May 28, 2004

Bigger Is Not Necessarily Better

By HENRY HANSMANN

Related articles: View all of the advice and commentary from this special supplement on endowments

It seems an article of faith among nonprofit institutions that having a big endowment is good, and having a bigger endowment is better. Often, though, endowment accumulation is a poor strategy. Moreover, even when building an endowment makes sense, currently popular spending rules are generally counterproductive.

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