College endowments facing widening gaps
A few select schools see big increase in donations, while others struggle
As donations to colleges and universities reach record heights, the divide between the wealthiest institutions and the rest of higher education is growing wider, leaving some schools on shaky financial footing.
Private donors gave nearly $60 billion to higher education in the 2022 fiscal year, according to an annual survey from the Council for Advancement and Support of Education, a 12.5 percent increase from the year before. But of the 781 institutions surveyed, about a third reported that donations had declined.
A newly announced $300 million donation to Harvard University has rekindled the long-running debate over wealth disparities in higher education, with a sliver of elite colleges holding billions in endowments while other schools struggle to get by.
“The gap between the wealthiest and the least wealthy institutions is definitely growing,” said Ken Redd, senior director of research and policy analysis at the National Association of College and University Business Officers, which publishes an annual survey of endowments.
The national median endowment is around $200 million, and only about 100 to 110 schools have endowments worth more than $1 billion, Redd said.
As of June, Harvard reported the largest university endowment of about $50 billion, while the Massachusetts Institute of Technology had more than $24 billion, the nation’s fifth largest, according to US News & World Report.
Boston College and Boston University each have endowments worth more than $3 billion, while Emerson College and Suffolk University are more typical, with around $180 million and $254 million, respectively, according to their latest financial statements.
The University of Massachusetts has an endowment of about $1.12 billion, with $442 million earmarked for its flagship Am
MACKENZIE SCOTT
Has given hundreds of millions of dollars to historically Black, tribal, and community colleges.
herst campus and $126 million for its Boston school, according to the University of Massachusetts Foundation, which manages the fund.
Brian Flahaven, CASE’s vice president of strategic partnerships, noted that certain types of institutions, especially large research universities, require more resources than smaller colleges.
“It’s not always an apples-toapples comparison,” he said.
But the vast gulf in resources between the wealthiest schools and the rest of the field deepens those disparities, said Adam Harris, journalist and author of “The State Must Provide: Why America’s Colleges Have Always Been Unequal — And How to Set Them Right.”
“Wealth begets wealth,” Harris said.
He noted that Harvard’s latest gift came from a graduate, as did several recent high-profile gifts to American universities, generosity that schools with fewer wealthy alumni cannot count on.
“Oftentimes, folks who are maybe alums of public, regional institutions aren’t able to give as much to their institutions,” he said.
Endowment growth is generally driven by investment returns as well as donations, Redd said, and schools with more resources can put money into accounts, such as private equity and venture capital funds, that may yield higher returns.
“The smaller endowments just don’t have access to those kinds of investments,” Redd said.
Wealthier schools also tend to attract wealthier students and generate a greater number of successful alumni, who end up giving back, Redd said.
It becomes a “virtuous cycle” for some colleges, Redd said. Large endowments also bring extra media attention, which can further attract high-profile donors.
“People follow the prestige,” said Marcella Bombardieri, a senior fellow at the Center for American Progress and former education editor for Politico. “I’m not sure if they fully fathom where most students go to college.”
Bombardieri said donations can stretch further at schools with smaller funding pools, especially at community colleges, which may not have endowments and tend to rely heavily on state budgets. She praised the philanthropy of Mackenzie Scott, who has given hundreds of millions to historically Black, tribal, and community colleges.
She said she hopes Scott’s charity will “become a model” for future donors, but said colleges should not just have to rely on private donations.
“It is a public responsibility to support public institutions,” Bombardieri said.
For smaller schools, major donations can have an outsized impact. In 2019, billionaire Robert Smith donated $34 million to pay off the student loans for the entire graduating class of Morehouse College.
Bombardieri said stability is “the point of an endowment,” meaning schools with modest holdings are more affected by external economic factors, like a dip in the stock market.
But Harris said smaller endowments grow slowly and donations must sometimes be spent on immediate needs.
For some schools, it feels like gifts “came in the door and went right out,” he said.
While elite private schools receive many large donations, the majority of American students attend public colleges and universities that are vulnerable to state budget cuts, Harris said.
“If you think of higher education as a more holistic idea, you would probably donate to the institutions that are doing more for more students,” Harris said. “And I don’t think that’s the case at this moment.”