Publication Date

9-2014

Abstract

The growth of college and university endowments, particularly those of elite schools, have drawn the attention of policymakers and pundits. Using a decomposition of the growth of endowments between 1991 and 2010 we simulate the effects of three prominent proposed policies had they been implemented in 1991 on endowment payouts through 2010: (1) a minimum spending rule, (2) removing full income tax deductibility of donations, and (3) taxing total endowment sizes beyond a given size. We find that a minimum spending rule increases the average size of endowment payouts for all quartiles of the endowment distribution in nearly all years of the sample period and has a modestly larger relative impact on richer schools. Removing tax deductibility decreases endowment payouts with its effect increasing over time. It has a larger relative impact on schools with smaller endowments than on richer schools.

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Suggested Citation
Milton, R. T., & Ehrenberg, R. G. (2014). University endowment growth: Assessing policy proposals [Electronic version]. Retrieved [insert date], from Cornell University, School of Industrial and Labor Relations site: https://digitalcommons.ilr.cornell.edu/workingpapers/233

Required Publisher Statement
Published by the Cornell Higher Education Research Institute, ILR School, Cornell University.

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