June 2, 2006

Endowments Can Become Too Much of a Good Thing

By MARK B. SCHNEIDER

Dozens of academic institutions, even small colleges, have endowments of at least $1-billion, despite losses following the burst of the dot-com bubble. Because colleges and universities see a generous endowment as a top priority, endowments have grown faster than budgets. That prompts two questions: When is an endowment big enough? And can an endowment be too big? There must be at least some rough ideal value for an endowment. Certainly endowments can't outpace institutional budgets

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