• Anthony Siradakis

Endowments May Not Save Some Institutions of Higher Education

If you ask the average college student to explain the purpose of an endowment, you’ll get a mixed bag of answers. Ask a faculty member and you’re likely to get a more detailed response. More of an accurate description will follow if the response comes from a staff member or administrator. But each person, regardless of their position within the institution will have a different answer when describing their interpretation of an endowment. At their core, endowments remain relatively mysterious for many, somewhat of a Pandora’s Box filled with complex financial and investment instrumentation. Yet they are actually quite simple. They’re meant to protect colleges and universities from a variety of internal and external variables, from reductions in student enrollment and lost revenue, to a near collapse of a global financial system, to pandemics. Well, the first two, yes, but whether or not endowments can protect (and more importantly sustain) universities through global health crises is still up for debate, and will be for quite some time.

What’s more, when you consider the current economic, health, and social climate within the United States, it’s entirely possible some students may not even want to return to campus in the fall. Further complicating matters, some of these students will choose to complete the remainder of their program online, forfeiting the option of returning to campus altogether. At this point, you may be wondering what this has to do with endowments. But herein lies the problem. Endowments, regardless of size and scope, will not help colleges and universities in combating large-scale health crises or civil issues originating off-campus.

Proof of this comes when analyzing the roughly $650 billion held in university endowments nationwide. Despite this eye-watering number, schools coast-to-coast are currently in scramble mode (more appropriately crisis mode), trying to selvedge the 2020/2021 academic year. Whether $40 billion or $10 million, each institution feels the same growing pains, as developments outside of their control continue to force administration to devise new ways of combatting these issues. Put frankly, throwing money at these problems won’t help. 

This is exactly where institutional administrators need to direct their focus, particularly those within the financial/endowment space of colleges and universities. Not the construction of new buildings, parks, or athletic stadiums, but the task of integrating systems and ways of thinking that incorporate an awareness of institutional susceptibility to the ebbs and flows of society. Additionally, this complex relationship between money and higher education is a story as old as the founding of America’s first institutions, and has been the subject of criticism from both the right and the left. A typical discussion of finance and higher education goes something like: Are enrollment numbers decreasing? Construct a variety of buildings and recreational facilities to attract new students. Budget on the decline? Launch fundraising campaigns to help compensate. Faculty and staff demanding higher pay? Raise tuition. The link between these examples shows how challenges that arise within the university are commonly remedied through the spending of institutional money. Countless other examples exist, but what’s most important moving forward is for institutional administrators to develop a deeper awareness of how challenges stemming from society are resolved by something else, something more than money. 




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