Comment by forrestthewoods
6 days ago
> the many billions it was meant to provide, in interest
THATS WHAT WHAT THE FIFTY BILLION IS
It’s a war chest that has been carefully cultivated over decades. The fifty billion is the result of a hundred years of investment and management.
If it can’t be spent now then when the fuck exactly can it be spent? In 200 years you’d still be saying “this is the seed corn for tomorrow!!”
I’m not saying burn it down to zero. But the whole fucking point of an endowment is to provide stability during trying times. If you can’t use the interest that has been accumulated now then when the fuck can you??
No. You misunderstand endowments.
Their principal is not intended to be spent, ever. The point of an endowment is not to "provide stability during trying times".
The point is to spend the interest that it generates, in normal times, in perpetuity. Which Harvard already does and has always done. Interest from their endowment is already a large part of their revenue. That's what the endowment is for.
How much is the principle? Because I bet you $3.50 it’s multiple billion less than the current balance.
Returns fluctuate wildly, while expenses are roughly constant. So obviously expenses are drawn conservatively. And if investment works well, you can grow the endowment too. Obviously it is up to the university to strike the right balance.
The more it grows, the less risk there is in the future. But if you start spending it more than the levels of its average returns, that's high risk. And the point is it's supposed to last forever.
You also need to grow it simply to account for inflation and other rising costs.
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> The point is to spend the interest that it generates, in normal times, in perpetuity.
Yes, but these are not normal times.