Secrets of the Academy: The Drivers of University Endowment Success

摘要

University endowments are important and interesting institutions both in the investing community and society at large. First, they play a role in maintaining the academic excellence of many universities which rely heavily on income from their endowments. In recent years, well-heeled institutions such as Harvard and Princeton have used their deep pockets to increase admissions and reduce effective tuition rates, broadening access to elite education (Hoover, 2007; Farrell, 2007). In contrast, poor finances can undermine a school's ability to provide academic services altogether. In a dramatic recent case, the 150 year-old liberal arts institution Antioch College announced in 2007 that it would need to close its doors in 2008 due largely to financial woes. While similar institutions such as Reed College, Oberlin College, and Kenyon College had endowments of over $100 million, Antioch's endowment of only $36 million engendered financial insecurity, which contributed to decaying facilities and a declining student base (Carlson, 2007). Although Antioch forestalled closure thanks to an emergency fund-raising drive, its financial future remains uncertain. Another example comes from the University of Rochester, which in the early 1970s had the third largest endowment in the country, after Harvard and the University of Texas.