ERIC Number: EJ782276
Record Type: Journal
Publication Date: 2007-Nov-9
Reference Count: 0
Don't Require Colleges to Spend More of Their Endowments
Mead, Dana G.; Jacobs, Jeremy M.
Chronicle of Higher Education, v54 n11 pB20 Nov 2007
The demand for higher education and academic research--and the costs of providing them--has risen in recent years, and the search is on for easy answers to limit the financial burdens on families and the government. The most recent suggestion has been to require colleges and universities, especially large and prestigious ones, to spend more of their endowments. Congress, for example, is considering a proposal to require institutions with big endowments to spend at least 5 percent of that money each year, the same percentage that nonprofit foundations are required to spend. Why don't universities spend as much as they can of their endowments to stop tuitions from rising, or to allow more low-income students to attend college, or to reduce the need for federal investment in scientific research? In this article, the authors argue that they already do. Colleges' and universities' spending is limited by their legal and moral responsibility to honor their donors' wishes and ensure that their endowments are at least as strong in the future as they are today. Even so, endowment spending is the single largest source of revenue for many higher education institutions. In addition, the author notes that it would be irresponsible for institutions to assume that investment returns will always grow rapidly; this basic fact governs endowment managers' spending behavior.
Descriptors: Higher Education, Income, Educational Finance, Expenditures, Endowment Funds, Research Universities, Donors, Colleges
Chronicle of Higher Education. 1255 23rd Street NW Suite 700, Washington, DC 20037. Tel: 800-728-2803; e-mail: email@example.com; Web site: http://chronicle.com/
Publication Type: Journal Articles; Opinion Papers
Education Level: Higher Education
Authoring Institution: N/A