In November 2013, the University of Michigan launched its new capital campaign, “Victors for Michigan,” which aims to raise $4 billion from private sources primarily to be deposited in the endowment. If successful, it will be the largest in the history of public higher education, topping U-M’s previous campaign which raised $3.2 billion between 2004-2008. On the surface, big donations and a fat endowment seem great. However, the growing importance of the endowment and the university’s dependence on wealthy donors and Wall Street firms are among the factors transforming the contemporary university from a place of learning and knowledge production to something that looks more and more like a corporation—or, in this case, a global hedge fund.
The endowment is a collection of about 7,800 pools of money that are invested around the world. The returns on these investments are then either reinvested or disbursed to different parts of the university, with each individual fund carrying certain restrictions regarding how it can be spent. These restrictions come from the individual donors, who unilaterally dictate that their money be used to fund a particular kind of scientific research, renovate a particular campus building, endow a specific professorship, and so on. A small percentage of the endowment’s returns (4.5%) is applied each year to university operations. Over the past five years, U-M’s $8 billion endowment has contributed an average of less than $300 million a year to operating expenses like professors’ salaries. The administration likes to talk up how 20% of this contribution goes toward financial aid, but $60 million is a drop in the bucket when you consider that tuition adds up to over $1 billion a year (and much of that aid is based on “merit” instead of financial need).