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College Endowments

October 14, 2007 · 6 Comments

News report: A private foundation must spend 5% of its endowment on its mission–colleges don’t have to. Record return on those endowments is leading to some in Congress to ask why colleges are letting tuition rise while their investment income skyrockets at an even higher rate. If they were required to meet the same 5% level as private foundations, financial aid would increase by 1.5 billion dollars a year.

Categories: College life

6 responses so far ↓

  • H. Myer // October 15, 2007 at 1:07 pm

    As you know, and as the article pointed out; most endowments are restricted by their benefactors.
    Those eye-popping returns mentioned in the artice were a result of a favorable stock market climate. They can just as easily turn in to jaw- dropping declines next year.
    This is nothing but political posturing.

  • Bill // October 15, 2007 at 1:09 pm

    But that is true of all private endowments as well.

    Sauce for the goose. This is just about putting college endowments under the same rules other foundations live under.

    As to it being “politics”–well, of course. We have a democratic system in which people have representatives; they complain to those representatives, who seek to help them. That’s what’s happening here.

  • H. Myer // October 15, 2007 at 2:24 pm

    Killing the golden goose would be a more apt description.
    I recently endowed a newly formed scholarship. There is a signed contract between myself and the University Foundation to which I contributed the money. It is a binding contract. It contains various specifics describing who will qualify for the scholarship and how much of the earnings will be applied to the scholarship.
    I would prefer that my representative not decide how or how much of my contribution is spent. Thanks.

  • Bill // October 15, 2007 at 2:39 pm

    Those are the same kinds of stipulations binding all other foundations. You haven’t answered the question of why colleges should be treated differently.

    Other foundations spend far more money on their mission–including the largest endowment in the world, held by the Shriners ($9.5 billion), by which they run their network of burn and orthopedic hospitals. 90% of the budget comes from the endowment. They do not charge patients or their families a penny, nor do they bill insurance.

  • H. Myer // October 15, 2007 at 3:09 pm

    Here’s your answer:
    I don’t believe that colleges should be treated differently. It’s wrong for private foundations also.
    The Shriners is a wonderful organization and we all appreciate the services that they provide; but I imagine that they are perfectly capable of managing their endowment without being told how much to distribute.
    I see that you are endorsing Ron Paul on your website. Why not ask his view on this subject. If he agrees with your view, I promise to change my own.

  • Bill // October 15, 2007 at 5:36 pm

    I don’t know what he thinks about the subject. I’ll take a look.

    But I don’t often change my views based on what any politician might think. I really don’t think you do, either. :-)

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