YALE UNIVERSITY President Richard Levin admitted this week that the institution’s endowment has lost 25 percent of its value, or over $5 billion. Harvard University’s endowment is down $8 billion. These losses are difficult to appreciate unless their value is translated into real goods. For $8 billion Harvard could have provided 25 years of Crimson undergraduates with a free education. Or built the largest particle accelerator in the world.
Many colleges and universities have spent decades amassing huge fortunes, unprecedented in scale. Part of the reason their endowments have become so large is that they are so aggressively invested. Another reason is that, despite their incredible gains, these institutions continue to engage in the Depression-era practice of spending very little of their treasure. Today’s losses are an indictment of that longstanding practice and proof that colleges and universities should have been spending more from their endowments all along.