April 27, 2020; Inside Higher Ed
Nationally, as of June 30, 2019, a total of 774 colleges combined had net endowment assets of $630 billion, according to the National Association of College and University Business Officers (NACUBO) and the investment firm TIAA.
Unlike private foundations, which are required by law to donate five percent of their assets each year, universities are expected to use their endowments to reinvest in themselves. As the anonymous letter writer—identified in Inside Higher Ed only as a staff person “at an independent college with a sizable endowment”—puts it:
Our college is fortunate to have a fairly strong endowment. We aren’t in the billion-dollar club, but the endowment is substantial and a key factor in the college’s routinely solid fiscal ratings.… Our president and Board of Trustees have promised the college community that the endowment, as a prized asset, will be preserved at all costs to be available in the future when we are beyond the current crisis.
But, the writer adds, “Our endowment will mean nothing if the community around the college collapses.” In other words, the writer argues that being an anchor institution means that in time of economic collapse, the university’s interest lies in supporting the surrounding community, even at the cost of reducing the size of the university’s endowment, perhaps substantially.
It’s a bold argument—and it is not hard to understand why the letter was written anonymously.
Gradually, as NPQ has covered, the anchor institution movement at universities has come to acknowledge that, in many senses, universities have failed to be true partners with surrounding low-income communities—and that a change in behavior is required. As Andrew Delbanco, president of the Teagle Foundation, put it in a keynote address to a conference of anchor institution movement advocates last fall, “Higher education is doing more to replicate inequality in our country than to resist it.”
Coming out of conferences like this one have been calls for universities to leverage social capital to dismantle structural racism in cities. But few anchor institutions have ever heard a call like the one issued by the anonymous letter writer to Inside Higher Ed.
In the letter, the unnamed college staffer contends that in this moment of crisis, an event that the writer remarks could prove to be “on par with World War II and the Great Depression in terms of social disruption,” that being an anchor institution means something much more. Specifically, it means mobilizing the full assets of the institution to do what it takes to protect the surrounding community.
In the letter, the case is made as follows:
The money the college borrows or pulls from endowment will mean jobs when jobs are desperately needed. If ever there was a time to forgive student debt and extend financial aid, it is now. Students spend money, not just on campus, but in the surrounding community.
All of this economic activity is vital to our community, as it doubtless is in every community that is home to a college or university.
Small businesses don’t have the kind of fiscal cushion that many colleges and universities do. A restaurant owner whose restaurant is empty has no choice but to begin laying off employees.
My college, again like so many academic institutions, prides itself on its community engagement. … But how deep is that engagement? If we are as engaged as we claim to be, shouldn’t we be asking more than how to save the college? Shouldn’t we be asking how to save our community?