4 ms·

If they were spending the money on those things, this might be an argument. But they're not spending it; they're hoarding it.

by tdeck 2y ago

blackhawkC17 2y ago
$9 billion annually [1] qualifies as not spending it, I guess. I wish people actually checked figures before ranting online. 1- https://projects.propublica.org/nonprofits/organizations/231352685 https://projects.propublica.org/nonprofits/organizations/231...
- tdeck 2y ago
  The page you linked shows their revenue is $9.93B/year and is greater than their expenses. So clearly they're not spending down the principal.
  - blackhawkC17 2y ago
    That’s because donors won’t let them drain all the principal in a few years. UPenn’s revenue includes “sales of assets” and “investment income,” i.e., taking some part of the endowment annually to fund their operations.
jjk166 2y ago
I don't think you understand how endowments work. It's not a pile of gold sitting in a vault on campus. It's an account which is productively invested and generating returns which are what's actually used for funding operations. A $20 billion endowment would be expected to produce about $1 billion per year, or around 20% of the annual operating budget. They need to bring in about $4 Billion more dollars per year to keep the lights on.
- tdeck 2y ago
  I do understand actually, and my argument is that this wouldn't be acceptable in any other category of nonprofit, so why is it acceptable for universities? If the Red Cross decided to take donations and then hoard a 20 billion dollar endowment while also charging top dollar for disaster relief, people wouldn't accept that as a legitimate strategy. Why is it suddenly OK when a university does it?
tzs 2y ago
They are spending it. On average they spend about 5% of it per year. In 2023 that was $975 million. It goes 53% to instruction, 22% to health care, 15% to student aid, and 10% to research, academic support, and other services. The point of an endowment is to provide long term support for whatever the purpose is of that endowment. That is done by investing it and using the investment earnings for that purpose.
JumpCrisscross 2y ago
> If they were spending the money on those things, this might be an argument. But they're not spending it; they're hoarding it There is something ironic about people who work in start-ups arguing for endowments to be spent down. Who do you think gives money to the VC funds?

If they were spending the money on those things, this might be an argument. But they're not spending it; they're hoarding it.

by tdeck 2y ago

If they were spending the money on those things, this might be an argument. But they're not spending it; they're hoarding it.

blackhawkC17 2y ago

$9 billion annually [1] qualifies as not spending it, I guess. I wish people actually checked figures before ranting online. 1- https://projects.propublica.org/nonprofits/organizations/231352685 https://projects.propublica.org/nonprofits/organizations/231...

tdeck 2y ago
The page you linked shows their revenue is $9.93B/year and is greater than their expenses. So clearly they're not spending down the principal.
- blackhawkC17 2y ago
  That’s because donors won’t let them drain all the principal in a few years. UPenn’s revenue includes “sales of assets” and “investment income,” i.e., taking some part of the endowment annually to fund their operations.

jjk166 2y ago

I don't think you understand how endowments work. It's not a pile of gold sitting in a vault on campus. It's an account which is productively invested and generating returns which are what's actually used for funding operations. A $20 billion endowment would be expected to produce about $1 billion per year, or around 20% of the annual operating budget. They need to bring in about $4 Billion more dollars per year to keep the lights on.

tdeck 2y ago
I do understand actually, and my argument is that this wouldn't be acceptable in any other category of nonprofit, so why is it acceptable for universities? If the Red Cross decided to take donations and then hoard a 20 billion dollar endowment while also charging top dollar for disaster relief, people wouldn't accept that as a legitimate strategy. Why is it suddenly OK when a university does it?

tzs 2y ago

They are spending it. On average they spend about 5% of it per year. In 2023 that was $975 million. It goes 53% to instruction, 22% to health care, 15% to student aid, and 10% to research, academic support, and other services. The point of an endowment is to provide long term support for whatever the purpose is of that endowment. That is done by investing it and using the investment earnings for that purpose.

JumpCrisscross 2y ago

> If they were spending the money on those things, this might be an argument. But they're not spending it; they're hoarding it There is something ironic about people who work in start-ups arguing for endowments to be spent down. Who do you think gives money to the VC funds?