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May 12, 2008

Panel Meets to Discuss University Endowment Spending

The controversy over endowment spending among universities was the primary focus of a panel at the American Bar Association on Friday, reports The Chronicle of Higher Education.

Congress has proposed that universities spend at least 5 percent of their endowments every year. However, there is a lot of room for interpretation as to what constitutes an endowment. Most endowments are a combination of disparate investments, and many have their own rules regarding spending.

Dean Zerbe, former senior counsel to Sen. Charles E. Grassley, of Iowa, the ranking Republican on the Senate Finance Committee, said that Congress would continue to push its concerns on endowment spending.

Adam A. Parachin, a law professor at the University of Western Ontario, cautioned against following Canadian regulations on investments held by universities. Charities must spend 80 percent of their revenue from the previous fiscal year, and universities must spend at least 3.5 percent of their endowments. Mr. Parachin said these measures are a “technical disaster.”

Lorraine A. Sciarra, senior counsel at Princeton University, suggested three methods to govern endowment spending: a balance between present and future needs, stability in the current operating budget, and a provision to allow investment managers to focus on long-term returns.

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Comments

1. It’s a real irritation to have a link in a story from the Chronicle of Philanthropy (to which I subscribe)and not be able to read the story in the Chronicle of Higher Education.

   — Philanthro Joe    May 12, 05:02 PM    #

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