Several endowment officials said schools also might balk at locking up too much money in long-term investments. They will need cash on hand to pay chunky tax bills and fund capital calls they might have committed to years earlier. Capital calls require clients to fund investment commitments they previously made. Many schools also already have much of their money in long-term investments and might not want to add more.
Lobbyists for schools have spent months visiting Capitol Hill trying to soften the potential blow. The schools say they are modeling for various possibilities, but haven’t started making wholesale changes to their investment portfolios.
At least five schools are expected to be in the 21% tax bracket: Harvard, Yale, Princeton and Stanford universities and the Massachusetts Institute of Technology, all of which have endowments of about $25 billion or more. The rate would also apply to other schools with endowments of more than $2 million per U.S. student, potentially sweeping in other schools such as the California Institute of Technology, with an endowment of $4.3 billion.
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