Cash in higher ed endowments? Not so fast...

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With money tight and higher education costs increasing, legislators have been eyeing university endowments much the way a hungry wolf might view a hamburger.

Millions, even a billion juicy dollars just sitting there in reserve - why not spend the money now, some say, and save us all a lot of trouble?

Sen. Chuck Grassley has gone so far as to call endowments “hoarding,” calling on institutions to dip more heavily into the funds to help make college more affordable.

In December, he urged President Barack Obama and Education Secretary Arne Duncan to “find ways to get educational institutions to help the people they're supposed to help” instead of padding their endowments.

In classic Grassley style, the senator was quoted in a news release as saying: “It's important to understand whether these tax benefits are fueling the tuition increases by subsidizing high salaries for college leaders and rock-climbing walls and other non-educational amenities to try to attract students.”

Late last month, the Des Moines Register climbed on board, chastising the University of Iowa Foundation for not using more of its $1.1 billion in assets for student aid.

But the senior senator and Penny-Pincher In Chief is painting a simplistic picture - endowments aren't quite the same as a $400 hammer. It's misleading to think of endowments as slush funds universities are just too selfish to tap.

And while recent economic uncertainties have shown endowments aren't always rock-solid revenue generators, the answer isn't for universities just to cash them out - even if they could.

Doing so would mean reneging on promises to donors about how their donations would be invested and used. It also would strip away stability - one of the main attractions for endowment pools in the first place.

Because “hoarding” donations and spending the interest (a practice you might have heard of as “saving”) stabilizes uncertain donation revenues - helps make available the same scholarships, the same faculty and research support from one year to the next.

And to answer Grassley's question, locally, at least, little of that money is going for fancy rock-climbing walls. Already, about one-third of the money in the UI Foundation's endowment is earmarked for students, according to figures from the group.

Could fundraisers try to boost that amount? That sounds like a good idea. But breaking into the endowment piggy bank for a one-time cash infusion?

Not so much.

Comments: (319) 339-3154; jennifer.hemmingsen@sourcemedia.net