About endowments, or why Matt Taibbi is a hack

If I were Matt Taibbi’s prof, I’d give him a C for his article. He did some research on endowments, but he gives no useful context. Whatever Rupert Murdoch’s New York Post paid him, it was too much. The Trump Administration wants to use taxes on endowments to subsidize tax cuts to the 1% who are the real hoarders, not to help kids pay for college. I realize Matt didn’t write the headline, but it is phony right-wing projection.

 What matters isn’t the endowment size, it’s the spend on the endowment. Typically, it’s 4-5% of the endowment. Except in times of financial exigency, universities don’t touch the corpus of the endowment.

Taibbi makes sport of the Harvard endowment, which is the largest in the US by a wide margin. Years ago, I saw some wag comment that Harvard is really a hedge fund that does education on the side. Taibbi’s clickbait isn’t new or original.

Of course, the whole endowment-tuition thing isn’t very informative for a place like Harvard, which has a relatively small undergraduate student body compared to, e.g., Ohio State or Arizona State. Harvard is tuition-free for admitted students with household incomes of less than $100,000/yr. Could they do more? Sure, but the spend on the endowment funds much more than undergraduate education. Research is a cost center for a university, and Harvard is a research juggernaut. You would never know that by reading Matt Taibbi’s lazy article.

So what are university endowment earnings spent on? I’m no authority on the subject, but I do know a bit about Saint Louis University, where I was on the faculty for 37 years.

The Saint Louis University Endowment had a market value of $1.344 billion as of June 30, 2022. The endowment declined 11.9% from the previous year. 

$200-300 million of that is the Doisy Fund. Dr. Edward Doisy was SLU’s only Nobel Laureate. In addition to sharing the Nobel Prize in Physiology or Medicine in 1943 for the structure and synthesis of vitamin K, Doisy also patented a process for the purification of conjugated estrogen from pregnant mare urine. He signed the patents over to the university. They still earn income from Premarin (PREgnant MAre urINe), which is used to treat menopause symptoms. 25% of the annual earnings from the Doisy Fund are designated for the department he founded, the Edward A. Doisy Department of Biochemistry and Molecular Biology, where I worked for 37 years. Those funds support (a) stipends, tuition and health insurance for PhD students after they complete their qualifying exams, (b) major research equipment purchases, (c) faculty recruitment packages and (d) an endowed chair named after Dr. Doisy.

My department also has a separate endowed chair that is used for retaining talented faculty. It has a named endowment fund that pays year 3 and 4 tuition for an MD student who switches to MD/PhD track after year 2 and does their PhD in our department.

Finally, all children of SLU faculty admitted to the university can attend tuition-free.

So unlike the picture painted by Taibbi, SLU puts its endowments to work. I suspect the same is true at all research universities.

https://nypost.com/2025/03/19/opinion/americas-colleges-are-hoarding-billions-and-yet-still-cry-poor-as-trump-targets-federal-funding/