American college and university endowments did very well last year, according to the Chronicle of Higher Education. The Council on Aid to Education’s research concludes that
[c]olleges raised $37.45-billion in 2014, the highest amount recorded since the survey started, in 1957. That is a 10.8-percent increase in giving since last year—the largest gain since 2000.
This is excellent news for higher education, isn’t it? Well, for some of higher ed. Actually, just a tiny fraction, according to a Vox article:
In all, according to the most recent NACUBO-Commonfund study of college endowments, 82 universities have endowments worth more than $1 billion. (And most of those endowments are in seven figures, not eight — generally worth less than $2 billion.) Those 82 universities, mostly private research universities, own about 70 percent of all college and university endowment wealth. [emphases added]
Recall that there are roughly 4,600 institutions of higher education in the United States. These 82 count for about 1.8% of them. They are, in a very literal sense, American higher education’s 1%.
What about the rest of our campuses?
Most college endowments are worth $500 million or less. Those colleges and universities mostly depend on tuition for their revenue. And colleges with endowments in the hundreds of millions still serve a minority of American college students. Forty percent of all college students attend to community colleges, which barely have any endowments at all.
Needless to say, those 99% do not win the attention of the well endowed. They don’t have the equivalent of a book like Excellent Sheep, lamenting the challenges of teaching and learning in the 1% zone.
We can take the 1% argument a little further. These endowments are built less by income and more by wealth – i.e., by the 1%’s capital. According to the Chronicle, who cites “a fund-raising consultant with Bentz Whaley Flessner”,
the increase in charitable giving can be attributed to wealth, not income. Colleges are “more and more dependent on wealth than on your average graduate getting a raise next year,” he said. “What’s really driving this is a huge explosion of wealth.”
In other words, the gift of a rising graduate making her way in the world, building a life of upward mobility American-dream-style, is less significant for growing these endowments than contributions from the already wealthy. Our richest families, America’s equivalent of landed gentry, are increasingly the prime movers of their preferred campuses’ business model. Academia’s 1% are becoming dependents on our society’s 1%.
As Libby Nelson notes, “At Harvard, endowment returns contribute more to the university’s budget than any other source of income: more than tuition revenue, research grants, or donations meant to be spent immediately.”
Meanwhile, higher education’s 99% muddle through in a mix of cuts to public funding, increasing debt, and overall privatization. Which seems to have been a congenial course of action for America’s 1%, who are the leading spirits of our policy world according to recent political science analysis (pdf).
What does this mean for higher education?
PS: Thomas Piketty came to similar conclusions about endowments, education, and inequality last year.