John, I was never comfortable with Lynne Munson’s populist attack on giant educational endowments. Her current article with Donald Frey sounds a bit defensive — an effort to justify her earlier pitch now that endowments have fallen by between a quarter and a third.
In 2007, Munson pushed for federal intervention requiring schools to report how much they paid out of their endowments each year; if that didn’t drive up payouts, she wanted a law requiring schools to pay out 5 percent of their endowments each year (something that charitable foundations must currently do, but not educational institutions).
The new article doesn’t explicitly repeat that recommendation, but it berates “poor Harvard” for not unlocking some of its (apparently) illiquid investments so that it can spend more on education. The implication is that the school is still misbehaving, just as it was when it was even richer.
True, some people want more government control of nonprofit institutions because of their tax-exempt status, but I don’t. We need less federal meddling, not more. And reducing spending might be one of the best things that has happened to Harvard in years.