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Anyone knows why rich universities keep that amount of money lying in the bank?
by nafizh 10y ago
Anyone knows why rich universities keep that amount of money lying in the bank?
- setr 10y agoI imagine banked money isn't taxed, but any spent would be, so every expenditure shoots up a bonus 20-40% relative to the value of just leaving it alone. Which means any revenue has to match, and exceed, the tax to actually be profitable (versus sitting on it) Same way, I think, apple keeps $800bn unspent; not spending is simply more profitable than spending And i guess at that level of money, its generally not worth doing much unless its big (due to all the overhead necessary to keep such funds available and tracked).
- allcentury 10y agoI'm not a tax expert so I can't answer the question on why universities would do that. As far as Apple goes, I'll assume they'd like to at least beat inflation and holding cash is usually done for regulatory reasons.
- t3soro 10y agoApple is different than Stanford. Stanford's fund is not an IRA - there is no tax either when they withdraw from the fund. Apple has all that money stashed because they can't repatriate it to the United States and their shareholders, without realizing corporate income tax on it in the US. So as long as they keep it overseas, the value of their stock goes up because they control the cash, but they can't award it back to their shareholders as dividends without biting the dividend tax bullet.
- deleted 10y ago[deleted]
- deleted 10y ago[deleted]
- JauntTrooper 10y agoIt's not in the bank, it's invested in assets like stocks and bonds. They use the returns to fund 21% - 25% of their budget every year (~$1.4 billion of $5.5 billion in 2015-2016). The endowment contributes more annually than tuition does. [0] [0] http://facts.stanford.edu/administration/finances http://facts.stanford.edu/administration/finances