Columbia University holds the 12th largest university endowment in the U.S., valued at $14.8 billion. A study by the National Association of College and University Business Officers and Commonfund found that 658 institutions have endowments totaling $873.7 billion, with 86% of this wealth concentrated among the top fifth of surveyed universities. Columbia’s endowment averages nearly $500,000 per student, significantly higher than the University of Texas, which has a $47.5 billion endowment but less than half as much per student. Endowments are not simple cash reserves; they consist of numerous funds, many of which are restricted by donors for specific purposes like professorships, scholarships, and research. Universities typically spend only 5% of their endowments annually, a practice that helps the principal grow and keep pace with inflation. Despite the restrictions, some funds can be used more flexibly, and universities can seek court approval to increase spending during crises. However, using endowments to cover short-term funding cuts is considered imprudent by some experts, as it could impact future cash flow. Additionally, the National Institute of Health has implemented a 15% cap on research reimbursements for indirect costs, and there are proposals to increase the endowment tax from 1.4% to as high as 21% for universities with significant assets per student. International student enrollment, a key revenue source, has also declined, adding to the financial challenges faced by universities.
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