| Every year tuition continues
to increase at an alarming level, imposing mammoth costs, which
leads one to believe that universities have very little money and
are scraping the bottom of the barrel just to survive. However,
in reality nothing could be further from the truth. Universities
have accumulated millions upon millions of dollars (some even billions)
in the form of endowments. These are large monetary gifts given
to universities from individuals or organizations. The amount is
invested; a small portion of the income generated helps to maintain
specific university programs, while the rest of the money gets added
to the main endowment fund in order for it to be re-invested. In
the past year the amount of money universities have received through
endowments has increased, yet little, if any, helps to ease the
financial burden on students. The very process of endowment giving,
with its generally specific focus and nature, has led to much of
the controversy regarding universities spending habits and has sparked
debates and disputes on campuses across the country by student
activists, including many here at
UCLA.
Endowments are the financial backbones used
to support all universities, as they are essential for the well-being,
security, and maintenance of all academic institutions. As endowments
are permanent funds, they are always available regardless of the
nation’s national economic situation, stock market fluctuations,
or political changes. The past year has seen an average increase
of three percent for university endowments. Even though schools
nationwide are receiving more money, this does not necessarily translate
into instant improvements and available funding for students, since
only about five percent of the endowment is actually spent each
year. Individuals (most of whom are alumni) or organizations that
make endowments usually have a vested interest in the university
and have a very detailed plan for how they want their money to be
used and allocated. Mario Cacciottolo explains in his article “Endowment
Brings Empowerment” that, “Having an endowment fund
set aside from an initial financial gift helps to ensure the continued
satisfaction of the donors, as well as allowing the university to
be more responsible with the donation itself.” He explains
here that it is necessary that the benefactors’ specific wishes
are carried out so that they will continue to support the school
in order to see their personal goals and visions achieved. He also
claims that by catering to the donors’ restrictions that in
turn the university benefits because a large portion of their gift
goes to the collective fund, which continually supports the university.
Even though the majority gifts go to the general
endowment fund, the portion that currently helps the university
has such a narrow focus that many complain that universities are
irresponsible and use their funds unwisely and unfairly. According
to information provided by http://articles.student.com/article/endowmentuses
at the Southern Methodist University in Dallas a local geologist
honored a fellow colleague by giving a restricted one million dollars
in order to endow a professorship in geology under that man’s
name. Examples of spending such as this anger many individuals who
believe the money could be put to use that benefits the students,
the quality of their education, and the affordability of the school.
The University of Maine claims that fifty percent of their one hundred
and fifteen million dollar endowment goes to scholarship support.
Greg Winters explains in his article
“University Endowments Still Recouping Losses” that,
“Unfortunately instances like this are extremely rare."
The fact that he describes endowments directly helping the students
as rare shows that restricted funds with a limited focus are much
more commonplace, which has stirred up a great deal of controversy.
As the economy has gotten progressively worse
each year, the amount of money a university obtains through endowments
has become increasingly important. Schools employ several aggressive
and effective fundraising campaigns in order to attract the greatest
number of donors. Many schools send out envelopes and pledge cards
in hopes of generating income, although this method has been found
largely ineffective. Another widely used fundraising tool is the
practice of cold calling to illicit money from alumni, parents,
and friends of the university. UCLA has found success with this
method and currently holds the number one student call center (in
terms of the amount of money raised) in the country. The mission
of UCLA’s call center is to raise money for the UCLA Fund,
which is the university’s only unrestricted account. Despite
the fact that this particular call center has raised between two
and three million dollars annually, it makes up such a small percentage
of the university’s budget that it goes largely unnoticed.
In his “Show
Us the Money” article, Andy Dehnart says,
Sometimes the whole money-raising process
becomes a closed loop. For instance, Hawaii uses unrestricted
donations "primarily to support the fundraising efforts,"
Howard said. At schools where donations are spent to attract even
more money, students aren't likely to see the results for a long
time.
He explains that since the amount of money raised
by these unrestricted funds seems miniscule in comparison to the
billion dollar university budgets, most of the money raised in these
campaigns is capable of supporting only the actual fundraising process.
In comparing the amount of money in unrestricted funds to that in
restricted funds, this huge discrepancy becomes apparent. Most donations
received do not directly help or assist students, which has been
the cause for much anger and bitterness.
Much of students’ resentment and anger
comes from the fact that tuition continues to increase, while hundreds
of millions of dollars just sits in the bank. As of 2003 the total
of all university endowments across the country was over one hundred
and fifty billion dollars. It is difficult for students to accept
paying more and more each year knowing that every year their college
receives millions of dollars that in theory could help lower tuition
costs. In the Associated Press article “University
Endowments’ Investments Up Slightly”, this sentiment
is shared:
Most of the nation's universities, despite
their trend of steadily increasing tuition, are swimming in cash
as a result of aggressive fundraising campaigns and a bloated
stock market. The 1990s are the "golden era for college and
university endowments," the report said, with funds reaping
an average 20.4 percent return on their investments.
Students feel very little interest and appreciation
student attitudes for most restricted
endowments because the fund is allocated so narrowly that it does
not provide a benefit to most students.
Not only are there debates over whether or not
endowments are actually helpful to students, but much controversy
has arisen over various proposals. One of the most notable of such
disputes took place here at UCLA (student
issues at UCLA). According to Adjoa Middleton’s article
“Turkey
Pushes to Endow UCLA History Chair”, “In 1997 the
Turkish government approached six universities in hopes of establishing
an endowed chair of Ottoman and Turkish history.” and UCLA
was one of those six schools selected. The proposal was that a gift
of one million dollars would be given and the chair of the Turkish
department would then be the first in history to be fully funded
by a foreign government. The proposal alone created a hotbed of
fury because many Armenian students claimed that political propaganda
was the only reason for the Turkish government’s interest
in funding an endowed chair. Many debates and fights between Armenian
and Turkish students broke out, continuing a long history of hostility
between the two groups. The Armenian Students Association, led by
Ardashes Kassakhian, attempted many protests, petitions, and tried
to use several other means in order to raise campus awareness about
the proposed endowment plan UCLA
student activism. Regardless of all the attention and negativity
brought to the topic by students, the proposal was given adequate
consideration and went through the same process of evaluation as
any other. All UCLA endowments must meet the three basic priorities
set by the university which include being in line with the university’s
mission, having normal academic and administrative processes of
review, and there must be an effort to respect freedom of academic
and general expression. In this case the Turkish government proposal
did not meet all of the criteria set and in the end the endowment
was not approved.
Generally the size of an endowment reflects
the academic reputation of a university, which indicates a strong
correlation between the amount of money a university receives and
the degree to which it is perceived by the public. Endowments are
crucial to the success of a university with respect to nationwide
rankings, which in turn are important in attracting superior
faculty members and students. However, when it comes to providing
financial assistance to students, making more classes available,
and hiring and retaining professors, endowments are not used. Since
the size of a university’s endowment is seen as a reflection
of its academic quality and excellence, they are necessary in order
for the college to survive. However, the fund is of little help
given the number of procedures and [bureaucratic committees] involved
in its allocation. Instead of continuously raising tuition, building
unnecessary buildings, and laying off faculty – all of which
alienates students – the universities should stop sitting
on the hundreds of millions of dollars they have and put those funds
to use.
Additional Sources:
http://www.usu.edu/develop/priorities/endowments.asp
http://www.boston.com/news/education/higher/articles/2004/01/20/college_endowment_earnings_are_up/
http://www.yaledailynews.com/article.asp?AID=1175
http://uclabruins.ocsn.com/departments/ucla-endowments.html
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