College Endowments: Why Even Harvard Isn't as Rich as You Think

Andrew Rotherham:

It seems everyone has an opinion about what colleges and universities should do with their endowments. Use them to lower tuition! Let students attend for free! Improve facilities! Hire more professors! When the National Association of College and University Business Officers (NACUBO) released its annual report on endowments last week, the big numbers grabbed headlines -- Harvard's endowment, the nation's largest, grew 15%, to $31.7 billion. Less attention was directed to Southern Virginia University's endowment of $574,000, which won't provide too many scholarships at a place that costs more than $18,000 a year. A few weeks ago I had lunch with a college president whose school has an endowment of about $20 million. It may sound like a lot of money, but he was consumed with fundraising efforts just to make ends meet. So the next time you hear someone pitching an idea for what a college should do with its endowment, think about these five reasons that the reality of how college endowments work is different from the rhetoric.

1. Most schools don't have them. There are 2,719 four-year colleges in the U.S. (and another 1,690 two-year colleges), according to the most recent Department of Education figures. Most higher-education institutions have no endowment, says William Jarvis, managing director and head of research at the CommonFund Institute, which helps NACUBO with its endowment surveys. But as with everything else around higher education, it's the elite schools -- which tend to be the ones that have large endowments -- that drive the conversation. Endowments just aren't a big factor at most of the institutions of higher education in this country.

Posted by Jim Zellmer at February 15, 2012 1:58 AM
Subscribe to this site via RSS/Atom: Newsletter signup | Send us your ideas