Free Republic

Earlier this year, in a landmark action, the Kansas legislature passed the Donor Intent Protection Act, which helps ensure that donors’ wishes are respected when they make a charitable gift as an endowment. This is a significant step forward for philanthropy, as it will help to build trust between donors and beneficiaries, on campus and elsewhere. Donor-intent protections are intended to uphold the details of an explicit written agreement between a donor and a charitable organization. Such agreements typically specify how the endowed funds will be used, such as for a specific program or purpose. When a donor makes a...

A number of elite American universities are finding themselves in hot water for their miserly behavior in response to the coronavirus. Harvard University is taking well-deserved heat for laying off its food service workers while sitting on a $40 billion endowment. Yale University, too, has been twisting in the wind; when New Haven mayor Justin Elicker asked the university to provide temporary housing to the city’s firefighters and police officers, the university initially refused. Then, after taking a public relations and social media beating, Yale relented, grudgingly agreeing to allow city officials to stay in the university’s vacant dormitory housing....

A tax proposed by top legislators on the earnings of Yale's sizable endowment was shot down Tuesday by the administration of Gov. Dannel P. Malloy. "Many proposals are put forward during the legislative session, and many stay as just that - proposals. We value Yale, the students it educates, the research and innovation it generates, and the neighborhoods it strengthens in New Haven," said Devon Puglia, the Democratic governor's spokesman. "As the governor has made clear, we don't believe that new taxes should be part of our solution as Connecticut adjusts to a new economic reality. Instead, we should make...

The gigantic endowments that a few universities hold inevitably attract attention. (Harvard leads the pack at around $33 billion and there are 19 schools and systems with endowments in excess of $5 billion). That attention usually comes from people who think that the institutions are not using their endowments in the best way. They berate universities for “hoarding” money when they could be spending much more to reduce or even eliminate tuition for their students. One such critic is University of San Diego law professor Victor Fleischer, who recently penned an op-ed for the New York Times entitled “Stop Universities...

It happened at least once a year, every year. In a roomful of a dozen Harvard University financial officials, Jack Meyer, the hugely successful head of Harvard’s endowment, and Lawrence Summers, then the school’s president, would face off in a heated debate. The topic: cash and how the university was managing - or mismanaging - its basic operating funds. Through the first half of this decade, Meyer repeatedly warned Summers and other Harvard officials that the school was being too aggressive with billions of dollars in cash, according to people present for the discussions, investing almost all of it with...

Rocco Landesman is President Obama's handpicked chairman of the National Endowment for the Arts. Last week he gave the keynote address to the 2009 Grantmakers in the Arts Conference. Those of us concerned about the politicization of life and art in the Age of Obama will not be consoled by a reading of Landesman's speech. The speech bears examination in its entirety, but Landesman's tribute to Obama is especially worth a look: This is the first president that actually writes his own books since Teddy Roosevelt and arguably the first to write them really well since Lincoln. If you accept...

Harvard University’s failed bet that interest rates would rise cost the school at least $500 million in payments to escape derivatives that backfired, reports Bloomberg. Harvard paid $497.6 million to investment banks during the fiscal year ended June 30 to get out of $1.1 billion of interest-rate swaps intended to hedge variable-rate debt for capital projects, the school’s annual report said. Harvard said it also agreed to pay $425 million over 30 to 40 years to offset an additional $764 million in swaps. The transactions began losing value last year as central banks slashed benchmark lending rates, forcing the university...

How Harvard Nearly Went Bankrupt After A Rogue Interest Rate Swap Went Very Sour Submitted by Tyler Durden on 10/16/2009 17:45 -0500 The school that epitomizes the dangers of groupthink (especially by very intelligent people) and tends to get caught in both the virtues and vices of its own ingeniosity, saw just how expensive hubris can be in 2009. Harvard's endowment dropped 27.3% in 2009 to $27 after hitting roughly $10 billion higher the year before. /snip Yet most notable in the entire report is an interesting story for all those who claim that representing the $200 or so trillion...

Verbotten. story here.

Harvard University last year lost nearly $2 billion in the cash account it uses to pay for daily operations, by investing the money with its endowment fund instead of keeping it in safer, bank-like accounts. The loss, disclosed today in the university's annual financial report, resulted from Harvard financial executives taking the unusual step of placing a large mount of the university's cash with Harvard Management Co., the entity that runs the school's endowment and invests in stocks, hedge funds and other risky assets. Typically, companies and institutions manage their cash accounts conservatively in order to have funds readily available,...

Harvard’s endowment tumbled 27.3 percent in its latest fiscal year, largely because of problems with its private equity and hedge fund portfolios, lopping off $10 billion and shrinking its portfolio to $26 billion. The loss is the biggest percentage decline at Harvard in 40 years and has prompted a review of how it manages its money and allocates assets. Jane Mendillo, who took over the endowment on July 1, 2008, intends to manage more of the school’s assets directly instead of using outside money managers and to hire additional people to oversee the management by outsiders. In her letter describing...

BOSTON (Reuters) - Harvard University announced 275 job cuts on Tuesday, the latest cost-cutting measure at the world's richest university after the financial crisis triggered big losses in its multibillion-dollar endowment. The Ivy League school took the action to meet budget constraints caused by an estimated 30 percent fall in its endowment for its 2009 fiscal year, ending June 30.

Forbes and the NYT ran curiously similar pieces on the Harvard endowment over the weekend, and the message I get from them is that it's in serious trouble. The new boss, Jane Mendillo, arrived seven full months after the old boss, Mohamed El-Erian, left -- and it seems as though nothing good or sensible transpired in the interim, although it's not entirely clear whose fault that is. El-Erian certainly catches some flak: Though the Harvard endowment posted a strong 8.6 percent gain in the year before Ms. Mendillo arrived, David A. Salem, who heads the Investment Fund for Foundations, says...

February 10, 2009, 1:06 pm Phillips Exeter Academy’s Endowment Falls 22% From Geraldine Fabrikant, a DealBook colleague: Phillips Exeter Academy, one of the nation’s wealthiest prep schools, told the Exeter community this week that its endowment — which held more than $1 billion at the end of 2007 — lost 21.8 percent in calendar 2008 and that it was instituting a series of budget adjustments. While the loss is less than the 37 percent drop in the Standard & Poor’s 500-stock index last year, much less the broader ravages within the financial sector, it is still a setback for the...

Harvard letter on its endowment /snip Harvard Management Company, using standard industry practices for valuing assets, has calculated investment losses of approximately 22 percent from July 1 through October 31. Yet even that sobering figure is unlikely to capture the full extent of actual losses for this period, because it does not reflect fully updated valuations in certain externally managed asset classes, most notably private equity and real estate. HMC expects that as we receive more comprehensive valuations in these asset classes from our external managers, the endowment will realize further declines in value. With those considerations in mind, and...

Brother, Can You Spare an Endowment? by: Bethany Stotts, October 20, 2008 The Internal Revenue Service (IRS) has issued a new questionnaire which asks some tough questions of college leaders. The new “compliance questionnaire,” labeled the “first stage” of the “Colleges and Universities Compliance Project” by the IRS, was sent to 400 American universities and colleges on the first of this month. It delves into schools’ financial information with considerable depth. “Among other things, the questionnaire will gather information from the schools about how they report revenues and expenses from their trade or business activities, classify their activities as exempt...

Colleges and universities are the richest institutions in the history of our nation --136 U.S.c olleges and universities have endowments larger than $500 million, 74 of which top $1 billion-- yet tuition continues to skyrocket while tax-free school endowments grow ever fatter. Lawmakers now question whether school endowments should remain unregulated and exempt from taxes, and are considering requiring schools to spend a percentage of their value each year, as private foundations must. Several schools have announced plans to dip into their endowments to defray students’ tuition expenses, but are they doing as much as they should in the area...

Paced by Harvard University's staggering $34 billion stockpile, 76 colleges now boast endowments over $1 billion after robust returns on their investments over the past year, according to an annual study being released today. Harvard's endowment rose by nearly $6 billion over the past year, a nearly 20 percent increase. Yale University's endowment, the nation's second largest, rose to $22.5 billion, a 25 percent increase. Stanford University, Princeton University, and the University of Texas system rounded out the top five. Among colleges with endowments greater than $1 billion, the median one-year return was 21 percent. Nationally, the median return was...

Harvard University got some nice press this week by announcing it will reduce tuition for middle-class families. ...families making up to $180,000 will pay no more than 10% of their annual income to finance the $45,600 that a year costs. ...While private foundations have been required for decades to shell out 5% of their total assets annually, universities decide for themselves and average close to 4%. The difference may seem small, but the money at stake is very large. Harvard's endowment is $35 billion, and growing... ..."it may not be the best thing for Congress to dictate the formulas by...

Donor Intent Endangered by: Malcolm A. Kline, November 06, 2007 Usually, when you donate to a charity you have some say in what happens to the donation, at least if you’re still around when the transfer payment takes place. “If ye’ be living when you’re giving, you be knowing where it’s going,” noted philanthropist John Templeton notably said. The problem of donor intent has become so acute in the charity world that it has spawned a cottage industry that focuses attention on it and, to some degree, has made charities more meticulous in adhering to their mission statements. Conversely, in...