Academic

Waldeck Responds on University Endowments

By Lawrence Solum

Please excuse this very brief post--I'm in the Mexico City Airport on my way home from a week in Bogota lecturing at the Univesidad Externado de Columbia, but I wanted to urge interested readers to check out Sarah Waldeck's response to my comments & the Crooked Timber discussion of her paper (which is highly recommended).  Here is a taste:

I?ll start with the observation I found most interesting: that some elite institutions have a mission that is as much (or even more) about research than about education. I agree that I need to emphasize this distinction more than I have to date. My proposal that an endowment per full-time student of $300,000 or more trigger less favorable tax treatment could penalize institutions whose primary output is research rather than education. Recall, however, that the most frequently proposed trigger is an absolute endowment value of $1 billion or more. Elite research universities tend to have endowments of this magnitude, so my proposal is not tougher on these institutions than the oft-suggested alternative. In fact, my proposed trigger would exempt some research-oriented universities that would otherwise be subject to new tax rules, such as Cornell and Columbia. The institutions most "negatively" affected by the $300,000 trigger are liberal arts colleges with endowments less than $1 billion and small student populations.

More important, however, is that a research-oriented mission actually strengthens calls for increased endowment spending. The sort of research taking place at America?s premier universities is designed to eventually lead to much social good: the easing of the global food crunch, the elimination of certain diseases, and so on, as well as the creation of knowledge more generally. Few science departments, for instance, are likely to argue that a dollar is better spent in the stock market than in their labs. The ability of researchers and scholars to make productive use of endowment funds seems almost endless, as do the potential gains from their work. This strikes me as a strong argument for elite research universities spending more of their endowments than they currently do.

If I might just add another word.  I think Waldeck has moved the ball forward & that the key issues concern intergenerational justice & the value of building independent and enduring institutions.

Read Waldeck.

Full post as published by Legal Theory Blog on June 13, 2008 (boomark / email).