBCUs had been particularly affected. We're going to be starting today's conversation there. Sibile Marcellus, as always, is here with us for today's conversation. Jen Rogers is on vacation.

SIBILE MARCELLUS: President Trump has been emphatic about his desire for schools to reopen this fall, but colleges and universities are already reeling from the financial devastation of the coronavirus pandemic, and they've been left to fend for themselves. It's up to them to decide whether they want to take on risk and open their doors in the fall or continue with remote online learning.

Now, what we've seen is that the lack of a deal between the White House and Democrats for another round of fiscal stimulus could mean that some colleges and universities will have to close their doors permanently this fall. Joining us now is Dwaun Warmack, president of Claflin University, a historically black university.

Now, Dwaun, you caught my attention when you said that when other institutions catch a cold, historically black colleges and universities catch the flu. Now, I know that this fall, you're going to be doing online remote learning. What has been the impact of the coronavirus pandemic on Claflin University's finances?

DWAUN WARMACK: Yeah. First off, thank you for having me on. And I say-- and I mean that. You know, HBCUs have been able to persevere and be successful for a long time, you know, when you think about the historical context. But for Claflin University, it's a very interesting time, right? You know, when you think about we're-- if we can't bring students back, we lose revenue for room and board.

But what makes HBCUs special is that campus environment. That's what separates us from other institutions, the nurturing environment and the family atmosphere, so losing that makes it extremely challenging for an institution like Claflin. So we're facing-- we could face anywhere from a $6 million to $10 million deficit just for the fall semester.

SIBILE MARCELLUS: Wow. That's pretty significant. And in December, I know that President Trump signed legislation to provide more than $250 million a year to historically black colleges and universities. Have you received those funds? Is that going to have an impact?

DWAUN WARMACK: I think-- you know, I think you have to extrapolate that. You know, there's 100 HBCUs-- over 100 HBCUs. And the formula-- that's in Pell grants. That's in Title III sponsored programs. So that's not really like a lump sum of cash coming to HBCUs, you know. And so when we're losing students, that's restricted-- that's unrestricted revenue. And so those dollars can't be used to make up a budget shortfall.

Does that make sense? Like, that's-- so those are operational costs that's there. So if it's earmarked for Title IX-- I mean Title III-- programming or Title IV for federal financial aid, then that's different. That comes with the students. That student-- that money goes directly with the students. But if it's, you know, for us-- so I can't say that money directly impacts my bottom line. Does that make sense?

SIBILE MARCELLUS: Yeah, it definitely does. So, Dr. Warmack, I kind of want to run through some stats with you right now. When we look at the average endowment size for HBCUs in 2019, it was less than $150 million. Now, if you're looking over at predominantly white institutions, that number is over $800 million. The HBCU endowment total was just over $2 billion. As you mentioned, $2 billion spread across over 100 universities-- HBCUs-- is not a lot of money. So when I think about the future of HBCUs, I think that it's fairly bleak, at least without any sort of meaningful intervention. I mean, are you seeing the landscape for HBCUs similarly?

DWAUN WARMACK: Not really, only because HBCUs have been able to persevere for years without support, right? So we understand the historical context. When we were founded, we wasn't founded because, you know, everybody loved us and thought that was the best thing. We had no other choices, right, you know, to provide access and opportunity for folks who didn't have access and opportunity. And so that has, you know, been perpetuated over the years in the limited funding and the funding equity challenges.

So I don't-- yes, it's bleak in a sense of we have to find a way now, as we've always had to, to be creative and innovative to ensure our students have an opportunity not just to survive this, but thrive through this time as well. So I would use Claflin University. I see this as a minor setback for a major comeback.

And so we're doing everything in our power to ensure-- we have continually been ranked in the top 10 amongst HBCUs in the nation. We have continued to graduate students at an extremely high rate. This freshman class we just brought in again for the 10th consecutive year, our mean GPA is a 3.65. You know, so we have top quality students that are choosing our institution because they want to be there.

And so we will get through this financial piece. And I love how corporations are looking at now helping support the endowments and funding some of our HBCUs. And I just-- shameless plug-- want to get one of the top 10 HBCUs, Claflin University, that has been in the top 10 for consecutive years in that mix.

SIBILE MARCELLUS: So following on that, you know, a lot of corporations giving a lot of money to-- well, I want to say HBCUs, but really, it's Howard University, it seems, in particular. Their endowment-- almost $700 million. The next big name on that list is about $300 million.

So I'm wondering, why you think Howard gets so much-- gets the lion's share of money from corporations and from donors? And as you're seeing companies, you know, in this movement after George Lloyd's death and his murder, if you're saying, hey, look, you know, Howard has a lot of money. Perhaps consider giving to Claflin. Perhaps consider giving to Grambling. Perhaps consider giving to one of these other HBCUs that does not have the level of funding that a media darling like Howard University has.

DWAUN WARMACK: Right. And so I will not take away from my colleagues at Howard at all, right? I am excited that they're able to build that in. But if you still compare Howard to a lot of the large, mainstream institutions, theirs is low respectively speaking, right?

And so I think it's-- you know, I think what Howard is doing-- it's been able to leverage itself in DC. You know, they're one of the few institutions that is a private institution that gets state and federal money from the government. And it goes towards the endowment. So I am happy for what happens at Howard.

But for me as well, there's other institutions out here that are doing just as good or better on a lot of the matrix scales that could use some of that funding. So I wouldn't say give Howard less, right? You know, I would say you know give Howard plus others. You know, there's a ton of funds that are out there and philanthropists that are doing it.

And so for me, if it was based on a certain matrix and success rate-- if you look at US News Report that most companies and organizations look at, we're there in the top consecutively. You know, when people-- if they look at participation, we've had the largest alumni giving amongst HBCUs for maybe seven to eight consecutive years. Over 40% of our alumni give. But when that wealth is not a large wealth piece that's there, that given number is low. But they believe in the institution and have been significantly committed to give funds.

So I just think, you know, some of the other corporations and companies and major organizations just have to hear other names outside of the big ones, you know. And so Howard has been successful in leveraging the Howard brand and Morehouse, Spelman, and a lot of colleagues. And I'm excited for them, but, you know, I just know there's a-- an HBCU in the state of South Carolina.

You put us up against anyone else in the country. We're just as good or better. And so if there are some philanthropists that would like to give to an outstanding institution that's been doing transformational work, look at Claflin University. We'll be good shepherds over that, and you'll be investing into fertile ground.

SIBILE MARCELLUS: Well, hopefully, some folks out there are watching and decide to open their pocketbooks to you. I'm wondering, in the aftermath of the murder of George Floyd and all of the protests that we've seen since then, if Claflin has been impacted in a positive way at least financially.

DWAUN WARMACK: Well, I wouldn't say because of George Floyd. I mean, I just think the impact-- you know, I will say this. In light of COVID, our applications jumped up significantly. We had over 10,000 applications for this year. So, you know, where students probably historically have been thinking about going to other institutions, other types of institutions, Claflin's long history of being committed for over 151 years of access and being a thought leader around inclusion and diversity forever-- we have an outstanding center for social justice that we are unapologetic about that commitment to equity.

And so we are-- we haven't fell short as it relates to the enrollment factor. I think our moment has increased, partially because of some of the things that are happening around the country. And we want to remain a thought leader in that space to help folks understand what does it mean to be in a space not just that you can go and be educated academically, but you can go socially, spiritually as well and then develop that whole student. And that's what Claflin University does.

SIBILE MARCELLUS: And let's talk about the elections coming up. As we know, Biden has picked Kamala Harris, and she is the graduate of a historically black university, Howard University. Now, during the primaries, Biden promised more than $70 billion in investments for historically black colleges and universities. Do you think that's enough? What would you like both Biden and Harris to promise come the elections in November?

DWAUN WARMACK: Well, I think it's-- I think it's one thing for a presidential promise, but I think, as we all know, it has to get through Congress, right? And so understanding that context and knowing the nuances that come behind that is challenging. And so we are asking for commitment to our HBCUs. We're not asking for a handout. We're asking just for a handup.

You know, we have historically done an outstanding job. If you look at-- HBCUs graduate the most African-Americans in the medical field, in the law field, in the criminal justice field. We only educate 3% of the college population, but we're the thought leaders in every one of those categories.

And so when you say punching above your weight, HBCUs consecutively does that. So just imagine what a little investment would do. And so as a CEO of an institution and of an organization, I believe in what's my ROI. So if I see these organizations are that successful, I would want that same return on my investment if I know that I can invest this amount of dollars and get this.

So you've invested this small amount, and look at the success rate. So imagine if you double that or triple that. Imagine the success rate. So you're talking about gainful employment. You're talking about getting folks in the workforce. HBCUs have been doing it forever. Just invest a little more, and we'll continue to be successful.