Trick or Treat: Schools Hoard Endowment Money

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Most colleges and universities are quick to push for expanded student aid from taxpayers but forget that age-old maxim: charity begins at home.

“Last year, Yale paid about $480 million to private equity fund managers as compensation — about $137 million in annual management fees, and another $343 million in performance fees, also known as carried interest — to manage about $8 billion, one-third of Yale’s endowment,” Victor Fleischer wrote in The New York Times in August. “In contrast, of the $1 billion the endowment contributed to the university’s operating budget, only $170 million was earmarked for tuition assistance, fellowships and prizes.”

“Private equity fund managers also received more than students at four other endowments I researched: Harvard, the University of Texas, Stanford and Princeton.”

Fleisher is a law professor at the University of San Diego. “Smaller institutions aren’t any better,” he writes. “The University of San Diego, where I teach, spent about $2 million from the endowment on tuition assistance in 2012, compared with $5 million in private-equity fees in 2014 and $13 million in overall investment management fees.”

Ohio State is even more parsimonious, at least towards its students.” According to New York Times financial columnist Victor Fleischer, who analyzed for The Free Press the Ohio State endowment’s 2012 tax return, the endowment for that year ‘provided exactly zero support, no expenditure at all, for scholarships,’ he said,” John Lasker reported in the Columbia Free Press. “What makes this alarming is that the endowment for 2012 received $365 million in contributions from over 200,000 donors.”