Comment by tdeck
2 days ago
If they were spending the money on those things, this might be an argument. But they're not spending it; they're hoarding it.
2 days ago
If they were spending the money on those things, this might be an argument. But they're not spending it; they're hoarding it.
They are spending it. On average they spend about 5% of it per year. In 2023 that was $975 million. It goes 53% to instruction, 22% to health care, 15% to student aid, and 10% to research, academic support, and other services.
The point of an endowment is to provide long term support for whatever the purpose is of that endowment. That is done by investing it and using the investment earnings for that purpose.
> If they were spending the money on those things, this might be an argument. But they're not spending it; they're hoarding it
There is something ironic about people who work in start-ups arguing for endowments to be spent down. Who do you think gives money to the VC funds?
I don't think you understand how endowments work.
It's not a pile of gold sitting in a vault on campus. It's an account which is productively invested and generating returns which are what's actually used for funding operations. A $20 billion endowment would be expected to produce about $1 billion per year, or around 20% of the annual operating budget. They need to bring in about $4 Billion more dollars per year to keep the lights on.
I do understand actually, and my argument is that this wouldn't be acceptable in any other category of nonprofit, so why is it acceptable for universities? If the Red Cross decided to take donations and then hoard a 20 billion dollar endowment while also charging top dollar for disaster relief, people wouldn't accept that as a legitimate strategy. Why is it suddenly OK when a university does it?
$9 billion annually [1] qualifies as not spending it, I guess. I wish people actually checked figures before ranting online.
1- https://projects.propublica.org/nonprofits/organizations/231...
The page you linked shows their revenue is $9.93B/year and is greater than their expenses. So clearly they're not spending down the principal.
That’s because donors won’t let them drain all the principal in a few years.
UPenn’s revenue includes “sales of assets” and “investment income,” i.e., taking some part of the endowment annually to fund their operations.