Comment by jltsiren
9 days ago
20 years is a short time for an institution that can reasonably expect to last centuries. Serving the institution means sustaining the endowment indefinitely, which isn't compatible with spending more than you can afford.
Depleting the endowment doesn't mean the institution disappears, and as I said, that would be decades into the future.
Is there no institutional value or quality that is worth even reducing the size of the endowment? If so, then the institution is serving the endowment, not the other way around.
The key question is what you expect from the future.
If you assume that the drop in federal funding is temporary and things will be back to normal in a year or two, it's reasonable to use endowment to soften the impact. But if you expect that the lower level of funding remains for the foreseeable future, depleting the endowment is the worst thing you could do. It the financial equivalent of wetting your pants in the cold. You leave the institution permanently weaker and less capable for some negligible short-term gains.
Depleting an endowment to ride out a novel and likely-temporary (1.5 to 3.5 years) political situation that seeks to alter the university's fundamental behavior and values... seems like a good use?
Especially since it likely wouldn't be 1:1 funding replacement, but facilitating more limited operations.
Better to negotiate from a position of strength, when the other party is inclined to push any advantage as far as they can.
Keep in mind that they've also suggested attacking endowments with wealth taxes. I'm not sure they've thought that one through, because that would also open the door to going after the wealth of their billionaire buddies in the next administration, assuming there is one.