The Chicago Typewriter was a model of 
« Stardate -344147.1822678843 | Main | Stand-up update 2008-11-10 »
UChicago Business School gets $300 million donation, promptly orders solid-gold toilets.
By Chicago Typewriter | November 10, 2008
The University of Chicago just received $300 million for its business school, which will now be named “The University of Chicago Booth School of Business,” or “Chicago-Booth” for short.
Jeebus.
This is the biggest donation to a business school in history, which raises two questions: 1) How bloody rich must you be to have $300 million lying around? 2) If you’re going to rename it, why not name it something truly Awesome? Like, the Darth Vader School of Business, or The Institute of Don’t Worry About It, We’re Totally Gonna Hook You Up With Major Cash Later.
I was having a rational argument with K regarding the need for universities with huge endowments to spend down the amount in order to further the mission of the school, be it in research or scholarships. I won’t say what our respective positions were, specifically, but I will say that one of us advocated a policy whereby schools above a certain amount of endowment-per-student would be required to offer a specific amount of scholarship assistance (or other public benefits) a year in order to avoid tax penalties. The other person advocated a position whereby universities would be given the status of minor fiefdoms, and required to contribute a certain amount of soldiers or grain to the sovereign every year.
I should also mention that one of us was drunk during the argument.
All that aside, what should universities with huge honking endowments do with it? Should the über-wealthy be asked to spend down some of it or risk losing their non-profit status? Or should we assume that acquiring an endowment of any size is important to the mission of a school? We are not talking about schools where the endowment is needed to grow or to remain stable; enlarging endowments for most places is absolutely needed to stay in the black through good times and bad. I am referring here to the institutions which top endowments of, say, over $250K/student.
Topics: Education, UChicago | Trackback | Comments RSS
November 11th, 2008 at 4:55 pm
I’m a big fan of a rule that says schools with endowments that exceed a certain limit have to instead give that money to schools that don’t have endowments that big. If the idea is promoting education, let’s share the wealth. Think of all the small liberal arts schools out there that have educated a huge portion of our population, yet keep getting more and more out of reach for the middle and lower classes because tuition costs are going up so fast. Big endowments should be used to spend down the cost of college. And not just at the school with the endowment.
November 11th, 2008 at 11:38 pm
This is a topic I’m actually pretty familiar with. I’ve met with the folks at the Yale and Harvard Endowments as well as little liberal arts schools. The fact, is, a lot of schools have tried a lot of different things. Berea College for example uses their large endowment to make sure not a single student pays tuition. Grinnell College in Iowa usage their monstrous endowment to see that their students can travel abroad. Some larger research universities choose to pay for facilities and bring in the top educators. Are any of these mandates more or less worthy than the others? The beauty of the system now is that schools can decide and many of them have different missions. It would be a problem if we mandated that all schools had the same mission, such as providing scholarships.
Additionally, the people who provide donations to these schools have the ultimate say over how these funds will be used. While many of the donations go into the general fund, others specify that they are to be used specifically for liberal arts scholarships or to fund a particular staff position etc.
One thing I do disagree with however is the people who feel large endowments are a bad thing and that money should just be spent to help TODAY’S students. That money is there to grow and help future generations. If an endowment spends 4% per year, and loses another 3% to inflation and another 1% to fees and management, that endowment needs to make 8% a year just to break even. (Particularly difficult when the market loses 35% like this year!)
When you look at spending more than 3-4% a year an endowment could soon find itself broke which would leave future generations without the benefit of a large endowment which was supposed to last into perpetuity. The investment managers at these universities truly carry a great burden. In fact, often times they are the second highest paid person behind the football coach. (The most important person at any university.)
November 13th, 2008 at 5:41 pm
This is a short comment, but I find myself in total agreement with Maury. I think that the strength of American universities is the free hand they’re given to manage their own affairs (with some reasonable regulations, of course, such as regarding human and animal experiments, equal access, etc.).
November 14th, 2008 at 1:13 am
At the same time, when the rich keep getting richer and the poor are having a harder time treading water, don’t we want to prioritize access to education? I’m not saying these institutions can’t prioritize research or top educators or football or whatever they want, just that a minimum standard of access should be ensured. There is a very large class of people who simply cannot afford to go to Harvard, Stanford, etc., and there is a quickly growing class of people who simply cannot afford any level of private liberal arts education, no matter the pedigree of the institution. That’s a very big problem for the future of this country.