University assets

Here’s an interesting news item from Bloomberg. American university endowments are faring well again as investments are once more producing much better returns. That’s not what I am drawing attention to, however. The article also tells us that the 835 institutions surveyed between them hold $448.6 billion of assets. This means that the average US university has reserves of some $537 million. Wrapped up in that is Harvard’s mouth-watering  $32.7 billion, a sum that would allow it to bail out Greece if it wished.

We should not however sit around in amazement, those of us in other countries need to do something to build up viable reserves. University endowments are not about creating luxury in higher education, they are about creating an ability to invest in real excellence, and also to provide proper supports for students who not so well off. US graduates have long accepted that supporting their university is one of the things that you do, and this acceptance allowed American universities to become truly world-beating. We need to develop the same habits. We need to create the kind of reserves that allow universities to secure their future and to avoid that constant knife-edge budgeting that afflicts most universities across the world. We need our universities to be really excellent and to invest in the future of all parts of society.

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4 Comments on “University assets”

  1. Eugene Gath Says:

    I think you would have to add another zero to bail out Greece.

  2. Al Says:

    @ FVP
    Would you be advocating a tithe on the local community due to the fact that the university gives the locality its dignity?

  3. Eduard Du Courseau Says:

    Hmmh! It seems as if US unis require exorbitant endowments to fund anything truly groundbreaking and, in reality, the cost of supporting a slightly better staff/student experience than is on offer in Europe/UK for a fraction of the price is hardly justifiable when there are so many more deserving charities and causes that today’s graduates could support.

    Consider Oxford VS Harvard: Harvard has $32.7 billion while Oxford uni has £686m, Oxford colleges have £2.8bn.
    Do we really see evidence of an extra $24bn of “real excellence” and support for “not so well off students”. Of course not,

    What we do see is $56k (fees, room and board) versus around $20k for Oxford students with a few crumbs for the poor.

    And then there are all of the continental unis which don’t need to charge fees but give a very decent education.

    Surely free education is a lot cheaper and of more benefit to society as a whole.

  4. Anna Notaro Says:

    The following comment struck me in the article linked up to this post:
    Universities with smaller endowments produced returns equal to or better than wealthier schools because they keep much of their money in traditional stocks, rather than alternative assets like hedge funds and private equity, […] Smaller universities “are being rewarded for being less well diversified,” said William Jarvis, managing director of the Commonfund Institute. “The rewards for risk taking have been muted.”

    I am not sure I share the negativity implied in the above, surely the future of a university is too precious to be put in jeopardy by *risky* investments. Also, as much as one admires the efficiency and viability of the American model, advocating the adoption of some of its practices within a European HE context, which includes a variety of funding mechanisms etc. might be highly problematic.

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