The money-spending requirements on foundations to spend their money are minimal. I’d bet that most college/university endowments spend a higher percentage of the fund than foundations do.

…Much the way corporate boards are typically drawn from “competing” corporations’ top management. Without oversight that’s external to this whole system, the opportunities for logrolling become irresistible.

But Waldeck is operating in a framework where endowments are a major way the long-term stability and autonomy of universities is preserved, and where the tax treatment of endowments is a major form of public support for universities. And it seems clear that even within that framework endowments could do more to support teaching and research.

slocum’s depressing comment about the incentives built into financial aid is also true, and worth a subsequent post (slocum, I notice that I almost always agree with you when the topic of higher ed comes up!)

Right—Slocum is the one sending his kid to a flagship public school ‘on the cheap’. On the cheap being ~$17K/year rather than ~$40K. BTW, if you aspire to sending your kid to a private university, don’t do what we did—don’t live below your means and save, because this will lead universities to conclude (via FAFSA) that all your savings are belong to us. If, instead, you send your kids to private K-12 schools and otherwise spend yourself to the limit of your means (say on luxury cars and a McMansion or two), you’ll get back a big chunk of the money you blew in the form of a nice discount off retail tuition rates.

There were probably ways to hide the savings, but because of Krueger and Dale, Slocum doesn’t worry much about depriving the kid.

As for Harvard and it’s endowment—I’d recommend that the trustees find some socially beneficial way of spending the money other than new buildings and highly subsidized tuition for the upper middle class. Otherwise, well, they don’t really expect the cash-hungry state legislature to leave that big old pile of money (or is that a big pile of old money) alone indefinitely, do they? And the more success Harvard has in fund-raising and investing, the more attractive it makes itself as a target.

LOL! And the best part is, you probably don’t think there’s any need for you to prove that’s where they derive their income, before dictating to them where it’s spent.

I think the best way to approach this is to note that, whatever universities are accumulating endowments for, the purpose ultimately has to involve spending money. The endowment isn’t just a Scrooge McDuck money pool for the trustees to swim in. It’s there to be spent.

So it’s fair enough that at some point we as them to start spending it, or take away the special tax status that’s assisting them in piling the gold bars higher.

You misunderstand. The quality is judged by (generally) anonymous referees from competing universities. You are not so much judged by your peers than by your competitors, and they have a vested interest in finding your work flawed, not correct. This does not mean the system is perfect, but the principle is very good and in no way comparable of a corporation devising its own accounting techniques (if that is the analogy you had in mind).

There are in fact many ways in which this kind of self-policing can go wrong. Conservatives argue most frequently about capture by political partisans, since that is the problem they’re most concerned about. But non-political problems such as corruption, mismanagement, inefficiency and cronyism are similarly damaging—and, I suspect, far more rampant than most academics care to admit. After all, when an organization has the largely unregulated power to manage an enormous endowment pretty much as it sees fit, within very broad limits encompassing every imaginable “legitimate academic purpose”, one shouldn’t be surprised if its decisions aren’t always motivated solely by a commitment to intellectual and academic excellence.

Let’s assume this is true. Still raises the question whether endowments are the only way to create such institutions. It seems to me the answer is pretty clearly ‘no’. After all, many countries that don’t have private universities do have institutions of higher education that seem to match Solum’s description.

These reasons alone convince me that the endowments existing now should be expropriated into one public fund that can then be used to support research and higher education according to democratic control; and all future contributions should be taxed.