The Worth of Endowments in Higher Education

April 2019

U.S. colleges and universities hold more than $500 billion in endowment assets, but many people have a poor grasp of these assets’ purpose and value.

Summary

Endowments enable colleges and universities to fund a portion of their work continu­ously, generation after generation. Yet little is done to help the public understand how endowment funds are solicited from donors, applied to expenses and steward­ed over time. This brief, produced by the Association of Governing Boards of Universities and Colleges (AGB) with support from the TIAA Institute, describes how trustees can inform public debate on endowments, clear up misperceptions – and, in so doing, enhance higher education’s reputation broadly. The brief is part of AGB's The Guardians Initiative: Reclaiming the Public Trust.

Key Insights
The true value of an endowment depends not on commonly used financial metrics, but on how well the assets are managed and applied to benefit society.
The common belief that institutions build their endowments at students’ expense has led to increased political interest in curtailing endowment growth.
Misperceptions about endowments contribute to skepticism about the value of higher education generally.
Board member voices are indispensable to informed public debate on the worth of endowments.
Trustees need to be ready to describe in plain terms where endowments come from, how they work, and why they exist.
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About TIAA Institute

The TIAA Institute helps advance the ways individuals and institutions plan for financial security and organizational effectiveness. The Institute conducts in depth research, provides access to a network of thought leaders, and enables those it serves to anticipate trends, plan future strategies and maximize opportunities for success.
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