Endowments Explained

An incisive analysis of one of the most important yet misunderstood assets of colleges, universities, and nonprofits.

Endowments are often at the center of debates about tuition, institutional wealth, philanthropy, and financial inequality, particularly in higher education. Yet despite their prominence, there is surprisingly little agreement about what an endowment is, which nonprofit organizations have them, or how endowment data should be collected and interpreted. Questions about investing and spending endowment funds add another layer of complexity and controversy.

In Endowments Explained, Bruce A. Kimball and Sarah M. Iler build on their prize-winning history of Harvard's endowments and their recent book on wealth, cost, and price in higher education to explain one of the nonprofit sector's most misunderstood financial assets. Written for nonprofit leaders, trustees, scholars, students, policymakers, and journalists, Kimball and Iler trace how conflicting definitions and assumptions about endowments emerged in the 1970s, evolved over subsequent decades, and continue to shape public debate today. They also examine major controversies surrounding endowment concentration, ethical investing, fundraising, spending policies, and the role endowments play in sustaining the long-term missions of colleges, universities, and other nonprofit organizations.

As part of the Higher Education Leadership Essentials series, Endowments Explained is especially timely. Excluding private foundations, roughly 60 percent of all nonprofit endowment assets in the United States are held by colleges and universities, and many of the most visible public debates over endowments have centered on higher education. By clarifying the history, purpose, and practical realities of endowments, Endowments Explained gives readers the foundation they need to better understand an issue of growing importance in higher education and public life.