Changes

The definition of "endowment" varies from charity to charity and from state to state.  For example, a donor may give money to a charity on the condition that the income from the investment of the gift is paid to his widow for as long as she lives and then what is left can be used by the charity.  In some states, that gift would be considered a part of the endowment as soon as it is received.  In other states, those funds would have to be invested separately until the widow dies.

The definition of "endowment" varies from charity to charity and from state to state.  For example, a donor may give money to a charity on the condition that the income from the investment of the gift is paid to his widow for as long as she lives and then what is left can be used by the charity.  In some states, that gift would be considered a part of the endowment as soon as it is received.  In other states, those funds would have to be invested separately until the widow dies.

Sometimes charities are criticized for setting aside too much money and not spending more each year.  For example, the [[Wikimedia Foundation]] has been criticized for using persistent fundraising to receive much more money than it plans to spend.  Some colleges have been criticized for paying out only a portion of endowment income (to hedge against future inflation) rather than using more of the income for [[financial aid]] or for lowering [[tuition]].<ref>{{cite news|url=https://www.nytimes.com/2008/01/25/education/25endowments.html|work=New York Times|title= Senate Looking at Endowments as Tuition Rises|first=Karen|last=Arenson|date=January 25, 2008|accessdate=November 21, 2012}}</ref> In general, [[conservative]]s try to protect endowment so that it can meet the needs of future generations, while [[liberal]]s seek to maximize the present benefits of endowments.

Sometimes charities are criticized for setting aside too much money and not spending more each year.  For example, the [[Wikimedia Foundation]] has been criticized for using persistent fundraising to receive much more money than it plans to spend.  Some colleges have been criticized for paying out only a portion of endowment income (to hedge against future inflation) rather than using more of the income for [[financial aid]] or for lowering [[tuition]].<ref>{{cite news|url=https://www.nytimes.com/2008/01/25/education/25endowments.html|work=New York Times|title= Senate Looking at Endowments as Tuition Rises|first=Karen|last=Arenson|date=January 25, 2008|accessdate=November 21, 2012}}</ref> In general, [[conservative]]s try to protect endowment so that it can meet the needs of future generations, while [[liberal]]s seek to maximize the present benefits of endowments.

Colleges and universities try to have as large an endowment as possible so that the income from those financial investments can subsidize the operating expenses of the institution.  Here is a table of the United States universities which have the largest endowments:<ref>{{cite web|url=http://www.nacubo.org/Documents/research/2011NCSEPublicTablesEndowmentMarketValues319.pdf|title=2011 NACUBO-Commonfund Study of Endowments|accessdate=November 20, 2012}}</ref>

Colleges and universities try to have as large an endowment as possible so that the income from those financial investments can subsidize the operating expenses of the institution.  Here is a table of the United States universities which have the largest endowments:<ref>{{cite web|url=https://www.nacubo.org/-/media/Nacubo/Documents/EndowmentFiles/2019-Endowment-Market-Values--Final-Feb-10.ashx|accessdate=September 6, 2020}}</ref>

{| class="wikitable"

{| class="wikitable"

!Rank!!School!!Size

!Rank!!School!!Size

|-

|-

|1||[[Harvard University]]||$31.7 billion

|1||[[Harvard University]]||$39.4 billion

|-

|-

|2||[[Yale University]]||$19.4

|4||[[Stanford University]]||$27.7

|-

|-

|3||University of Texas System||$17.1

|5||[[Princeton University]]||$26.1

|-

|-

|4||Princeton University||$17.1

|6||[[Massachusetts Institute of Technology]]||$17.5

|-

|-

|5||Stanford University||$16.5

|7||[[University of Pennsylvania]]||$14.6

|-

|-

|6||Massachusetts Institute of Technology||$9.7

|8||[[Texas A&M University System]]||$13.5Columbia University||$7.8

|-

|-

|7||University of Michigan||$7.8

|9||[[University of Michigan]]||$12.4

|-

|-

|8||Columbia University||$7.8

|10||[[University of California]]||$11.8

|-

|-

|9||Northwestern University||$7.2

|11||[[University of Notre Dame]]||$11.3

|-

|-

|10||Texas A&M University System||$7.0

|12||[[Northwestern University]]||$11.1

|13||[[Columbia University]]||$10.9

|15||[[University of Chicago]]||$8.3

|}

|}

Although endowment size is a relative measure of a college's financial strength and stability, there are many other factors that influence the quality of a school.  For example, public universities generally have lower endowments than private institutions, but public universities receive annual taxpayer appropriations that can make up for a lower annual endowment income.  In general, over time, universities earn an average of 4% per year on their endowment investments.  So, a $100 million endowment investment may subsidize annual operations by $4 million per year.

 

Although endowment size is a relative measure of a college's financial strength and stability, there are many other factors that influence the quality of a school.  For example, many of these schools include hospital systems with a portion of the endowment supporting hospital operations.  Also, public universities generally have lower endowments than private institutions, but public universities receive annual taxpayer appropriations that can make up for a lower annual endowment income.  In general, over time, universities earn an average of 4% per year on their endowment investments.  So, a $100 million endowment investment may subsidize annual operations by $4 million per year.

Endowment size generally confers a competitive advantage to colleges with larger endowments, as shown by this table with the top 100 colleges holding 78% of all college endowment assets:

Endowment size generally confers a competitive advantage to colleges with larger endowments, as shown by this table with the top 100 colleges holding 78% of all college endowment assets: