Given the high price of tuition, lodging, transportation, meals and other expenses, it’s safe to say that individuals put in a lot of time, effort, and money into their college experience. While going to college leaves you with a degree, greater earning potential, and great experiences, are there things we should be questioning about our educational system? Today let’s look at endowments and the role that they play in the context of university finances.
What Are University Endowments?
A university endowment is a financial asset donated to the college. The original intention of the endowment is for the educational institution to invest the capital. This is in hopes that the total value of the asset will reap further investments and greatly aid in university expenses.
What’s the Problem?
There are some organizations which believe universities should be taxed on the endowments that they receive. In 2016 Harvard was known to have the largest endowment with receiving a little over $36.4 billion dollars. This is money that is not currently being taxed and is furthermore not being used to its full potential. On average only 4% of the endowments were spent last year.
Who’s Reaping the Benefits?
The top colleges with the largest endowments are Harvard, Yale, University of Texas, Princeton, and Stanford. These five universities are all establishments with endowments of over twenty billion dollars in untaxed revenue. There are many more that make it over the 1-billion-dollar list.
Should universities be taxed on the endowments that they receive? Or are they free to do whatever they want with gifts from patrons and alumni? Either way, it is our duty to question the desirability of the practice.
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