Harvard’s biggest gift yet is a $400 million donation from billionaire John Paulson to advance its engineering school, which is expanding with a new science campus. News of the gift evoked spirited discussion about the “unfairness” of all that money going to a school with a $36 billion endowment while so many small colleges struggle.

George Leef and Howard Husock rightly defend Paulson on that score.

But the gift does raise an issue that bothers me (not too many others, apparently): Why endowments, anyway? Universities typically spend 4 percent a year from the endowment, which means that Paulson’s gift will begin to help the engineering school to the tune of $16 million in the first year. That’s a lot of change, but think about more typical endowment gifts—say $1 million. In that case, a mere $40,000 would be spent each year.

The rationale is that the capital should never be touched, just the income. But why?

What is so great about having your gift sit around till long after you are dead? Some people may like the “immortality” of it—yes, the gift will still be giving decades hence (as Gordon McKay’s 1891 gift to Harvard’s technical school still is, we are told).

But if you want something to happen, don’t you want it to happen now? If students need scholarships, isn’t it better to give ten scholarships now rather than a bit of a single scholarship each year?

And what if there aren’t enough “bits”? A school with a sizable endowment like Sweet Briar decides it can’t make it. In retrospect, it would have been better for that money to be used for what the donors intended.

I refer readers to a 2011 article by Oklahoma University business professor Vance Fried, who presents a strong case against endowments. He says that no school should have an endowment beyond what’s realistically needed to protect against financial stress.

The task of preserving financial wealth for future generations is for a trust company, not a college. … Colleges today may be over-saving simply because the inter­generational equity argument sounds noble and they really haven’t thought it through.

Thanks to the stability provided by endowments, schools can thumb their noses at free speech, overpay administrators, and waste campus space. I wonder what Gordon McKay, whose donation now supports 40 professors, would think about Harvard today?