Buchholtz at Opinion Journal:
Bill Gates has $56 billion to his name. What would you do if he called your home asking you for some money? You'd hang up on the prankster, of course. Now, what would you do if Harvard, with its $35 billion endowment, called begging for cash? My wife and I take out our checkbook. But maybe we should be hitting up Harvard instead.
Princeton's endowment grew by more than $3 billion last year. Three weeks of gains in the Tiger portfolio would have paid for every undergrad's tuition and for a fresh pair of stripes on the mascot. Princeton's nothing special, at least in this case. Over 60 universities in the U.S. have endowments surpassing $1 billion, a fivefold gain in the past 10 years. This lovely fiscal boom has angered some U.S. senators who want to force Harvard, Princeton, MIT, Stanford and many others to spend more from their coffers. Republican Sen. Charles Grassley threatens to pry open the endowments so that, like other charitable groups, they must spend at least 5% of principal each year, compared with the measly 4.2% they chose to spend in 2006, down from 5.1% in 1994 and 6.5% in 1982.
What's happening here? Are rich schools like survivalists, afraid to spend and waiting for the apocalypse? If we looked in Yale's basements would we find a million rows of canned tuna and bottled Evian, guarded by angry bulldogs? The universities have all sorts of sensible rebuttals.
Read the whole thing.
