Managing University Endowments for Perpetual Growth and Stability

Strategic Insights -

Indiana University Senior Vice President and Chief Financial Officer MaryFrances McCourt testified before a U.S. House committee on the importance of university endowments, stating that they help colleges and universities meet growing student and public expectations amidst challenging economic times. McCourt highlighted the need for careful management of endowments to provide perpetual, growing, and consistent support for university operations and programs. She emphasized that institutions of higher education are making significant investments in student success initiatives, such as student persistence, completion, advising, and financial literacy.

Key Takeaways:

  • University endowments are crucial for meeting growing student and public expectations amidst economic challenges, with colleges and universities withdrawing $21.2 billion in 2014 to support their missions.
  • Most spending from endowments is restricted by donors, with 90% of the $7.7 billion in donations to universities in fiscal 2014 being restricted.
  • Indiana University's unrestricted private funding supports less than 0.1% of the operating budget, with philanthropic gifts and endowments becoming increasingly important due to stagnant state appropriations.
  • The university has increased student financial assistance, reduced tuition, and implemented a student financial literacy initiative, credited with reducing total student debt by 16.2% over three years.
  • MaryFrances McCourt emphasized the need for careful management of endowments to be perpetual, growing, and consistent, providing a stable source of income and fulfilling the university's promise to donors in perpetuity.

Statistics:

  • $21.2 billion: The amount of money U.S. colleges and universities withdrew in 2014 to support their missions.
  • 90%: The percentage of donations to universities in fiscal 2014 that were restricted.
  • $7.7 billion: The amount of donations to universities in fiscal 2014.
  • 0.1%: The percentage of Indiana University's operating budget supported by unrestricted private funding.
  • 58%: The percentage of Indiana University's general fund budget supported by state appropriations 20 years ago.
  • 25%: The percentage of Indiana University's general fund budget supported by state appropriations today.
  • 26%: The percentage of Indiana University's general fund budget supported by student tuition and fees 20 years ago.
  • 67%: The percentage of Indiana University's general fund budget supported by student tuition and fees today.

Sources:

  • Prepared testimony by MaryFrances McCourt for a House Ways and Means Committee Subcommittee on Oversight congressional hearing on college tuition and the tax treatment of university endowments.
  • National Association of College and University Business Officers.
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