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May 27, 2008

Why Should Alumni Give to Institutions With Large Endowments?

On the eve of her 25th reunion, Carroll Bogert, a member of the Harvard class of 1983, is questioning why she and other alumni should continue to donate to a university with a $35-billion endowment when most of that money is invested rather than spent.

Ms. Bogert, the associate director of Human Rights Watch, makes her case for reexamining giving to weathy universities in an opinion piece in The New York Times.

She and a few hundred fellow alumni have formed a group called Harvard Alumni for Social Action to channel 25th-year reunion giving to poor universities in Africa. In three years, they’ve raised $425,000.

Ms. Bogert says Drew Gilpin Faust, president of Harvard, begged off meeting with the group. “Harvard clearly doesn’t like any effort that might divert a dollar away from its Cambridge coffers,” she writes.

Her argument raises an interesting question: How do universities with the largest endowments make the case to skeptical alumni about why they need additional funds? And are alumni who want to change how their alma mater uses their money better off diverting the annual gift check to a needier cause?

—Kathryn Masterson

Tuesday May 27, 2008 | Permalink

Comments

1. Ms. Bogert is right in asking why donors would give to universities with disgracefully huge endowments. I say “disgracefully” because I don’t understand how universities like Harvard, in good conscience, can continue to seek endowment gifts while there is so much need in this world.

   At the same time, a good amount of blame has to be placed on the donor. In this day of hightened awareness of stewardship in giving, how can donors make a charitable donation to an institution that clearly doesn’t need the money?

   — Kevin Feldman    May 27, 03:07 PM    #

2. Each time Stanford calls me, I make a point of explaining to them that they REALLY don’t need my money—in contrast to the school where I work, which has a tiny endowment and charges students something like 3K a year for tuition.

   — Jamie    May 27, 03:47 PM    #

3. I don’t disagree with Caroll Bogert or the posters, but I do have a “however.” One issue that is rarely brought up in these discussions: most endowed funds are restricted to very limited purposes by the original donors. The school cannot simply divert those funds or their earnings to general purposes.

   So these “disgracefullly huge” endowments cannot necessarily go to the purpose the college needs at the time. I don’t know anything specific about the composition Harvard or Stanford’s endowments, but the perception that these dollars are freely available to be used however the school wishes is way off. Endowment funds created 50 or 100 or 200 years ago may in fact be very difficult to spend.

   — Camille    May 27, 05:37 PM    #

4. Anyone who asks why “…most of that money is invested rather than spent” doesn’t understand money. The principal in an endowment is never spent – the depletes the principal. Only the interest generated by the principal is spent – or it’s not an endowment!

   — Al    May 27, 05:38 PM    #

5. I’ve commented on this issue in another section of CoP, but wanted to add that I’m sure it is difficult for the public to comment on the situation with Harvard’s endowment since many of us can only speculate what their endowment is being used for (and how)to support in perpetuity. With said, I hope that these are questions that concerned alumni like Ms. Bogart is respectively asking Harvard and, respectively, Harvard is responding to.

   — Ken D. Grunke    May 27, 05:48 PM    #

6. Serious question: Why do students pay tuition at all at Harvard and other ultra-wealthy schools? I know the usual excuses, but really why do they?

   If they went with free (or very minimal) tuition that would be a good reason for alums to continue to give.

   Jamie (#2) is right on!

   — John    May 28, 07:06 AM    #

7. This story really stuck a chord with me, a Harvard graduate. Naturally Harvard has been calling me for years, and I have not given in years, for exactly the reasons expressed by Carroll Bogert and by Jamie, above. I always explain my reasons to the caller, who then usually invokes financial aid. But of course Harvard can underwrite every dime of financial aid they award; they don’t need my hundred bucks. The school where I work does need it, though, and so do charities that deliver services directly to the poor and hungry. Beyond all this, my biggest beef with Harvard is that they are building, building, building — when a fraction of that capital investment could dramatically improve the teaching of undergraduates. Their arguments for their enormous expansion efforts are couched in the usual noble language; the real reason they expand, though, is that they can.

   — Steve Howard    May 28, 04:54 PM    #

Commenting is closed for this article.

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