University endowments are often significantly misunderstood. Here are some of the most common myths about endowments*:
Myth: An endowment is one large pot of money.
An institution's "endowment" is actually a collection of hundreds to thousands of funds set up through generous charitable gifts. These gifts help institutions fulfill their missions of life-changing learning and life-saving research.
Myth: Institutions don't use endowments to reduce tuition and college costs.
The exact opposite is true: Endowed funds help keep college costs down for students. Tuition — even for students who don't receive aid — covers only a portion of the cost of a student's education. The rest is covered by endowment earnings, gifts from donors, and other non-tuition sources.
Myth: Endowment totals represent the amount of cash a university has on hand.
When an institution receives an endowed or capital gift, the full value of the gift is not immediately available for the college or university to use. Institutions spend a portion of their endowments each year to meet current teaching and learning needs, and they keep the rest invested to meet the needs of future generations. In addition to endowed charitable gifts, institutions also receive current-use gifts that support scholarships, academic programs, and other needs.
Myth: Schools can spend endowment funds however they please.
Donors typically give endowed gifts for a specific purpose: creating scholarships, professorships, or starting new programs.
*Source: Council for Advancement and Support of Education (CASE), January 2019 BriefCASE issue
