it in possessive case

[vikhyat86]

Hey,

This was a sentence i came across in the MGMAT flash cards..

After the president of the college publicly lamented the sharp
drop in the value of its endowment, the head of faculty suggested that the college initiate a fundraising campaign immediately.

In the sentence above i was wondering how can its refer to the college and not the president? I know by meaning it would be wrong for "its" to refer to the president, but how so grammatically?

[tim]

The president is a person, so it is grammatically incorrect to refer to him as an it..