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Friday, January 25, 2008

Senate Asks Why Colleges Earn 17.6% on Endowments But Spend Only 4.6% on Students

20080125_endow__2The Senate Finance Committee yesterday sent a letter to the 136 U.S. colleges and universities with endowments of $500 million or more, requesting the schools to respond within thirty days to more than fifty questions dealing with finances and tuition.  From the press release:

Federal law requires most private foundations to pay out 5% of their assets each year toward their charitable purpose. No such requirement exists for university endowments. Donations to universities are tax-exempt, and endowment funds are tax-exempt. A Finance Committee hearing last September explored endowment growth. Since then, three colleges – Harvard, Yale, and Dartmouth – have announced increased student aid.

A new study from the National Association of College and University Business Officers (NACUBO) released today shows double-digit endowment growth at hundreds of colleges over the past year. According to the study, 136 colleges in the United States now have endowments of $500 million or more.

My school -- the University of Cincinnati -- ranked 63rd out of 785 colleges and universities with a $1.2 billion endowment.

Press and blogosphere coverage:

http://taxprof.typepad.com/taxprof_blog/2008/01/senate-asks-why.html

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