February 9, 2012

College Endowments: Why Even Harvard Isn’t as Rich as You Think

By By Andrew J. Rotherham

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It seems everyone has an opinion about what colleges and universities should do with their endowments. Use them to lower tuition! Let students attend for free! Improve facilities! Hire more professors! When the National Association of College and University Business Officers (NACUBO) released its annual report on college endowments last week, the big numbers grabbed headlines — Harvard’s endowment, the nation’s largest, grew 15% to $31.7 billion. Less attention was directed to Southern Virginia University’s endowment of $574,000, which won’t provide too many scholarships at a place that costs more than $18,000 a year. I had lunch with a college president a few weeks ago whose school has an endowment of about $20 million, which may sound like a lot of money, but he was consumed with fundraising efforts just to make ends meet. So the next time you hear someone pitching an idea for what a college should do with its endowment, think about these five reasons why the reality of how college endowments work is different than the rhetoric…

Read the full column at TIME.com

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